Land Value
Taxation is not a Tax on Land
Henry George: Justice
the Object, Taxation the Means
We used to be confronted constantly by the question: "Well, after you have
divided the land up, how do you propose to keep it
divided?" We don't meet that question now. The Single Tax has, at least, this
great merit: it suggests our method; it shows the way
we would travel — the simple way of abolishing all taxes, save one
tax upon land values. Now, mark: One tax upon land values.
We do not propose a tax upon land, as people who misapprehend us constantly
say. We do not propose a tax upon land; we propose a tax upon land values,
or what in the terminology of political economy is termed rent; that is
to say, the value which attaches to land irrespective of any improvements — in
or on it; that value which attaches to land, not by reason of anything that
the user or improver of land does — not by reason of any individual
exertion of labour, but by reason of the growth and improvement of the
community. A
tax that will take up what John Stuart Mill called the unearned increment;
that is to say, that increment of wealth which comes to the owner of land,
not as a user; that comes whether he be a resident or an absentee; whether
he be engaged in the active business of life; whether he be an idiot and
whether he be a child; that growth of value that we have seen in our own
times so astonishingly
great in this city; that has made sand lots, lying in the same condition
that they were thousands of years ago, worth enormous sums, without anyone
putting
any exertion of labour or any expenditure of capital upon them.
Now, the distinction between a tax on land and a tax on land values may
at first seem an idle one, but it is a most important one. A tax on land
that
is to say, a tax upon all land — would ultimately become a condition
to the use of land; would therefore fall upon labour, would increase prices,
and be borne by the general community. But a tax on land values cannot
fall on all land, because all land is not of value; it can only fall on
valuable
land, and on valuable land in proportion to its value; therefore, it can
no more become a tax on labour than can a tax upon the value of special
privileges
of any kind. It can merely take from the individual, not the earnings of
the individual, but that premium which, as society grows and improves,
attaches
to the use of land of superior quality. ... read the whole
speech
Henry George: Why The Landowner Cannot Shift
The Tax on Land Values (1887)
A VERY common objection to the proposition
to concentrate all taxes on Land Values is that the landowner would add the
increased tax on the value of his land to the rent that must be paid by his
tenants. It is this notion that increased Taxation of Land Values would fall
upon the users, not upon the owners of land, that more perhaps than anything
else prevents men from seeing the far-reaching and beneficent effects of
doing away with the taxes that now fall upon labor or the products of labor,
and taking for public use those values that attach to land by reason of the
growth and progress of society.
That taxes levied upon Land Values, or, to use the politico-economic
term, taxes levied upon rent, do not fall upon the user of land, and cannot
be transferred by the landlord to the tenant is conceded by all economists
of reputation. However much they may dispute as to other things, there is no
dispute upon this point. Whatever flimsy reasons any of them may have deemed
it expedient to give why the tax on rent should not be more resorted to, they
all admit that the taxation of rent merely diminishes the profits of the landowner,
cannot be shifted on the user of land, cannot add to prices, nor check production. ...
To put the matter in a form in which it can be easily understood,
let us take two cases. The one, a country where the available land is all
in use, and the competition of tenants has carried rents to a point at
which the
tenant pays the landlord all he can possibly earn save just enough to barely
live. The other, a country where all the available land is not in use and
the rent that the landlord can get from the tenant is limited by the terms
on which
the tenant can get access to unused land. How, in either case, if the tax
were imposed upon Land Values (or rent), could the landlord compel the
tenant to
pay it?
It may be well to call attention to
the fact that a tax on Land Values is not a tax on land. They are very different
things, and the difference should be noted, because a confusion of thought
as to them may lead to the assumption that a tax on Land Values would fall
on the user. Barring such effect as it might have on speculation,
a tax on land — that is to say, a tax of so much per acre or so much per
foot on all land — would fall on the user. For such a tax, falling equally
on all land — on the poorest and least advantageously situated as fully
as on the richest and best situated land — would become a condition
imposed on the use of any land, from which there could be no escape, and
thus the owners
of rentable land could add it to their rent. Its operation would be analogous
to that of a tax on a producible commodity, and it would in effect reduce
the supply of land sufficient to pay the tax. But a tax on economic rent
or Land
Values would not fall on all land. It would fall only on valuable land,
and on that in proportion to its value. It would not have to be paid upon
the
poorest land in use (which always determines rent), and so would not become
a condition
of use, or restrict the amount of land that could be profitably used. Thus
the landowners on whom it fell could not shift it on the users of land.
This distinction, as to nature and effects, between a tax on land and a
tax on
Land Values, it is necessary to bear in mind.
It is also necessary to bear in mind that the value of land is something
totally distinct from the value of improvements. ... read the whole article
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