for What You Take, Not for What You Make
One of the slogans you might hear in Georgist circles is "Pay for what
you take, not for what you make" — in other words, our share of
the costs of supporting our common spending should come not from our salaries
earn on our capital (savings, buildings, equipment), but first from a payment
for the bit of earth we occupy. If we choose to occupy land almost
no-one wants (in a "low rent district" such as agricultural land
or on the fringe of town, or near some negative amenity) that payment might
be next to nothing. If,
on the other hand, we choose to occupy a downtown acre in a small town, or
a tiny fraction of an acre in the central business district of
a large city, that land
would be much higher. But we'd be paying it to the commons, not to
a private individual or a corporation or a real estate trust or the trust
left by some long-dead landlord: it would be our share of the
support of the commons. And an individual apartment dweller's share
of the rent on an urban sixteenth or fiftieth of an acre (shared with all
in the same column of apartments), while still more than his country cousin
would pay for a similar sized condo in a small city on far less valuable
be a reasonable compensation to the commons for the right to live where subways,
buses, fire and police protection, and all the amenities of city life, are
at one's front door.
Georgists seek a tax structure that would not penalize the fellow who builds
a suitably tall building on the valuable site; his taxes would be no higher
fifty year old building next door, or the one with an empty lot on the other
aligns the incentives with what we'd like to see: dense cities, compact rather
than sprawling. Short commutes, via public transportation. Less
dependence on cars. Well funded schools. Property owners motivated to redevelop
them and put them to their best use. Jobs. A healthy marketplace.
Revenue recycling rather than rentention by absentee landlords and
corporate landholders. Jobs chasing people, instead of people chasing jobs.
Mason Gaffney: The Taxable
Capacity of Land
The property tax,
rather than "shoot anything that
moves," is a charge on inactivity. It taxes both lands and
buildings on their market value, regardless of how they are used.
"Hold on," you might say, "how about the very activity of
constructing those buildings?" Yes, touché, the property tax
does shoot at that, and shoot hard. However, that is why we are here
today, to consider modifying the tax to exempt buildings. The
proposal is to make it a tax mainly, or even purely, on "land ex
buildings," a tax on inactivity, a tax just
for sitting on a piece
carved from the world's fixed, limited land supply. ...
the whole article
Upton Sinclair: The Consequences of Land
Speculation are Tenantry and Debt on the Farms, and Slums and Luxury in the
...I have before me a little book entitled "Enclaves of Economic Rent," by
C. W. Huntington....This book is published by Mr. Fiske Warren, a millionaire
paper manufacturer who lives at Harvard, Massachusetts, and believes in the
Single Tax by way of enclaves....I sought to persuade Mr. Warren that a great
crisis was impending; that the inequality of wealth in our society a thing
continually growing worse, was bound to bring a smash-up long before mankind
had been persuaded to live in enclaves. To this Mr. Warren answered, in substance: "You
may be right; but if this civilization collapses, something else will have
to be put in its place, and it may be useful to men to have a model of
a better community."
...How are these enclaves run? The principle is very simple. The community
owns the land, and fixes the site value year by year, and those
who occupy the land pay the full rental value of the land they occupy. Improvements
of any kind are not taxed; you pay only for the use of what nature and
the community have created. The community takes all this wealth and uses
it, first to pay all the taxes on the land [and buildings -ds] the remaining
money being expended for community purposes, by the democratic vote of
all. ... read the whole article
Louis Post: Outlines of Louis F. Post's
Lectures, with Illustrative Notes and Charts (1894)
3. THE SINGLE TAX FALLS IN PROPORTION TO BENEFITS
To perceive that the single tax would justly measure the value of government
service we have only to realize that the mass of individuals everywhere and now,
in paying for the land they use, actually pay for government service in proportion
to what they receive. He who would enjoy the benefits of a government must use
land within its jurisdiction. He cannot carry land from where government is poor
to where it is good; neither can he carry it from where the benefits of good
government are few or enjoyed with difficulty to where they are many and fully
enjoyed. He must rent or buy land where the benefits of government are available,
or forego them. And unless he buys or rents where they are greatest and most
available he must forego them in degree. Consequently, if he would work or live
where the benefits of government are available, and does not already own land
there, he will be compelled to rent or buy at a valuation which, other things
being equal, will depend upon the value of the government service that the site
he selects enables him to enjoy. 14 Thus does he pay for the service of government
in proportion to its value to him. But he does not pay the public which provides
the service; he is required to pay land-owners.
14. Land values are lower in all countries of poor government
than in any country of better government, other things being equal. They
are lower in cities of poor government, other things being equal, than
in cities of better government. Land values are lower, for example, in
Juarez, on the Mexican side of the Rio Grande, where government is bad,
than in El Paso, the neighboring city on the American side, where government
is better. They are lower in the same city under bad government than
under improved government. When Seth Low, after a reform campaign, was
elected mayor of Brooklyn, N.Y., rents advanced before he took the oath
of office, upon the bare expectation that he would eradicate municipal
abuses. Let the city authorities anywhere pave a street, put water through
it and sewer it, or do any of these things, and lots in the neighborhood
rise in value. Everywhere that the "good roads" agitation of
wheel men has borne fruit in better highways, the value of adjacent land
has increased. Instances of this effect as results of public improvements
might be collected in abundance. Every man must be able to recall some
within his own experience.
And it is perfectly reasonable that it should be so.
Land and not other property must rise in value with desired improvements
in government, because, while any tendency on the part of other kinds
of property to rise in value is checked by greater production, land can
not be reproduced.
Imagine an utterly lawless place, where life and property
are constantly threatened by desperadoes. He must be either a very bold
man or a very avaricious one who will build a store in such a community
and stock it with goods; but suppose such a man should appear. His store
costs him more than the same building would cost in a civilized community;
mechanics are not plentiful in such a place, and materials are hard to
get. The building is finally erected, however, and stocked. And now what
about this merchant's prices for goods? Competition is weak, because
there are few men who will take the chances he has taken, and he charges
all that his customers will pay. A hundred per cent, five hundred per
cent, perhaps one or two thousand per cent profit rewards him for his
pains and risk. His goods are dear, enormously dear — dear enough
to satisfy the most contemptuous enemy of cheapness; and if any one should
wish to buy his store that would be dear too, for the difficulties in
the way of building continue. But land is cheap! This is the
type of community in which may be found that land, so often mentioned
and so seldom seen, which "the owners actually can't give away,
But suppose that government improves. An efficient administration
of justice rids the place of desperadoes, and life and property are safe.
What about prices then? It would no longer require a bold or desperately
avaricious man to engage in selling goods in that community, and competition
would set in. High profits would soon come down. Goods would be cheap — as
cheap as anywhere in the world, the cost of transportation considered.
Builders and building materials could be had without difficulty, and
stores would be cheap, too. But land would be dear! Improvement
in government increases the value of that, and of that alone.
Now, the economic principle pursuant to which land-owners are thus able
to charge their fellow-citizens for the common benefits of their common government
points to the true method of taxation. With the exception of such other monopoly
property as is analogous to land titles, and which in the purview of the
single tax is included with land for purposes of taxation, 15 land is the
only kind of property that is increased in value by government; and the increase
of value is in proportion, other influences aside, to the public service
which its possession secures to the occupant. Therefore, by taxing land in
proportion to its value, and exempting all other property, kindred monopolies
excepted — that is to say, by adopting the single tax — we should
be levying taxes according to benefits.16
15. Railroad franchises, for example, are not usually
thought of as land titles, but that is what they are. By an act of sovereign
authority they confer rights of control for transportation purposes over
narrow strips of land between terminals and along trading points. The
value of this right of way is a land value.
16. Each occupant would pay to his landlord the value
of the public benefits in the way of highways, schools, courts, police
and fire protection, etc., that his site enabled him to enjoy. The landlord
would pay a tax proportioned to the pecuniary benefits conferred upon
him by the public in raising and maintaining the value of his holding.
And if occupant and owner were the same, he would pay directly according
to the value of his land for all the public benefits he enjoyed, both
intangible and pecuniary.
And in no sense would this be class taxation. Indeed, the cry of class
taxation is a rather impudent one for owners of valuable land to raise against
the single tax, when it is considered that under existing systems of taxation
they are exempt. 17 Even the poorest and the most degraded classes in the
community, besides paying land-owners for such public benefits as come their
way, are compelled by indirect taxation to contribute to the support of government.
But landowners as a class go free. They enjoy the protection of the courts,
and of police and fire departments, and they have the use of schools and
the benefit of highways and other public improvements, all in common with
the most favored, and upon the same specific terms; yet, though they go through
the form of paying taxes, and if their holdings are of considerable value
pose as "the tax-payers" on all important occasions, they,
in effect and considered as a class, pay no taxes, because government, by
increasing the value of their land, enables them to recover back in higher
rents and higher prices more than their taxes amount to. Enjoying the same
tangible benefits of government that others do, many of them as individuals
and all of them as a class receive in addition a tangible pecuniary benefit
which government confers upon no other property-owners. The value of their
property is enhanced in proportion to the benefits of government which its
occupants enjoy. To tax them alone, therefore, is not to discriminate against
them; it is to charge them for what they get.18
17. While the landholders of the City of Washington were
paying something less than two per cent annually in taxes, a Congressional
Committee (Report of the Select Committee to Investigate Tax Assessments
in the District of Columbia, composed of Messrs. Johnson, of Ohio, Chairman,
Wadsworth, of New York, and Washington, of Tennessee. Made to the House
of Representatives, May 24, 1892. Report No. 1469), brought out
the fact that the value of their land had been increasing at a minimum
rate of ten per cent per annum. The Washington land-owners as a class
thus appear to have received back in higher land values, actually and
potentially, about ten dollars for every two dollars that as land-owners
they paid in taxes. If any one supposes that this condition is peculiar
to Washington let him make similar estimates for any progressive locality,
and see if the land-owners there are not favored in like manner.
But the point is not dependent upon increase in the capitalized
value of land. If the land yields or will yield to its owner an income
in the nature of actual or potential ground rent, then to the extent
that this actual or possible income is dependent upon government the
landlord is in effect exempt from taxation. No matter what tax he pays
on account of his ownership of land, the public gives it back to him
to that extent.
18. Take for illustration two towns, one of excellent
government and the other of inefficient government, but in all other
respects alike. Suppose you are hunting for a place of residence and
find a suitable site in the town of good government. For simplicity of
illustration let us suppose that the land there is not sold outright
but is let upon ground rent. You meet the owner of the lot you have selected
and ask him his terms. He replies:
"Two hundred and fifty dollars a year."
"Two hundred and fifty dollars a year!" you
exclaim. "Why, I can get just as good a site in that other town
for a hundred dollars a year."
"Certainly you can," he will say. "But
if you build a house there and it catches fire it will burn down; they
have no fire department. If you go out after dark you will be 'held up'
and robbed; they have no police force. If you ride out in the spring,
your carriage will stick in the mud up to the hubs, and if you walk you
may break your legs and will be lucky if you don t break your neck; they
have no street pavements and their sidewalks are dangerously out of repair.
When the moon doesn't shine the streets are in darkness, for they have
no street lights. The water you need for your house you must get from
a well; there is no water supply there. Now in our town it is different.
We have a splendid fire department, and the best police force in the
world. Our streets are macadamized, and lighted with electricity; our
sidewalks are always in first class repair; we have a water system that
equals that of New York; and in every way the public benefits in this
town are unsurpassed. It is the best governed town in all this region.
Isn't it worth a hundred and fifty dollars a year more for a building
site here than over in that poorly governed town?"
You recognize the advantages and agree to the terms.
But when your house is built and the assessor visits you officially,
what would be the conversation if your sense of the fitness of things
were not warped by familiarity with false systems of taxation? Would
it not be something like what follows?
"How much do you regard this house as worth? " asks
"What is that to you?" you inquire.
"I am the town assessor and am about to appraise
your property for taxation."
"Am I to be taxed by this town? What for?"
"What for?" echoes the assessor in surprise. "What
for? Is not your house protected from fire by our magnificent fire department?
Are not you protected from robbery by the best police force in the world?
Do not you have the use of macadamized pavements, and good sidewalks,
and electric street lights, and a first class water supply? Don't you
suppose these things cost something? And don't you think you ought to
pay your share?"
"Yes," you answer, with more or less calmness; "I
do have the benefit of these things, and I do think that I ought to pay
my share toward supporting them. But I have already paid my share for
this year. I have paid it to the owner of this lot. He charges me two
hundred and fifty dollars a year -- one hundred and fifty dollars more
than I should pay or he could get but for those very benefits. He has
collected my share of this year's expense of maintaining town improvements;
you go and collect from him. If you do not, but insist upon collecting
from me, I shall be paying twice for these things, once to him and once
to you; and he won't be paying at all, but will be making money out of
them, although he derives the same benefits from them in all other respects
that I do."
... read the book
Peter Barnes: Capitalism
3.0: Preface (pages ix.-xvi)
For much of this time I was president of Working Assets, a company
that donates 1 percent of its gross sales to nonprofit groups working
a better world. These donations come off its top line, not its bottom
line; the company makes them whether it’s profitable or not (and
many years we were not). It occurred to me that 1 percent is an exceedingly
small portion of sales for any business to return to the larger world,
given that businesses take so much from the larger world without paying.
How, for example, could we make any goods without nature’s many
free gifts? And how could we sell them without society’s vast
infrastructure of laws, roads, money, and so on? At the very least,
I liked to think, we ought to pay a 1 percent royalty for the privilege
of being a limited liability corporation. ... read
the whole chapter
Charles B. Fillebrown: A Catechism
of Natural Taxation, from Principles of
Natural Taxation (1917)
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 building?
A. Because the value of the privilege of occupancy and use is the same in both
... read the whole article