Catechism of Natural Taxation
Charles B. Fillebrown
Some years ago when President of the Massachusetts
Single Tax League I started a correspondence and series of conferences
with a large number of students of political economy including more
than 100 professors in the leading colleges and universities of the
country. The purpose was to ascertain whether it might be possible to
secure agreement of recognized authorities concerning the fundamental
economic principles on which the science of taxation must rest. The
project met with such cordial approval at the hands of the economists,
and proved so interesting and profitable that it finally resulted in a
round-table conference at the Annual Meeting of the American Economic
Association held at Madison, Wisconsin, in December 1907.1 The final
canvass of opinions showed an overwhelmingly majority agreed upon
three propositions stated in the following Catechism, No. 39.2
1. See Proceedings of the Twentieth Annual
Meeting of the American Economic Association,
1907, pp. 117-29; also The A B C of
"Largely out of the correspondence elicited by The
ABC of Taxation this Single-Tax Catechism has grown." As described by
an economist not in sympathy with the single tax:
2. Quoted from an introduction to the edition of the Catechism which
was published in the National
Magazine for November, 1912.
It simplifies the method of treatment,
supplies needed definitions and explanations, and meets the objections
naturally raised by honest seekers after the truth. In fundamental
doctrine no change has been required either in general principles or
their practical application. Thirteen editions of the Catechism have
been privately printed and circulated. They have given opportunity to
make such changes as has seemed desirable after considering the
hundreds of criticisms and suggestions received from critics, friendly
as well as otherwise disposed. From correspondents and other friends,
indeed, so great assistance has been derived that the Catechism has
really become a joint product of scores of collaborators.
1. Edition of 1916-17, fifteenth
Q1. What is a tax?
A. A tax is a compulsory contribution of
individual product or the value of such product toward the needs of
Q2. What is meant by the single tax?
A. The payment of all public expenses from economic
rent, the normal revenue, thus eventually abolishing all taxes.
Q3. What is meant by economic rent?
A. Gross ground rent — the annual site value of
land — what land, including any quality or content of the land itself,
is worth annually for use — what the land does or would command for
use per annum if offered in open market — the annual value of the
exclusive use in control of a given area of land, involving the
enjoyment of those "rights and privileges thereto pertaining" which are
stipulated in every title deed, and which, enumerated specifically, are
as follows: right and ease of access to
utilities which depend for their efficiency and economy on the
character of the government; which collectively constitute the economic
and social advantages of the land which are due to the presence and
activity of population, and are inseparable therefrom, including the
benefit of proximity to, and command of, facilities for commerce and
communication with the world — an artificial value created primarily
through public expenditure of taxes. For the sake of brevity, the
substance of this definition may be conveniently expressed as the value
of "proximity." It is ordinarily measured by interest on investment
- water, and
- health inspection,
- fire protection,
- steam and electric railway service,
- gas and electric lighting,
- telegraph and telephone service,
- public schools,
- private schools,
- public buildings —
Q4. What is the ethical basis of the single tax?
A. The common right of all citizens to profit by
site values of land which are a creation of the community.
Q5. What is meant by equal right to land?
A. The right of access upon equal terms—preference to be secured only upon payment of a premium that will
extinguish the equal rights of all other men.
Q6. What is meant by a joint or common right to land?
A. A joint or common right to the rent of land — a
right such as heirs-at-law have to share the income of or rent of an
Q7. What is meant by land value?
A. Its site value — its selling or market value — its net value to
the purchaser — the capitalization of its net rent — the value supposed
be adopted by the assessors as the basis of
Q8. How about fertility value?
A. On the surface of the globe are countless
varieties of exhaustible fertility, i.e. chemical constituency,
differing in kind and degree, from the nitrogen, hydrogen, oxygen, and
carbon of the soil to the carbon of the coal, the gold, and the
diamond. Fertility as an attribute need not be predicated of
agricultural land alone. Economic fertility belongs equally to any
other land which yields to labor its product whether in food, mineral,
or metal. Land may be fertile in wheat, corn, and potatoes. It may be
fertile in cotton, in tobacco, or in rice. It may be fertile in
diamonds, in gold, silver, copper, lead, or iron. It may be fertile in
oil, coal, or natural gas, in a water power or water front. The value
of artificial fertility is an improvement value. The value of natural
fertility of any kind is a site value.
Q9. Does not the single tax mean the nationalization
A. No; as Henry George has said, "the primary error
of the advocates of land nationalization is in their confusion of equal
rights with joint rights. ... In truth, the right to the use of land is
not a joint or common right, but an equal right; a joint or common
right is to rent."* It means rather the socialization of economic rent.
It simply proposes gradually to divert an increasing share of ground
rent into the public treasury.
*A Perplexed Philosopher, Part III,
Chapter XI: Compensation
Q10. What is the distinction between the taxation of
land and the taxation of rent?
A. Taxing land means, in the ordinary use of the
words, to tax the land upon its capital value, or selling value, at a
given rate per $100 or $1,000 of that value. Taxing rent means taxing
the annual value, or ground rent, at a given percentage of that rent.
It is in one case a tax on rent; in the other is a tax on capitalized
Q11. Does not the common right to rent involve
common ownership of land?
A. Not in the least. When the economic rent is
appropriated by the community for common purposes, individual ownership
of land could and should continue. Such ownership would carry all the
present rights of the landowner to use, control, and dispose of land,
so that nothing like common ownership of land would be necessary.
Q12. Did not Henry George believe in the abolition
of private property in land?
A. Assuredly not. If he did, why was it that he
suggested no modification whatever of present land tenure or "estate in
land"? If he did, how could he have said that the sole "sovereign" and
sufficient remedy for the wrongs of private property in land was "to
appropriate rent by taxation"?
Q13. What is meant by the right of property?
A. As to the grain a man raises, or the house that
he builds, it means ownership full and complete. As to land, it means
legal title, tenure, "estate in land," perpetual right of exclusive
possession, a right not absolute, but superior to that of any other man.
Q14. What is meant by the right of possession?
A. As to land, if permanent and exclusive, as on
perpetual lease, it means the right to "buy and sell, bequeath and
devise," to "give, grant, bargain, sell, and convey" together with the
rights and privileges thereto pertaining, in short, the same definition
for possession that the law
applies to property.
Q15. What should be the limit of revenue under
the single tax?
A. The same as under any other system of taxation,
the cost of government economically administered.
Q16. Did not Henry George hold that the full
ground rent of land should be taken in taxation?
A. No! Not only did he concede a margin of rent to
the landlord, but as a matter of fact, as Thomas G. Shearman said, "not
all the power of all governments" could collect in taxation all of
Q17. You would not say that land is a product
A. No; but the annual site value of land is a
product of the growth and industry of the community.
Q18. You would not say that the supply of land can
A. No; but fresh demand is constantly requiring not
only an increase in the public equipment of land already in use, but
also the constant extension of such equipment to new area.
Q19. Why should buildings and all other improvements
and personal property and capital be exempt from taxes?
A. Because a tax on them falls upon industry, and so
increases the cost of living, while continuing the invidious exemption
of the present net land value.
Q20. Why should stocks and bonds be exempt?
A. Stocks, because they are only paper certificates
of property which itself has been taxed once already. Bonds, if
legitimate, because a tax on borrowed money is paid after all by the
borrower and so becomes an added factor in cost of production, and
consequently in the cost of living.
Q21. What is meant by an "old tax" or a "new
A. By the term "old tax" is intended the taxing
force at last change of ownership; by a "new tax," one the imposed
Q22. What is privilege?
A. Strictly defined, privilege is, according to the Century Dictionary, "a special and
exclusive power conferred by law on particular persons or classes of
persons and ordinarily in derogation of the common right."
Q23. What is today the popular conception of
A. That it is the law-given power of one man to
profit at another man's expense.
Q24. What are the principal forms of privilege?
A. The appropriation by individuals, or by public
service corporations, of the net rent of land created by the growth and
activity of the community without payment for the same. Also, the less
important privileges connected with patents, tariff, and the currency.
Q25. Where in does privilege differ from capital?
A. Capital is a material thing, a product of labor,
stored-up wages; an instrument of production paid for in human labor,
and destined to wear out. Capital is the natural ally of labor, and is
harmless except as allied to privilege. Privilege is none of these, but
is an intangible statutory power, an unpaid-for and perpetual lien upon
the future labor of this and succeeding generations. Capital is paid
for and ephemeral. Privilege is unpaid for and eternal. A man
accumulated in his profession $5,000 capital, which he invested in land
in Canada. Ten years later he sold the same land for $200,000. Here is
an instance of $5,000 capital allied with $195,000 privilege. This
illustrates that privilege and not capital is the real enemy of labor.
Q26. How may franchises be treated?
A. Franchise privileges may be abated, or gradually
abolished by lower rates, or by taxation, or by both, in the interest
of the community.
Q27. Why should privilege be especially taxed?
A. Because such payment is fairly due from grantee
to the grantor of privilege and also because a tax upon privilege can
never be a burden upon industry or commerce, nor can it ever operate to
reduce the wages of labor or increase prices to the consumer.
Q28. How are landlords privileged?
A. Because, in so far as their land tax is an "old" tax, it is a burdenless
tax, and because their buildings' tax is shifted upon their tenants; most landlords
who let land and also the
tenement houses and business blocks thereon avoid all share in the tax
Q29. How does privilege affect the distribution of
A. Wealth as produced is now distributed
substantially in but two channels, privilege and wages. The abolition
of privilege would leave but the one proper channel, viz., wages of
capital, hand, and brain.
Q30. How would the single tax increase wages?
A. By gradually transferring to wages that portion
of the current wealth that now flows to privilege. In other words, it
would widen and deepen the channel of wages by enlarging opportunities
for labor, and by increasing the purchasing power of nominal wages
through reduction of prices. On the other hand it would narrow the
channel of privilege by making the man who has a privilege pay for it.
Q31. How can this transfer be effected?
A. By the taxation of privilege.
Q32. How much ultimately may wages be thus increased?
A. Fifty percent would be a low estimate.
Q33. What are fair prices and fair wages?
A. Prices unenhanced by privilege, and wages
undiminished by taxation.
Q34. Why does not an increase in ground rent tend to
cause an increase in prices?
A. Usually sales increase faster proportionately
than rent, thus reducing the ratio of rent to sales. The larger the
product, the lower the individual costs. The larger the gross sales,
the lower the competitive prices.
Q35. Why should land be singled out to bear the bulk
of the burden of taxation?
A. Because in the private appropriation of the net
rent of land is found the bulk of privilege.
Q36. How much does this particular form of privilege
A. It amounted for 1914 to approximately $40 million
for Boston and more than $200 million for Greater New York.
Q37. Does the single tax imply or involve the
municipalization of public utilities?
A. No. A public franchise value is a land value
which the single tax would assess at the same rate as other land
values. The municipalization of the public utilities themselves is a
different question, and is no necessary part of the single tax.
Q38. What are the three legs of the tripos, the
threefold support upon which the single tax rests?
A. They are:
(1) The social origin of ground rent — that the
site value of land is a creation of the community, a public or social
(2) The non-shiftability of a land tax — that no
tax, new or old, on the site value of land can be recovered from the
tenant or user by raising his rent.
(3) The ultimate burdenlessness of a land tax—that the selling value
of land, reduced as it is by the capitalized tax that is imposed upon it,
is an untaxed value. Whatever lowers the
income from land lowers proportionately its selling price, so that
whether the established tax upon it has been light or heavy, it is no
burden upon the new purchaser, who buys it at its net value and thus
escapes all part in the tax burden which he should in justice share
with those who now bear it all.
Q39. Is not land peculiar in that it is a gift of
the Creator, and is not a product of labor?
A. Yes, that is true of land itself, but not of the
value of land.
Q40. What is meant by a capitalized tax?
A. It is a sum, the interest of which would pay the
Q41. Why would the single tax be an
improvement upon present systems of taxation?
A. Because: (1) The taking for public uses of that
value which justly belongs to the public is not a tax; (2) it would
relieve all workers and capitalists of those taxes by which they are
now unjustly burdened, and (3) it would make unprofitable the holding
of land idle.
Q42. Should not all people pay taxes for the
protection of their property?
A. Yes, and that is what they are doing when they
pay their ground rent. To tax them again, as is now done, is double
Q43. Do all people, then, pay ground rent?
A. Yes, in proportion as they are users of land
having any value.
Q44. Why, on similar lots of land, should one
man with a $10,000 building be taxed as much as another with a $100,000
A. Because the value of the privilege of occupancy
and use is the same in both cases.
Q45. Why tax $1,000 invested in a vacant lot while
exempting $1,000 invested in New York Central stock?
A. Because: (1) the land is made worth $1,000 and so
maintained at public expense without any contribution from the owner;
(2) the $1,000 New York Central stock adds nothing to the public
expense, but a tax upon it, if collected at the source, falls directly
on the road and thence upon the public, and so adds to the cost of
Q46. Would it not be confiscation so to
increase the tax on land?
A. What would be confiscated? No land would be
taken, no right of occupancy, or use, or improvement, or sale, or
devise; nothing would be taken that is conveyed or guaranteed by the
Q47. What is the distinction between taxation
A. The sovereign state may appropriate private
property of its citizens in two ways: (1) by confiscation; (2) by
taxation. When one particular man by treason or otherwise has forfeited
his rights as a citizen, the land and houses and personalty of this one
man may all be "forfeit to the crown," while the validity and sanctity
of 9,999 other men's rights are in no way infringed. This is
confiscation. On the other hand, when the state, in order to obtain the
revenue to meet the expenses of government, levies tribute upon its
10,000 citizens impartially, this is taxation.
Q48. But would it not be an injustice to the
A. If it be an injustice to tax hard-earned incomes
(wages) to maintain an unearned income (net economic rent) that bears
no tax burden, how can it be an injustice to stop doing so? There can
be no injustice in taking for the benefit of the community the value
that is created by the community.
Q49. What is the lesson of the inevitable
"capitalization" of the land tax?
A. It is that an unfair discrimination in favor of
the landowner can never be overcome until all taxes are paid out of
ground rent; then all men will enjoy total exemption equally with the
Q50. How could the landowner escape the
alleged burden of an increase in his land tax?
A. Simply by assuming the legitimate role of a model
landlord, by putting his land to suitable use, in providing for tenants
at lowest possible price the best accommodations and facilities
appropriate to the situation that money can buy.
Q51. Does not a land tax increase house rent
or store rent?
A. The landlord, as a rule, exacts the full ground
rent for the use of his land. Neither by taking three dollars nor $30
per thousand in taxation can land to be made worth any more for use.
Q52. In old cities, it is not nearly all the
land in use?
A. About one half the area of New York and Chicago
is classed by the assessors as vacant. In Boston the proportion is:
occupied, 45 percent; vacant, 43 percent; marsh, 12 percent.
Q53. How would the single tax effect the
A. It would greatly reduce his taxes. His buildings,
stock, and crops would be exempt. His land is at present assessed at
nearly twice its proper unimproved value, while town and city land is
often valued at less than one half its actual value, thus subjecting
him to a more than fourfold disadvantage.
Q54. What relief could it bring to strictly
agricultural towns, where the unimproved land values are very small?
A. However poor the town or heavy the taxes, it
would at least tend the equalize their present tax burden. The assessed
value of land in the three smallest towns of Massachusetts, Alford,
Holland, and Peru, is $282,335, or more than three times that of the
buildings. Allowing one half of the assessed valuation of land to be
improvement value, the unimproved basis for taxation would be $141,168,
or 60 percent more than the buildings. Thus an apportionment according
to unimproved land values, increasing ever so slowly, would seem to be
fairer than one according to improvements, which require constant
Q55. How would the single tax effect the
A. It would neither increase nor decrease his land
rent. It would reduce his house rent by the amount of the house tax.
Q56. How would it affect the man who owns the
house he lives in?
A. In nearly every case it would reduce his taxes.
Roughly speaking, his taxes will be less or greater in proportion as
his house is worth more or less than his land.
Q57. Would the single tax yield sufficient
revenue for all government purposes, local, state, and national?
A. Careful estimates by Mr. Thomas G. Shearman
indicate that all present taxes amount to not much more than one half
of the annual site value of the land. But he said:
The honest needs of public
government grow faster than population and fully as fast as wealth
itself. Local taxation will increase rapidly; and it ought to do
so..... This does not imply that ground rent will not be sufficient to
supply many, possibly all, of those additions to human happiness which
Henry George has pictured in such glowing words. But such extensions of
the sphere of government must take place gradually; or they will be
ruinous failures, simply because the state cannot at once furnish the
necessary machinery for their successful operation.
Q58. What expected result of the single tax
needs studious emphasis?
A. That it would unlock the land to labor at its
present value for use, instead of locking out labor from the land by a
prohibitive price based upon the future value for use.
Q59. Is it correct to say that "land" is one
thing, and the "rent of land" another and quite different thing, and
that to take in taxation the rent of land it is not necessary to take
the land itself?
A. Ninety-one professors of political economy have
answered "Yes." Twenty-three have answered "No."
Q60. Do you believe that economic rent ought
to furnish a larger proportion of public revenue than it does now?
A. One hundred nineteen professors of political
economy have answered "Yes." Eight have answered "No."
Q61. Do you think there would be any injustice in
taking by taxation the future increment in the value of land?
A. Fifteen professors of political economy have
answered "Yes." Ninety-four have answered "No."
Q62. Would it be wise to take gradually in
taxation, say, 1/4, one half, or 3/4 of the future increase in economic
A. One hundred and one professors of political
economy have answered "Yes." Twenty-nine have answered "No."
Q63. How could the single tax be put into
A. By gradually transferring to land all taxes not
already on it.
Q64. How might such a plan be worked out?
A. If fifty cents per thousand should be deducted
yearly for 30 years from the rate on all property other than land, the
reduction would finally amount to $15 per thousand, and it would then
be practically exempt from all taxation.
Q65. But how could it be worked out in case of
A. Recognizing that a right thing may be done in a
wrong way, it is insisted that a right way ought to be found to do a
thing that ought to be done. The following is presented as a natural
and convenient unit of calculation:
To be exact, an average of about 20
percent of the gross ground rent of land is now taken in taxation, for
instance, in Boston, as well as for the whole state of Massachusetts.
If an additional one percent should be taken each year for 30 years, it
would amount at the end of that period to 30 percent, which, added to
20 percent, would make 50 percent, or one half, which is about the
average proportion that present taxes levied on all property bear to
gross ground rent. Meantime few landowners would feel the change, much
less be prejudiced by it.
The following variable illustrations, A, B, and C, make clear.
A "Modus Operandi"
A Increase of Present Tax
For instance, applied to the assessment of a specific lot of land for
which the user pays a gross ground rent of say ...... $68.00
Of which amount there is taken in taxation, 1915 ..... $18.00
Leaving a net income to the owner of .... $50.00
The selling value (presumably also the assessed valuation) would be at
5 per cent ... $1,000.00
Proceeding to take yearly from now on 1 per cent additional of the
gross ground rent of $68 for a period of thirty years would amount in
all to 30 per cent of $68, equal to .... $20.40
Which, added to the tax already taken .... $18.00
Would give at the end of thirty years, from the $1,000 worth of land
alone, everything else being exempted, a total tax of .... $38.40.
Which is not much more than one half of the gross ground rent of ...
The opening exhibit in detail would stand as follows:
In 1915 the tax on this $1,000 worth of land was $18.00
In 1916 the tax would be $18 plus 68 cents (1 per cent of the gross
ground rent, $68); equal to .... $18.68
Reducing the owner's net rent from $50 to $49.32
In 1917 the tax would be $18 plus $1.36 (2 per cent of the $68),
totaling .... $19.36
Reducing the owner's net rent from $50 to $48.64,
In 1918 the tax would be $18 plus $2.04 (3 per cent of the $68) or
Reducing the owner's net rent from $50 to $47.96
In 1945 the tax on the land would be $18 plus $20.40 (30 per cent of
the $68) or ... $38.40
With all improvements exempted.
Reducing the owner's net rent from $50 to $29.60.
The taking in taxation of any desired proportion of the future
increment could be accomplished simply by continuing the present
valuation and present rate as constant factors, and making a separate
individual assessment of the increment tax after the following or
similar formula, according to the proportion to be taken. For
instance, to take in taxation 50 per cent of the future increase:
For a Future Increment Tax
for Each Year
||Tax for year
||Tax for year
||Tax for year
||Tax for year
||Tax for year
In applying this formula it would be necessary after the first few
years at least to increase the rate to correspond to the decrease in
assessed valuation due to this new tax. For computations upon
this and related points, see the Report
of the New York City Commission on New Sources of City Revenue
(1913), p. 7 and Appendices X to XV.
It should be reiterated that inasmuchas gross ground rent, actual or
potential, is the initial factor in getting at the value of land, it
cannot be unprofitable to become familiar with a more correct formula
as expressed in terms of rent.
The Assessment of Rent
Starting with the present unit of annual value for use to take in
taxation in 25 years 50 per cent of the future increase in ground rent:
for Each Year
||Tax for year
||Tax for year
||Tax for year
||Tax for year
|Tax for year
||Tax for year
Q66. What has the single tax to say about the taxation of forest
A. Perhaps the majority opinion would be to tax annually all forests
old or new on what would be the value of the land if denuded of all
growth -- a stumpage tax to be collected upon old growth timber when
cut, but not upon new growth such as may be reasonably classed as a