Many things we depend on ultimately come from the earth. Land Value Taxation
can lower the prices of those items, both by its own action, and by replacing
sales taxes and other taxes which raise prices.
Rev. A. C. Auchmuty: Gems from George, a
themed collection of
excerpts from the writings of Henry George (with links to sources)
THE mode of taxation is quite as important as the amount. As a small burden
badly placed may distress a horse that could carry with ease a much larger
one properly adjusted, so a people may be impoverished and their power of
producing wealth destroyed by taxation, which, if levied in another way,
could be borne with ease. — Progress & Poverty — Book
VIII, Chapter 3, Application of the Remedy: The Proposition Tried by the
Canons of Taxation
IF we impose a tax upon buildings, the users of buildings must finally pay
it, for the erection of buildings will cease until building rents become
high enough to pay the regular profit and the tax besides. If we impose a
tax upon manufactures or imported goods, the manufacturer or importer will
charge it in a higher price to the jobber, the jobber to the retailer, and
the retailer to the consumer. Now, the consumer, on whom the tax thus ultimately
falls, must not only pay the amount of the tax, but also a profit on this
amount to everyone who has thus advanced it — for profit on the capital
he has advanced in paying taxes is as much required by each dealer as profit
on the capital he has advanced in paying for goods. — Progress & Poverty — Book
VIII, Chapter 3, Application of the Remedy: The Proposition Tried by the
Canons of Taxation
THE way taxes raise prices is by increasing the cost of production, and checking
supply. But land is not a thing of human production, and taxes upon rent cannot
check supply. Therefore though a tax on rent compels the landowners to pay
more, it gives them no power to obtain more for the use of their land, as it
in no way tends to reduce the supply of land. On the contrary, by compelling
those who hold land on speculation to sell or let for what they can get, a
tax on land values tends to increase the competition between owners, and thus
to reduce the price of land. — Progress & Poverty — Book
VIII, Chapter 3, Application of the Remedy: The Proposition Tried by the Canons
... go to "Gems from George"
Louis Post: Outlines of Louis F. Post's
Lectures, with Illustrative Notes and Charts (1894) — Appendix:
Q11. How can mines be taxed without increasing the price of the out-put?
A. By taxing the royalty, or, what is essentially the same, by taxing their
capitalized value as mining opportunities. This would tend to lower rather
than increase the price of the product. Read note 11.
Note 11: This is usually a stumbling block to those who,
without much experience in economic thought, consider the single tax
for the first time. As soon as they grasp the idea that taxes upon commodities
shift to consumers they jump to the conclusion that similarly taxes upon
land values would shift to the users. But this is a mistake, and the
explanation is simple. Taxes upon what men produce make production more
difficult and so tend toward scarcity in the supply, which stimulates
prices; but taxes upon land, provided the taxes be levied in proportion
to value, tend toward plenty in supply (meaning market supply of course),
because they make it more difficult to hold valuable land idle, and so
"A tax on rent falls wholly on the landlord. There
are no means by which he can shift the burden upon anyone else. . . A
tax on rent, therefore, has no effect other than its obvious one. It
merely takes so much from the landlord and transfers it to the state." — John
Stuart Mill's Prin. of Pol. Ec., book v, ch. iii, sec. 1.
"A tax laid upon rent is borne solely by the owner
of land." — Bascom's Tr., p.159.
"Taxes which are levied on land . . . really fall
on the owner of the land." — Mrs. Fawcett's Pol. Ec. for
Beginners, pp.209, 210.
"A land tax levied in proportion to the rent of land,
and varying with every variation of rents, . . . will fall wholly on
the landlords." — Walker's Pol. Ec., ed. of 1887, p. 413,
"The power of transferring a tax from the person
who actually pays it to some other person varies with the object taxed.
A tax on rents cannot be transferred. A tax on commodities is always
transferred to the consumer." — Thorold Rogers's Pol.
Ec., ch. xxi, 2d ed., p. 285.
"Though the landlord is in all cases the real contributor,
the tax is commonly advanced by the tenant, to whom the landlord is obliged
to allow it in payment of the rent." — Adam Smith's Wealth
of Nations, book v, ch. ii, part ii, art. i.
"The way taxes raise prices is by increasing the
cost of production and checking supply. But land is not a thing of human
production, and taxes upon rent cannot check supply. Therefore, though
a tax upon rent compels land-owners to pay more, it gives them no power
to obtain more for the use of their land, as it in no way tends to reduce
the supply of land. On the contrary, by compelling those who hold land
on speculation to sell or let for what they can get, a tax on land values
tends to increase the competition between owners, and thus to reduce
the price of land." — Progress and Poverty, book viii,
ch. iii, subd. i.
Sometimes this point is raised as a question of shifting
the tax in higher rent to the tenant, and at others as a question of
shifting it to the consumers of goods in higher prices. The principle
is the same. Merchants cannot charge higher prices for goods than their
competitors do, merely because they pay higher ground rents. A country
storekeeper whose business lot is worth but few dollars charges as much
for sugar, probably more, than a city grocer whose lot is worth thousands.
Quality for quality and quantity for quantity, goods sell for about the
same price everywhere. Differences in price are altogether in favor of
places where land has a high value. This is due to the fact that the
cost of getting goods to places of low land value, distant villages for
example, is greater than to centers, which are places of high land value.
Sometimes it is true that prices for some things are higher where land
values are high. Tiffany's goods, for instance, may be more expensive
than goods of the same quality at a store on a less expensive site. But
that is not due to the higher land value; it is because the dealer has
a reputation for technical knowledge and honesty (or has become a fad
among rich people), for which his customers are willing to pay whether
his store is on a high priced-lot or a low-priced one.
Though land value has no effect upon the price of good,
it is easier to sell goods in some locations than in others. Therefore,
though the price and the profit of each sale be the same, or even less,
in good locations than in poorer ones, aggregate receipts and aggregate
profits are much greater at the good location. And it is out of his aggregate,
and not out of each profit, that rent is paid, For example: A cigar store
on a thoroughfare supplies a certain quality of cigar for fifteen cents.
On a side street the same quality of cigar can be bought no cheaper.
Indeed, the cigars there are likely to be poorer, and therefore really
dearer. Yet ground rent on the thoroughfare is very high compared with
ground rent on the sidestreet. How, then, can the first dealer, he who
pays the high ground rent, afford to sell as good or better cigars for
fifteen cents than his competitor of the low priced location? Simply
because he is able to make so many more sales with a given outlay of
labor and capital in a given time that his aggregate profit is greater.
This is due to the advantage of his location, and for that advantage
he pays a premium in higher ground rent. But that premium is not charged
to smokers; the competing dealer of the side street protects them. It
represents the greater ease, the lower cost, of doing a given volume
of business upon the site for which it is paid; add if the state should
take any of it, even the whole of it, in taxation, the loss would be
finally borne by the owner of the advantage which attaches to that site — by
the landlord. Any attempt to shift it to tenant or buyer would be promptly
checked by the competition of neighboring but cheaper land.
"A land-tax, levied in proportion to the rent of
land, and varying with every variation of rent, is in effect a tax on
rent; and as such a tax will not apply to that land which yields no rent,
nor to the produce of that capital which is employed on the land with
a view to profit merely, and which never pays rent; it will not in any
way affect the price of raw produce, but will fall wholly on the landlords." — McCulloch's
Ricardo (3d ed.), p. 207 ...
Q31. Will not the capitalist be able under the single tax to undersell
the laborer — to sell goods for less than cost, at least temporarily — and
thereby force him to accept the capitalist's terms?
A. With capitalists continually hunting for men to help them fill their orders,
and bidding against each other to get men, as would be the case under the single
tax, such a contingency would be in the highest degree improbable. It is practically
impossible. Nothing short of a trust, an absolutely perfect trust, of all the
owners of capital the world over could produce it. And even then, plenty of very
useful land of all kinds being free and labor products being exempt from taxation,
all people who were outside of the trust would resort co-operatively to the land,
and the trust would be obliged to take them in as the alternative of falling
to pieces under their competition. ... read
Charles B. Fillebrown: A Catechism
of Natural Taxation, from Principles of
Natural Taxation (1917)
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.
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 privilege?
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 burden.
Q29. How does privilege affect the distribution of wealth?
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
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
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.
... read the whole article
Jeff Smith: What the
Left Must Do: Share the Surplus
Increasing taxes, fees, or dues upon land, resources, and privileges
won’t force firms to raise prices; the ones who try to will lose
customers to those who don’t; in the end, all will have to settle for
smaller profits. On the other hand, de-taxing
labor and capital, by lowering overhead, lets firms lower the price of
their products, while competition drives them to. The resultant lower
cost of living – coupled with higher wages and the social salary – lets
those with enough stuff work less, so those without enough stuff can
work more. Read the whole article
Winston Churchill: Land Prices as a Cause of Poverty
The immemorial custom of nearly every modern State, the mature conclusions
of many of the greatest thinkers, have placed the tenure, transfer, and
obligations of land in a wholly different category from other classes of
mere obvious physical distinction between land, which is a vital necessity
of every human being and which at the same time is strictly limited in
extent, and other property is in itself sufficient to justify a clear differentiation
in its treatment, and in the view taken by the State of the conditions
should govern the tenure of land from that which should regulate traffic
in other forms of property. ... read
the whole speech