Single Tax The Remedy for Privilege Chapter Twenty-Four second part
|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
The Menace of Privilege, by Henry George Jr.
We are pleased to present, in installments, a very rare yet significant book written by former Congressman Henry George Jr. in 1905.
Earlier installments are available at the Progress Report Archive.
more of CHAPTER 24, TO FREE NATURAL OPPORTUNITIES
What is the cure for privileges? Leave the land in its present hands, but tax its entire annual value into the public treasury.
Consider the volume of revenue from this one source in this country if all land having value, exclusive and regardless of improvements — all urban and suburban land, all agricultural land, all forest land, all land bearing minerals or oil or gas in its bosom, all grazing land, all land that would sell for anything on the open market — should turn that value over to the public tax gatherer! It is conservative to say that the revenue for municipal, State and Federal purposes would far exceed the present needs of Government economically administered.
(A simple method of dividing the revenue raised by this single tax would be to have the municipality use part of the existing taxation machinery, collect the tax, and pay over to the state and Federal authorities the quotas apportioned for each. The income tax, several times levied by the Federal Government, was left to the States respectively to collect and turn over to the Federal Treasury, the amount from each State being apportioned, and the Federal Government making a liberal discount for the labor and expense saved it by the States.)
It would therefore make unnecessary the multitude of compounding taxes now heavily burdening and galling production. The whole weight of Government — Federal, State and municipal — would thus rest, through this single tax, upon the rent of land: of land alone, regardless of improvements. This does not mean rent of land as it is commonly understood, for that means merely the income the owner receives, and much speculative land is leased at a nominal rate. What is meant is potential rent — the annual advantage that such land affords over the poorest land in use; what in political economy is called economic rent.
The proposal is very much like that which a group of great Frenchmen just before the Revolution in France proposed and called l’impôt unique, a tax which, on account of the results it would effect, Mirabeau, the father, who was one of this group of economists, pronounced the greatest discovery since that of printing.
A point to be accentuated is that this very tax now exists in rudimentary form in our present complicated fiscal system. A tax on land values is one of the multitude of taxes we now levy. But its size or rate is inconsiderable. What is proposed is to abolish the whole mass of taxes save this one small tax falling on land values, and to increase its amount or rate until it absorbs the entire potential or economic rent. The landowner could not shift this tax, for, as John Stuart Mill has said: “A tax on rent falls wholly on the landlord. There is no means by which he can shift the burden upon any one else.” (“Principles of Political Economy,” Book V, chap. III, Sec. 2.) A cloud of authorities and common reason support this statement.
But why discriminate; why make land values the sole resting-place of taxes? Because, for one reason, land values are not produced by landowners, but by the public; by social growth and social improvement. John Stuart Mill most wisely says, “It is not the fortunes which are earned, but those which are unearned, that it is for the public good to place under limitation.” (Book V, Chap. II, Sec. 3.)
What he means by that may be judged from a further statement: “When the ‘sacredness of property’ is talked of, it should always be remembered that any such sacredness does not belong in the same degree to landed property. No man made the land. It is the original inheritance of the whole species. Its appropriation is wholly a question of general expediency. When private property in land is not expedient, it is unjust.” (Book II, Chap. II, Sec. 6.)
In a word, this single tax conforms more nearly than any other kind of tax does to what Adam Smith calls the “four maxims” of taxation, which maxims or conditions my father has compactly set down as follows: –
- That it bear as lightly as possible upon production – so as least to check the increase of the general fund from which taxes must be paid and the community maintained.
- That it be easily and cheaply collected, and fall as directly as may be upon the ultimate payers so as to take from the people as little as possible in addition to what it yields the Government.
- That it be certain – so as to give the least opportunity for tyranny or corruption on the part of officials, and the least temptation to law-breaking and evasion on the part of the taxpayers.
- That it bear equally – so as to give no citizen an advantage, as compared with others. (“Progress and Poverty,” Book VIII, chap. III.)
That this single, land value tax would most nearly meet these requirements is important, indeed.
It is also important that in going to a natural fund for the defraying of the expenses of Government, all taxes upon production might be remitted. A legion of taxes that now embarrass general production, but which Privilege turns to advantage, would be wiped out. Among them would be the tariff. We shall go into this in considering the second class of privileges. It is mentioned here only to show its relation to the application of the land value tax.
But all this question of revenue from land values belongs to but one phase of the matter of natural opportunities. Important as it is, a still more radical and far-reaching effect of taxing land values to their full would be to throw open great natural bounties now locked up against use. Such a tax would break “corners” in natural opportunities.
Take an instance: The hard coal combination in Pennsylvania, generally termed the Anthracite Coal Trust, owns, holds by lease, or otherwise controls practically all the available anthracite coal in that State, and there is nowhere in the world another deposit of quality approaching it. The managers of this trust therefore control the world supply. Whoever wants to buy anthracite coal, at least of that quality, must go to them.
Their policy is not low prices and large sales, which rules where there is competition. They take the opposite course: the highest possible prices and comparatively small sales. They do not desire large output of the mines; they deliberately restrict that output. Many times as much coal land within their possession is kept locked up and idle as is worked; and on that which is worked, the men are rarely busy full time. Much coal land has been purchased with the predetermination of preventing any one from mining it at this time; and much land that could be obtained only by lease was leased in order to prevent coal from being brought forth to increase the market supply, even though to shut off that coal the trust had to pay to the owners of such leased land stated sums in lieu of royalty it would have had to pay had it taken coal out of the ground.
The trust, by thus controlling the market supply of anthracite coal, could fix so high a price to the public as to leave a large profit to it after allowing for the expenditure on locked-up lands.
And while the trust thus puts up the price of coal to the public by limiting the amount mined, it at the same time tends to keep mine workers in subjection, since the limitation of output which raises the price to the public also reduces to a minimum available opportunities for employment.
Thus by a policy of restricting the working of coal land, both the public and the mine workers are robbed, the one through high prices for coal, the others through low wages for their labor.
But how can the trust afford to keep valuable coal land idle? Is not such land taxed? Yes, but only nominally. Much of the finest hard coal land of Pennsylvania is taxed merely as farming land, and poor farming land at that. Probably a large proportion of those mine workers who are fortunate enough to own a little patch of ground and a little home on it have to pay more taxes relatively than the great corporations adjoining pay on land kept idle, the mineral from which would bring a great price. So low is assessment of such mineral land for taxation purposes that it bears comparatively no tax at all. The trust can find a handsome profit in buying or leasing all such land, paying the inconsiderable tax, and then withholding that land from competition with coal land that is being worked.
But what would happen if the tax falling on this land were not very light, but very heavy? The value of such land can be and is determined easily enough when it comes to a sale or a lease. What if the tax were laid on such a valuation – a tax that should take the whole potential or economic rent of such land? Would the land then remain locked up? Would it stay idle? Would not the fine for idleness be too heavy to bear? Would not the trust set immediately to using all its available land, or to getting rid of such land as it could not use? And would not such discarded land — good coal land that the trust could not use and therefore would not care to pay taxes on — be immediately taken up by others and worked? Are there not plenty of men about with requisite knowledge and means who would jump at a chance to sink shafts and drive tunnels into this idle coal land?
A tax taking for public use all the economic rent of the hard coal lands — lands unworked as well as lands worked — would destroy the Anthracite Coal Trust. The latter’s policy then would be, not to make profit by cornering land and limiting output of coal, but in holding only such land as it could work and working that land to the limit. The principle of monopoly would be destroyed, that of competition set up in its place.
The coal operators would then look for their profits, not in restricted sales at high prices, but in extended sales at low prices. The robbery of the public and mine workers through high prices and low wages would cease. The market charge for coal would be low, while such would be the demand for laborers in the mines that wages would obviously advance materially over present rates.
If this heavy land value tax would smash the hard coal trust in eastern Pennsylvania, it would operate in precisely the same way against the soft coal combination in western Pennsylvania, and against the bituminous combinations, in Ohio, West Virginia, Indiana, Illinois and all the other coal States. We all would use more coal if it were to be had more cheaply. Cheaper fuel would be a boon to countless manufacturing activities. It would be a distinct gain to civilization. We could have it if we would. Tens upon scores of millions of tons of fine, accessible, easily workable coal lies waiting to be brought forth from the bosom of our soil. But a few men stand guard and say: “No; we choose that fuel should not be cheap. We care nothing about public needs, about activities in production, about civilization. We are after the highest price that we can get and you cannot prevent us.”
Next Week: Other Trusts and Monopolies Would Crumble if All Taxes Save That on Land Values Were Abolished
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