Henry George, Marx, and the 16th Amendment
It's important to differentiate the 16th Amendment from the Revenue Act of 1913, also among taxation litigation and legislation.
April 29, 2018
Rick DiMare

Thanks to the Henry George national period, which began in September 1890 and ended with the decision in Pollock v. Farmers' Loan (1895), we got the power to tax unearned income derived from land under the 16th Amendment (1913). It does not follow that wages (earned income) should have been included in the tax base of the Revenue Act of 1913. Another good point is that it's probably more accurate to describe the post-16th Amendment unearned income derived from land as public income.

It's important to differentiate the 16th Amendment from the Revenue Act of 1913. The 16th Amendment was a legal formality or necessity, caused by the Georgist national period (1890-1895) attempt to tax landlord rental income. It became part of the Constitution in February 1913.

On the other hand, the Revenue Act of 1913 was the result of politics and was enacted in October 1913. It is a tax Henry George would reject (because it taxed wages along with unearned or public income), but it got through because most Georgists at the time were convinced that the Act would only target very high wages.

A Marxist looking at Henry George's objection to "private property in land" would probably conclude that George was seeking public ownership of land, but not quite. George definitely objected to private ownership to the extent that the landlord or bank would be allowed to keep the unearned income derived from land, but otherwise firmly believed in the right to exclusively possess land, or believed in a kind of qualified private ownership. No book, in my opinion, better explains what George meant by private ownership vs. the right to exclusively possess, than John Pullen's "Nature's Gifts: The Australian Lectures of Henry George on the Ownership of Land & Other Natural Resources" (2014).

Marx's actual words from the letter (where he criticizes Henry George, or, more accurately, criticizes his own misunderstanding of Henry George) were: "All these 'socialists' since Colins have this much in common that they leave wage labor and therefore capitalist production in existence and try to bamboozle themselves or the world into believing that if ground rent were transformed into a state tax all the evils of capitalist production would disappear of themselves. The whole thing is therefore simply an attempt, decked out with socialism, to save capitalist domination and indeed to establish it afresh on an even wider basis than its present one."

Of course, in 1881 Marx did know that Henry George would eventually support a tax on "capitalist production" in the 1893 "Just and Practicable Income Tax," but who knows of any Georgists today who support, or even recognize, that special income tax?

I would also like to add that the current form of Georgism, which is complicit in the privatization of "factory rents" (corporate net income and dividends), has given rise to such a virulent form of capitalism, it may very well destroy the country. Of course, what we have now should not even be called capitalism. It is essentially private debt-notes used in production, not any kind of wealth used in production, so not something that Henry George would consider as being remotely legitimate.

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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).