Being called a "rent seeker" is not usually a compliment, and most often implies the person bearing that label is greedy, and should stop doing the objectionable behavior.
But Henry George and his lawyer Thomas Shearman disputes and qualifies the term "rent seeker," not in a way that justifies unbridled greed and monopolies, but in a way that allows rent-seekers to co-exist with the rest of us.
This was the main point of Thomas Shearman's 1898 book "Natural Taxation," in which he referred to rent-seekers as "nature's tax collectors."
But exactly how do we co-exist with hardcore rent-seekers? By recognizing that they are at least entitled to a wage for seeking out people who need, for example, land, money, or a job.
I identify four major rent-seekers:
- landlords who find people in need of land or real estate;
- lenders who seek out people that need loans;
- employers who seek out people that need a job; and
- speculators who seek out profitable opportunity.
I just want to mention this because a major point of misunderstanding among Georgists revolves around to what degree rent-seeking should be allowed.
The answer is: only to the point that the rent-seeker is allowed a (sometimes generous) wage, but not to the point that he is allowed to keep most of the unearned income he generates (i.e., rental income, capital/land gains, speculative gains or winnings, interest income, profits from hiring the labor of others, etc.).
Corporate profits, dividends, and capital gains from share buybacks all need to be regarded as economic rent or unearned income, and heavily taxed. Corporations are only parasitic (in the bad sense) if their unearned income is privatized and not reclaimed by government (for the benefit of the public that sponsored or "hosted" the corporation in the first place).
Corporations totally owe their existence to the people-owned state and federal governments that created and maintain them. It's unbelievable that neoliberalism has been able to obscure this view, and replaced it with the idea that corporations exist only to maximize shareholder value. Many neoliberals even claim that corporations have a "fiduciary duty" to maximize value for shareholders, which is a very high duty of care. Again, unbelievable!
A private for-profit corporation is created when a state government grants a license or "charter" to private individuals, which corporation also can be regulated and taxed by the federal government (but the federal government can charter its own federal corporations, also). Since under the U.S. system, "the people" are the shareholders of the state and federal governments, the corporations created by the government are also indirectly owned by the public. Then, after the government creates corporations, massive resources are used to administer the corporate privileges of limited liability, eternal legal life, ability to divide corporate ownership into shares, etc.
It's legally valid, but seems invalid because of thought-control campaigns or "psycho politics" which have advanced the neoliberal idea that corporations are not creatures of the peoples' government, but independent, stand-alone "persons" under the 14th Amendment who are entitled to liberty and equal protection of the laws.
This is my understanding of the point Shearman was making in his book "Natural Taxation," and Henry George consented to the idea.
This article was authored by Rick DiMare. Rick is a self employed attorney from Boston, Massachusetts. He graduated from Boston College and studied law at the Massachusetts School of Law at Andover. He also administers the Facebook group called Common Wealth Tax, which seeks to explore the (currently obscure) link between modern income tax laws and the Land Value Tax (LVT) advocated by political economist and “Greenbacker” Henry George (1839-1897).
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