SINGLE TAX
104. DEFINITIONS.--The words "single tax" refer to a policy under
which all public revenue is to be raised by a single tax on land
value. All other taxes are to be abolished. By land value is meant the
value of the land itself, irrespective of all improvements, such as
ditches, drains, and buildings. Everything done on the land to
increase its value would be counted as an improvement, and would thus
be exempt from taxation. This would leave only location value and
fertility to be taxed. By location value is meant that value which is
due to the situation of the land. For example, land in a wilderness
has little or no location value, but if, later, schools, stores,
railroads, and other elements of community life develop in that
region, the land may take on great value because of its location in
the community. The fertility value of land is that value which is due
to natural endowment in the way of moisture, climate, and soil
elements.
105. HENRY GEORGE AND HIS WORK.--The doctrine of single tax is closely
associated with the name of Henry George, an American reformer who
died in 1897. His theory was best developed in his book, _Progress and
Poverty_, published in 1879. In this book George points out that in
spite of the progress of the world, poverty persists. This is due
chiefly, he contends, to the fact that land-owners take advantage of
the scarcity of good land to exact unduly high prices for its use.
According to George, this monopoly of the gifts of Nature allows
landowners to profit from the increase in the community's
productiveness, but keeps down the wages of the landless laborers.
"Thus all the advantages gained by the march of progress", George
writes, "go to the land-owner, and wages do not increase."
George proposed to use the single tax as an engine of social reform,
that is to say, to apply it with the primary view of leveling the
inequalities of wealth. Value due to improvements was to be exempt
from taxation, so that land-owners might not be discouraged from
making improvements on their land. On the other hand, it was proposed
that the single tax take all of the income due to location and
fertility. This, according to George, would "render it impossible for
any man to exact from others a price for the privilege of using those
bounties of Nature to which all men have an equal right."
106. RESULTS CLAIMED FOR THE SINGLE TAX.--George claimed that the
application of the single tax was highly desirable. If, through the
medium of this tax, the government were to take from the land-owners
all the location and fertility value of their land, two great benefits
were to result. First, rich landlords would be deprived of much
unearned wealth. Second, the wealth so secured, called the unearned
increment, could be used to make life easier for the poor. Ultimately,
George went so far as to claim, the single tax would "raise wages,
increase the earnings of capital, extirpate pauperism, abolish
poverty, give remunerative employment to whoever wishes it, afford
free scope to human powers, lessen crimes, elevate morals and taste
and intelligence, purify government, and carry civilization to yet
nobler heights." The steps by which George arrived at this gratifying
conclusion are obscure, and practically every modern economist agrees
that too much has been claimed for the theory. Nevertheless, there is
much to be said on both sides of this interesting question.
107. ARGUMENTS FOR THE SINGLE TAX.--Single taxers claim that it is
just to take from land-owners that land value which is not due to
their individual efforts. Fertility, on the one hand, is due
originally to the bounty of Nature, and as such belongs to all men
alike, rather than to particular individuals. Location value, on the
other hand, is due to community growth, and should therefore be taken
for the benefit of the community at large.
A very strong argument in favor of the single tax is that land cannot
be hidden from the tax assessor, as can stocks, bonds, jewels, and
other forms of personal property. A single tax on land would,
therefore, be relatively easy to apply.
A tax on the location and fertility value of land would not discourage
industry. Location value is largely or entirely due to community
growth, rather than to the efforts of the individual land-owner.
Fertility, of course, is largely a natural endowment, and as such
cannot be destroyed by a tax. The land would continue to have all of
its location value, and probably much of its fertility value, whether
or not the owner were taxed.
Another argument is that a single tax on land would eliminate taxes on
live stock, buildings, and all other forms of property except land,
and that this would encourage the development of the forms of property
so exempted. This would stimulate business.
It has also been said that the single tax would force into productive
use land which is now being held for speculative purposes. It is
claimed that many city tracts remain idle because the owners are
holding them in the hope of getting a higher price in the future.
According to the single taxer, a heavy tax would offset this hope of
gain, and would force speculators either to put the land to a
productive use, or to sell it to someone who would so employ it.
A last important argument in favor of the single tax is that it might
force into productive work certain capable individuals who are now
supported in idleness by land rents. Professor Carver has pointed out
that if the single tax deprived such persons of their incomes, they
would be forced to go to work, and thus the community would gain by an
increase in the number of its productive workers.
108. ARGUMENTS AGAINST THE SINGLE TAX.--The most important objection
to the single tax is that the confiscation of land, or, what amounts
to the same thing, the confiscation of the income which land yields,
is unjust. "Pieces of land," Professor Seager points out, "have
changed hands on the average dozens of times in the United States, and
present owners have in most cases acquired them not as free gifts of
Nature, nor as grants from the government, but by paying for them,
just as they have had to pay for other species of property." Where
individuals have acquired land in good faith, and under the protection
of a government which guarantees the institution of private property,
the confiscation of land value would be demoralizing to the community
and unfair to its land-owning citizens.
Another difficulty lies in the ease with which value due to permanent
improvements is confused with value due to location or fertility.
Where money has been expended in draining land, removing stones or
applying fertilizer, it is hard to tell, after a few years, what part
of the value of the land is due to improvements. The possibility of
this confusion would cause some land-owners to neglect to improve
their land, or might even cause them to neglect to take steps to
retain the original fertility. Thus the single tax might result in the
deterioration of land values.
It is also objected that the single tax would provide an inelastic
taxation system. This means that it would tend to bring in an equal
amount of revenue each year, whereas the revenue needs of government
vary from year to year. A good tax system will accommodate itself to
the varying needs of the government, always meeting the expenses of
government, but at the same time taking as little as possible from the
people. [Footnote: Some opponents of the single tax declare that the
heaviest possible tax on land would yield only a fraction of the
revenue needed to finance the government. Single taxers, however,
maintain that the tax would yield more than enough revenue to meet
public expenditures. The merits of this argument are uncertain.]
It is doubtful whether the single tax would force into productive use
land now being held by speculators. Even though a heavy tax were laid
upon such land, it would not be utilized unless there were an
immediate use to which it could profitably be put.
A last important argument against the single tax is that there is no
good reason for removing the tax burden from all except land-owners.
Land is only one form of wealth, and it is unfair not to tax
individuals who hold property in some other form. Some land value is
indeed unearned, but there are other forms of unearned wealth, as, for
example, monopoly gains and inherited property. Taxes ought to be
levied upon these forms of unearned wealth, as well as upon the
unearned income from land. It is desirable, too, to levy at least a
light tax upon the propertyless classes, in order to encourage them to
feel an interest in, and a sense of responsibility for, the conduct of
their government.
109. SERVICE RENDERED BY THE SINGLE TAX AGITATION.--Economists are
unanimous in agreeing that the single tax, as expounded by Henry
George, is too drastic and special a reform to find wide favor.
Nevertheless, the single taxers have performed a valuable service by
emphasizing the fact that in many cases the income from land is
largely or entirely unearned. It would be manifestly unjust to
dispossess present-day land-owners who have acquired land in good
faith; on the other hand, most economists agree that we ought to
reform our tax system so as to take for the community a larger share
of the future unearned increment of land values. As Professor Taussig
has pointed out, no one has a vested right in the indefinite future.
The taking of this future unearned increment, it is hardly necessary
to add, would not constitute a single tax, but rather a heavy land
tax. Many other taxes would continue to be levied. [Footnote: The
general problem of taxation is discussed in Chapter XXXIL]
QUESTIONS ON THE TEXT
1. Define the single tax.
2. What is location value?
3. Define fertility value.
4. Who was Henry George?
5. What benefits, according to George, were to result from an
application of the single tax?
6. Give the chief arguments in favor of the single tax.
7. Give the chief objections to the doctrine.
8. What service has been rendered by the single tax agitation?
9. What is the attitude of most economists toward the future unearned
increment of land?
REQUIRED READINGS
1. Williamson, _Readings in American Democracy_, chapter xi.
Or all of the following:
2. Carver, _Elementary Economics_, chapter xlv.
3. George, _Progress and Poverty_, book ix.
4. _International Encyclopedia_, vol. 21, article on "Single Tax."
QUESTIONS ON THE REQUIRED READINGS
1. Who were the Physiocrats? (Carver, page 372.)
2. What is the "ethical argument" in favor of the single tax?
(_International Encyclopedia_, vol. 21, page 136.)
3. What is the "expediency argument" in favor of the single tax?
(_International Encyclopedia_, vol. 21, page 136.)
4. What is meant by "mining" the soil, and what is the relation of
this practice to the single tax? (Carver, pages 375-376.)
5. What, according to George, would be the effect of the single tax
upon production? (George, book ix, chapter i.)
6. What, according to George, would be the effect of the single tax
upon the distribution of wealth? (George, book ix, chapter ii.)
7. What are the present aims of the single tax movement?
(_International Encyclopedia_, vol. 21, page 137.)
TOPICS FOR INVESTIGATION AND REPORT
I
1. Select for study a plot of farm or garden land in your locality.
(a) What is the market value of the land?
(b) Is it more or less valuable than similar plots in the same
neighborhood? Why?
(c) To what extent is the value of the plot selected for study due to
natural fertility?
(d) To what extent is the value due to location?
(e) To what extent is the value due to permanent improvements, such as
drains, ditches, hedges, fences, or the use of fertilizer to retain or
increase the natural fertility?
(f) If you were the owner of this plot, to what extent, if to any,
would your future use of this land be affected by the adoption of the
single tax program?
2. Select for study a plot of ground in your locality which has been
idle for a number of years.
(a) Why has this ground been idle so long?
(b) Do you believe that this land is being held for speculative
purposes?
(c) If so, suppose that a very heavy tax stimulated the owner to put
the land to some use. Do you know of a productive use to which it
could be put?
II
3. The life of Henry George. (Consult an encyclopedia.)
4. The economic background of Henry George's doctrine. (Young, _The
Single Tax Movement in the United States_, chapter ii.)
5. Is land-ownership a monopoly? (Seligman, _Principles of Economics_,
page 391.)
6. Tactics of the single tax movement. (Young, _The Single Tax
Movement in the United States_, chapter xii.)
7. Relation of the single tax to socialism. (Young, _The Single Tax
Movement in the United States_, pages 307-312.)