There is a group in Washington that
calls itself Citizens for Tax Justice. Their research is often
good and relevant, but their solutions fail to meet the criteria for
real justice. Here are some Georgist writings which they might
find illuminating, and which you might find useful in evaluating what
CTJ, and others, propose in the way of tax reform.
Henry George: The Condition of
Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)
Nor do we hesitate to say that this way of securing the equal right to the
bounty of the Creator and the exclusive right to the products of labor is
the way intended by God for raising public revenues. For we are not atheists,
who deny God; nor semi-atheists, who deny that he has any concern in politics
It is true as you say — a salutary truth too often forgotten — that “man
is older than the state, and he holds the right of providing for the life
of his body prior to the formation of any state.” Yet, as you too perceive,
it is also true that the state is in the divinely appointed order. For He
who foresaw all things and provided for all things, foresaw and provided
that with the increase of population and the development of industry the
organization of human society into states or governments would become both
expedient and necessary.
No sooner does the state arise than, as we all know, it needs revenues.
This need for revenues is small at first, while population is sparse, industry
rude and the functions of the state few and simple. But with growth of population
and advance of civilization the functions of the state increase and larger
and larger revenues are needed.
Now, He that made the world and placed man in it, He that pre-ordained civilization
as the means whereby man might rise to higher powers and become more and
more conscious of the works of his Creator, must have foreseen this increasing
need for state revenues and have made provision for it. That is to say: The
increasing need for public revenues with social advance, being a natural,
God-ordained need, there must be a right way of raising them — some
way that we can truly say is the way intended by God. It is clear that this
right way of raising public revenues must accord with the moral law.
It must not take from individuals what rightfully belongs to individuals.
It must not give some an advantage over others, as by increasing the prices
of what some have to sell and others must buy.
It must not lead men into temptation, by requiring trivial oaths, by making
it profitable to lie, to swear falsely, to bribe or to take bribes.
It must not confuse the distinctions of right and wrong, and weaken the
sanctions of religion and the state by creating crimes that are not sins,
and punishing men for doing what in itself they have an undoubted right to
It must not repress industry. It must not check commerce. It must not punish
thrift. It must offer no impediment to the largest production and the fairest
division of wealth.
Let me ask your Holiness to consider the taxes on the processes
and products of industry by which through the civilized world public revenues
are collected — the
octroi duties that surround Italian cities with barriers; the monstrous customs
duties that hamper intercourse between so-called Christian states; the taxes
on occupations, on earnings, on investments, on the building of houses, on
the cultivation of fields, on industry and thrift in all forms. Can these
be the ways God has intended that governments should raise the means they
need? Have any of them the characteristics indispensable in any plan we can
deem a right one?
All these taxes violate the moral law. They take by force what belongs to
the individual alone; they give to the unscrupulous an advantage over the
scrupulous; they have the effect, nay are largely intended, to increase the
price of what some have to sell and others must buy; they corrupt government;
they make oaths a mockery; they shackle commerce; they fine industry and
thrift; they lessen the wealth that men might enjoy, and enrich some by impoverishing
Yet what most strikingly shows how opposed to Christianity is this system
of raising public revenues is its influence on thought.
Christianity teaches us that all men are brethren; that their true interests
are harmonious, not antagonistic. It gives us, as the golden rule of life,
that we should do to others as we would have others do to us. But out of
the system of taxing the products and processes of labor, and out of its
effects in increasing the price of what some have to sell and others must
buy, has grown the theory of “protection,” which denies this
gospel, which holds Christ ignorant of political economy and proclaims laws
of national well-being utterly at variance with his teaching. This theory
sanctifies national hatreds; it inculcates a universal war of hostile tariffs;
it teaches peoples that their prosperity lies in imposing on the productions
of other peoples restrictions they do not wish imposed on their own; and
instead of the Christian doctrine of man’s brotherhood it makes injury
of foreigners a civic virtue.
“By their fruits ye shall know them.” Can anything more clearly
show that to tax the products and processes of industry is not the way God
intended public revenues to be raised?
But to consider what we propose — the raising of public revenues by
a single tax on the value of land irrespective of improvements — is
to see that in all respects this does conform to the moral law.
Let me ask your Holiness to keep in mind that the value we propose to tax,
the value of land irrespective of improvements, does not come from any exertion
of labor or investment of capital on or in it — the values produced
in this way being values of improvement which we would exempt. The value
of land irrespective of improvement is the value that attaches to land by
reason of increasing population and social progress. This is a value that
always goes to the owner as owner, and never does and never can go to the
user; for if the user be a different person from the owner he must always
pay the owner for it in rent or in purchase-money; while if the user be also
the owner, it is as owner, not as user, that he receives it, and by selling
or renting the land he can, as owner, continue to receive it after he ceases
to be a user.
Thus, taxes on land irrespective of improvement cannot lessen the rewards
of industry, nor add to prices,* nor in any way take from the individual
what belongs to the individual. They can take only the value that attaches
to land by the growth of the community, and which therefore belongs to the
community as a whole.
* As to this point it may be well to add that all economists
are agreed that taxes on land values irrespective of improvement or use — or what
in the terminology of political economy is styled rent, a term distinguished
from the ordinary use of the word rent by being applied solely to payments
for the use of land itself — must be paid by the owner and cannot be
shifted by him on the user. To explain in another way the reason given in
the text: Price is not determined by the will of the seller or the will of
the buyer, but by the equation of demand and supply, and therefore as to
things constantly demanded and constantly produced rests at a point determined
by the cost of production — whatever tends to increase the cost
of bringing fresh quantities of such articles to the consumer increasing
by checking supply, and whatever tends to reduce such cost decreasing
price by increasing supply. Thus taxes on wheat or tobacco or cloth add
price that the consumer must pay, and thus the cheapening in the cost
of producing steel which improved processes have made in recent years
reduced the price of steel. But land has no cost of production, since
it is created by God, not produced by man. Its price therefore is fixed —
1 (monopoly rent), where land is held in close monopoly, by what the owners
can extract from the users under penalty of deprivation and consequently
of starvation, and amounts to all that common labor can earn on it beyond
what is necessary to life;
2 (economic rent proper), where there is no special monopoly, by what the
particular land will yield to common labor over and above what may be had
by like expenditure and exertion on land having no special advantage and
for which no rent is paid; and,
3 (speculative rent, which is a species of monopoly rent, telling particularly
in selling price), by the expectation of future increase of value from social
growth and improvement, which expectation causing landowners to withhold
land at present prices has the same effect as combination.
Taxes on land values or economic rent can therefore never be shifted by
the landowner to the land-user, since they in no wise increase the demand
for land or enable landowners to check supply by withholding land from use.
Where rent depends on mere monopolization, a case I mention because rent
may in this way be demanded for the use of land even before economic or natural
rent arises, the taking by taxation of what the landowners were able to extort
from labor could not enable them to extort any more, since laborers, if not
left enough to live on, will die. So, in the case of economic rent proper,
to take from the landowners the premiums they receive, would in no way increase
the superiority of their land and the demand for it. While, so far as price
is affected by speculative rent, to compel the landowners to pay taxes on
the value of land whether they were getting any income from it or not, would
make it more difficult for them to withhold land from use; and to tax the
full value would not merely destroy the power but the desire to do so.
To take land values for the state, abolishing all taxes on the products
of labor, would therefore leave to the laborer the full produce of labor;
to the individual all that rightfully belongs to the individual. It would
impose no burden on industry, no check on commerce, no punishment on thrift;
it would secure the largest production and the fairest distribution of wealth,
by leaving men free to produce and to exchange as they please, without any
artificial enhancement of prices; and by taking for public purposes a value
that cannot be carried off, that cannot be hidden, that of all values is
most easily ascertained and most certainly and cheaply collected, it would
enormously lessen the number of officials, dispense with oaths, do away with
temptations to bribery and evasion, and abolish man-made crimes in themselves
But, further: That God has intended the state to obtain the revenues it
needs by the taxation of land values is shown by the same order and degree
of evidence that shows that God has intended the milk of the mother for the
nourishment of the babe.
See how close is the analogy. In that primitive condition ere the need for
the state arises there are no land values. The products of labor have value,
but in the sparsity of population no value as yet attaches to land itself.
But as increasing density of population and increasing elaboration of industry
necessitate the organization of the state, with its need for revenues, value
begins to attach to land. As population still increases and industry grows
more elaborate, so the needs for public revenues increase. And at the same
time and from the same causes land values increase. The connection is invariable.
The value of things produced by labor tends to decline with social development,
since the larger scale of production and the improvement of processes tend
steadily to reduce their cost. But the value of land on which population
centers goes up and up. Take Rome or Paris or London or New York or Melbourne.
Consider the enormous value of land in such cities as compared with the value
of land in sparsely settled parts of the same countries. To what is this
due? Is it not due to the density and activity of the populations of those
cities — to the very causes that require great public expenditure for
streets, drains, public buildings, and all the many things needed for the
health, convenience and safety of such great cities? See how with the growth
of such cities the one thing that steadily increases in value is land; how
the opening of roads, the building of railways, the making of any public
improvement, adds to the value of land. Is it not clear that here is a natural
law — that is to say a tendency willed by the Creator? Can it mean
anything else than that He who ordained the state with its needs has in the
values which attach to land provided the means to meet those needs?
That it does mean this and nothing else is confirmed if we look deeper still,
and inquire not merely as to the intent, but as to the purpose of the intent.
If we do so we may see in this natural law by which land values increase
with the growth of society not only such a perfectly adapted provision for
the needs of society as gratifies our intellectual perceptions by showing
us the wisdom of the Creator, but a purpose with regard to the individual
that gratifies our moral perceptions by opening to us a glimpse of his beneficence.
Consider: Here is a natural law by which as society advances the one thing
that increases in value is land — a natural law by virtue of which
all growth of population, all advance of the arts, all general improvements
of whatever kind, add to a fund that both the commands of justice and the
dictates of expediency prompt us to take for the common uses of society.
Now, since increase in the fund available for the common uses of society
is increase in the gain that goes equally to each member of society, is it
not clear that the law by which land values increase with social advance
while the value of the products of labor does not increase, tends with the
advance of civilization to make the share that goes equally to each member
of society more and more important as compared with what goes to him from
his individual earnings, and thus to make the advance of civilization lessen
relatively the differences that in a ruder social state must exist between
the strong and the weak, the fortunate and the unfortunate? Does it not show
the purpose of the Creator to be that the advance of man in civilization
should be an advance not merely to larger powers but to a greater and greater
equality, instead of what we, by our ignoring of his intent, are making it,
an advance toward a more and more monstrous inequality? ... read the whole letter
Henry George: The Common Sense of Taxation (1881
IT may seem like a truism to assert that the only fund upon which taxation
can draw is that made up by the produce of the community, and that to multiply
the places at which it is tapped is not to increase its capacity to yield.
Yet the manner in which taxation, under our system, is spread over a multitude
of subjects, and new subjects are still sought for, suggests the belief of
that chief of the eunuchs who thought the weight of an obnoxious poll-tax
might be lessened, and his masters revenues at the same time increased, by
substituting for the tax on heads a tax upon fingers and toes.
But it is probable that the disposition to tax everything susceptible of
taxation does not spring so much from the notion that more may thus be obtained,
as from the notion that as a matter of justice everything should be taxed.
That all species of property shall be equally taxed, is enjoined by many
of our State constitutions, and that it should be so, at least so far as
direct taxation is concerned, is regarded by most of our people as a self-evident
truth — the idea being that every one should contribute to public expenses
in proportion to his means, or, as it is sometimes phrased, that all property,
being equally protected by the State, should equally contribute to the expenses
of the State.
But under no system that any of our legislatures have yet been able to
devise is all property equally taxed; nor can it be equally taxed. And if
it were possible to even approximate to the equal taxation of all property,
this would not be to secure that equality which justice demands. For, as
is evident in the case of mortgages, etc., to equally tax all property would
infallibly be to levy a higher rate of taxation upon some than upon others;
and even if the same proportion could be taken from the means of every member
of the community, that would no more conform to the dictates of equality
than would the levy upon each of an equal sum; for, as the demand for a sum
which would not be felt by the rich man would fall with crushing weight on
the poor man, so to take the same proportion of their means would be a very
different thing to him who has barely enough, and to him who has a large
Quite as fallacious is the idea that all property should be equally taxed,
because equally protected. The fact is that all property is not equally protected,
cannot be equally protected, and ought not to be equally protected, if by
protection anything more is meant than the mere preservation of the peace.
The protection of property is not the end, it is only one of the incidents,
of government. As John Stuart Mill says: "The ends of government are
as comprehensive as those of the social union. They consist of all the good
and all the immunity from evil which the existence of government can be made,
either directly or indirectly, to bestow." And to say that government
should impartially protect and equally tax all property, is like saying that
the farmer should bestow the same care upon everything he may find growing
in his fields, whether weeds or grain. ...
Evidently this regard for the general good is the true principle of taxation.
The more it is examined the more clearly it will be seen that there is no
valid reason why we should, in any case, attempt to tax all property. That
equality should be the rule and aim of taxation is true, and this for the
reason given in the Declaration of Independence, that all men are created
equal. But equality does not require that all men should be taxed alike,
or that all things should be taxed alike. It merely requires that whatever
taxes are imposed shall be equally imposed upon the persons or things in
like conditions or situations; it merely requires that no citizen shall be
given an advantage, or put at a disadvantage, as compared with other citizens.
The true purposes of government are well stated in the preamble to the
Constitution of the United States, as they are in the Declaration of Independence.
To insure the general peace, to promote the general welfare, to secure to
each individual the inalienable rights to life, liberty, and the pursuit
of happiness — these are the proper ends of government, and are therefore
the ends which in every scheme of taxation should be kept in mind.
As to amount of taxation, there is no principle which imposes any arbitrary
limit. Heavy taxation is better for any community than light taxation, if the
increased revenue be used in doing by public agencies things which could not
be done, or could not be as well and economically done, by private agencies.
Taxes could be lightened in the city of New York by dispensing with street-lamps
and disbanding the police force. But would a reduction in taxation gained in
this way be for the benefit of the people of New York and make New York a more
desirable place to live in? Or if it should be found that heat and light could
be conducted through the streets at public expense and supplied to each house
at but a small fraction of the cost of supplying them by individual effort,
or that the city railroads could be run at public expense so as to give every
one transportation at very much less than it now costs the average resident,
the increased taxation necessary for these purposes would not be increased
burden, and in spite of the larger taxation required, New York would become
a more desirable place to live in. It is a mistake to condemn taxation as bad
merely because it is high; it is a mistake to impose by constitutional provision,
as in many of our States has been advocated, and in some of our States has
been done, any restriction upon the amount of taxation. A restriction upon
the incurring of public indebtedness is another matter. In nothing is the far-reaching
statesmanship of Jefferson more clearly shown than in his proposition that
all public obligations should be deemed void after a certain brief term — a
proposition which he grounds upon the self-evident truth that the earth belongs
in usufruct to the living, and that the dead have no control over it, and can
give no title to any part of it. But restriction upon public debts is a very
different thing from restriction upon the power of taxation, and reasons which
urge the one do not apply to the other. Nor is increased taxation necessarily
proof of governmental extravagance. Increase in taxation is in the order of
social development, for the reason that social development tends to the doing
of things collectively that in a ruder state are done individually, to the
giving to government of new functions and the imposing of new duties. Our public
schools and libraries and parks, our signal service and fish commissions and
agricultural bureaus and grasshopper investigations, are evidences of this.
But while no limit can be properly fixed for the amount of taxation, the
method of taxation is of supreme importance. A horse may be anchored by fastening
to his bridle a weight which he will not feel when carried in a buggy behind
him. The best ship may be made utterly unseaworthy by the bad stowage of
a cargo which properly placed would make her the stiffer and more weatherly.
So enterprise may be palsied, industry crushed, accumulation prevented, and
a prosperous country turned into a desert, by taxation which rightly levied
would hardly be felt.
Now discarding all idea that there rests upon us any obligation to equally
tax all kinds of property, and assuming for our guidance the true rule, that
taxation should be levied with a view to the promotion of the general prosperity,
the securing of substantial equality, and the recognition of inalienable rights,
let us consider upon what species of property it may be best laid.
To consider what is included in the category of property is to see the
absurdity of saying that all property should be equally taxed. ...
To consider the nature of property of this kind is again to see a clear
distinction. That distinction is not, as the lawyers have it, between movables
and immovables, between personal property and real estate. The true distinction
is between property which is, and property which is not, the result of human
labor; or, to use the terms of political economy, between land and wealth.
For, in any precise use of the term, land is not wealth, any more than labor
is wealth. Land and labor are the factors of production. Wealth is such result
of their union as retains the capacity of ministering to human desire. A
lot and the house which stands upon it are alike property, alike have a tangible
value, and are alike classed as real estate. But there are between them the
most essential differences. The one is the free gift of Nature, the other
the result of human exertion; the one exists from generation to generation,
while men come and go; the other is constantly tending to decay, and can
only be preserved by continual exertion. To the one, the right of exclusive
possession, which makes it individual property, can, like the right of property
in slaves, be traced to nothing but municipal law; to the other, the right
of exclusive property springs clearly from those natural relations which
are among the primary perceptions of the human mind. Nor are these mere abstract
distinctions. They are distinctions of the first importance in determining
what should and what should not be taxed.
For, keeping in mind the fact that all wealth is the result of human exertion,
it is clearly seen that, having in view the promotion of the general prosperity,
it is the height of absurdity to tax wealth for purposes of revenue while
there remains, unexhausted by taxation, any value attaching to land. We may
tax land values as much as we please, without in the slightest degree lessening
the amount of land, or the capabilities of land, or the inducement to use
land. But we cannot tax wealth without lessening the inducement to the production
of wealth, and decreasing the amount of wealth. We might take the whole value
of land in taxation, so as to make the ownership of land worth nothing, and
the land would still remain, and be as useful as before. The effect would
be to throw land open to users free of price, and thus to increase its capabilities,
which are brought out by increased population. But impose anything like such
taxation upon wealth, and the inducement to the production of wealth would
be gone. Movable wealth would be hidden or carried off, immovable wealth
would be suffered to go to decay, and where was prosperity would soon be
the silence of desolation.
And the reason of this difference is clear. The possession of wealth is
the inducement to the exertion necessary to the production and maintenance
of wealth. Men do not work for the pleasure of working, but to get the things
their work will give them. And to tax the things that are produced by exertion
is to lessen the inducement to exertion. But over and above the benefit to
the possessor, which is the stimulating motive to the production of wealth,
there is a benefit to the community, for no matter how selfish he may be,
it is utterly impossible for any one to entirely keep to himself the benefit
of any desirable thing he may possess. These diffused benefits when localized
give value to land, and this may be taxed without in any wise diminishing
the incentive to production.
To illustrate: A man builds a fine house or large factory in a poorly improved
neighborhood. To tax this building and its adjuncts is to make him pay for
his enterprise and expenditure — to take from him part of his natural
reward. But the improvement thus made has given new beauty or life to the
neighborhood, making it a more desirable place than before for the erection
of other houses or factories, and additional value is given to land all about.
Now to tax improvements is not only to deprive of his proper reward the man
who has made the improvement, but it is to deter others from making similar
improvements. But, instead of taxing improvements, to tax these land values
is to leave the natural inducement to further improvement in full force,
and at the same time to keep down an obstacle to further improvement, which,
under the present system, improvement itself tends to raise. For the advance
of land values which follows improvement, and even the expectation of improvement,
makes further improvement more costly.
See how unjust and short-sighted is this system. Here is a man who, gathering
what little capital he can, and taking his family, starts West to find a
place where he can make himself a home. He must travel long distances; for,
though he will pass plenty of land nobody is using, it is held at prices
too high for him. Finally he will go no further, and selects a place where,
since the creation of the world, the soil, so far as we know, has never felt
a plowshare. But here, too, in nine cases out of ten, he will find the speculator
has been ahead of him, for the speculator moves quicker, and has superior
means of information to the emigrant. Before he can put this land to the
use for which nature intended it, and to which it is for the general good
that it should be put, he must make terms with some man who in all probability
never saw the land, and never dreamed of using it, and who, it may be, resides
in some city, thousands of miles away. In order to get permission to use
this land, he must give up a large part of the little capital which is seed-wheat
to him, and perhaps in addition mortgage his future labor for years. Still
he goes to work: he works himself, and his wife works, and his children work — work
like horses, and live in the hardest and dreariest manner. Such a man deserves
encouragement, not discouragement; but on him taxation falls with peculiar
severity. Almost everything that he has to buy — groceries, clothing,
tools — is largely raised in price by a system of tariff taxation which
cannot add to the price of the grain or hogs or cattle that he has to sell.
And when the assessor comes around he is taxed on the improvements he has
made, although these improvements have added not only to the value of surrounding
land, but even to the value of land in distant commercial centers. Not merely
this, but, as a general rule, his land, irrespective of the improvements,
will be assessed at a higher rate than unimproved land around it, on the
ground that "productive property" ought to pay more than "unproductive
property" — a principle just the reverse of the correct one, for
the man who makes land productive adds to the general prosperity, while the
man who keeps land unproductive stands in the way of the general prosperity,
is but a dog-in-the-manger, who prevents others from using what he will not
Or, take the case of the railroads. That railroads are a public benefit
no one will dispute. We want more railroads, and want them to reduce their
fares and freight. Why then should we tax them? for taxes upon railroads
deter from railroad building, and compel higher charges. Instead of taxing
the railroads, is it not clear that we should rather tax the increased value
which they give to land? To tax railroads is to check railroad building,
to reduce profits, and compel higher rates; to tax the value they give to
land is to increase railroad business and permit lower rates. The elevated
railroads, for instance, have opened to the overcrowded population of New
York the wide, vacant spaces of the upper part of the island. But this great
public benefit is neutralized by the rise in land values. Because these vacant
lots can be reached more cheaply and quickly, their owners demand more for
them, and so the public gain in one way is offset in another, while the roads
lose the business they would get were not building checked by the high prices
demanded for lots. The increase of land values, which the elevated roads
have caused, is not merely no advantage to them — it is an injury;
and it is clearly a public injury. The elevated railroads ought not to be
taxed. The more profit they make, with the better conscience can they be
asked to still further reduce fares. It is the increased land values which
they have created that ought to be taxed, for taxing them will give the public
the full benefit of cheap fares.
So with railroads everywhere. And so not alone with railroads, but with
all industrial enterprises. So long as we consider that community most prosperous
which increases most rapidly in wealth, so long is it the height of absurdity
for us to tax wealth in any of its beneficial forms. We should tax what we
want to repress, not what we want to encourage. We should tax that which
results from the general prosperity, not that which conduces to it. It is
the increase of population, the extension of cultivation, the manufacture
of goods, the building of houses and ships and railroads, the accumulation
of capital, and the growth of commerce that add to the value of land — not
the increase in the value of land that induces the increase of population
and increase of wealth. It is not that the land of Manhattan Island is now
worth hundreds of millions where, in the time of the early Dutch settlers,
it was only worth dollars, that there are on it now so many more people,
and so much more wealth. It is because of the increase of population and
the increase of wealth that the value of the land has so much increased.
Increase of land values tends of itself to repel population and prevent improvement.
And thus the taxation of land values, unlike taxation of other property,
does not tend to prevent the increase of wealth, but rather to stimulate
it. It is the taking of the golden egg, not the choking of the goose that
Every consideration of policy and ethics squares with this conclusion.
The tax upon land values is the most economically perfect of all taxes. It
does not raise prices; it maybe collected at least cost, and with the utmost
ease and certainty; it leaves in full strength all the springs of production;
and, above all, it consorts with the truest equality and the highest justice.
For, to take for the common purposes of the community that value which results
from the growth of the community, and to free industry and enterprise and
thrift from burden and restraint, is to leave to each that which he fairly
earns, and to assert the first and most comprehensive of equal rights — the
equal right of all to the land on which, and from which, all must live.
Thus it is that the scheme of taxation which conduces to the greatest production
is also that which conduces to the fairest distribution, and that in the
proper adjustment of taxation lies not merely the possibility of enormously
increasing the general wealth, but the solution of these pressing social
and political problems which spring from unnatural inequality in the distribution
"There is," says M. de Laveleye, in concluding that work in which
he shows that the first perceptions of mankind have everywhere recognized
a most vital distinction between property in land and property which results
from labor, — "there is in human affairs one system which is the
best; it is not that system which always exists, otherwise why should we
desire to change it; but it is that system which should exist for the greatest
good of humanity. God knows it, and wills it; man's duty it is to discover
and establish it." read the
H.G. Brown: Significant
Paragraphs from Henry George's Progress & Poverty,
Chapter 8: Why a Land-Value Tax is Better than an Equal Tax on All Property (in
the unabridged P&P: Book
VIII: Application of the Remedy — Chapter 3: The proposition tried
by the canons of taxation)
The ground upon which the equal taxation of all species of property is commonly
insisted upon is that it is equally protected by the state. The basis of
this idea is evidently that the enjoyment of property is made possible by
the state — that
there is a value created and maintained by the community, which is justly
called upon to meet community expenses. Now, of what values is this true?
the value of land. This is a value that does not arise until a community
is formed, and that, unlike other values, grows with the growth of the community.
It exists only as the community exists. Scatter again the largest community,
and land, now so valuable, would have no value at all. With every increase
of population the value of land rises; with every decrease it falls. This
true of nothing else save of things which, like the ownership of land,
are in their nature monopolies.
The tax upon land values is, therefore, the most just and equal of all taxes.
- It falls only upon those who receive from society a peculiar and valuable
benefit, and upon them in proportion to the benefit they receive.
- It is the taking by the community, for the use of the community, of
that value which is the creation of the community.
- It is the application of the common property to common uses.
When all rent is taken by taxation for the needs of the community, then will
the equality ordained by Nature be attained. No citizen will have an advantage
over any other citizen save as is given by his industry, skill, and intelligence;
and each will obtain what he fairly earns. Then, but not till then, will labor
get its full reward, and capital its natural return. ... read the whole chapter
Henry George: Justice
the Object -- Taxation the Means (1890)
Tax buildings, and you will
have fewer or poorer buildings; tax
farms, and you will have fewer farms and more wilderness; tax ships,
there will be fewer and poorer ships; and tax capital, and there will
be less capital; but you may tax land values all you please and there
will not he a square inch the less land. Tax land values all you
please up to the point of taking the full annual value — up to the
point of making mere ownership in land utterly unprofitable, so that
no one will want merely to own land — what will be the result?
Simply that land will be the easier had by the user. Simply that the
land will become valueless to the mere speculator — to the dog in
the manger, who wants merely to hold and not to use; to the
forestaller, who wants merely to reap where others have sown, to
gather to himself the products of labour, without doing labour. Tax
land values, and you leave to production its full rewards, and you
open to producers natural opportunities. Read the entire article
Henry George: The Single
Tax: What It Is and Why We Urge It (1890)
When we tax houses, crops,
money, furniture, capital or wealth
in any of its forms, we take from individuals what rightfully belongs
to them. We violate the right of property, and in the name of the
State commit robbery. But when we tax ground values, we take from
individuals what does not belong to them, but belongs to the
community, and which cannot be left to individuals without
robbery of other individuals. ... read
the whole article
Louis Post: Outlines of Louis F. Post's
Lectures, with Illustrative Notes and Charts (1894)
c. Significance of the Upward Tendency of Rent
Now, what is the meaning of this tendency of Rent to rise with social progress,
while Wages tend to fall? Is it not a plain promise that if Rent be treated
as common property, advances in productive power shall be steps in the direction
of realizing through orderly and natural growth those grand conceptions of
both the socialist and the individualist, which in the present condition
of society are justly ranked as Utopian? Is it not likewise a plain warning
that if Rent be treated as private property, advances in productive power
will be steps in the direction of making slaves of the many laborers, and
masters of a few land-owners? Does it not mean that common ownership of Rent
is in harmony with natural law, and that its private appropriation is disorderly
and degrading? When the cause of Rent and the tendency illustrated in the
preceding chart are considered in connection with the self-evident truth
that God made the earth for common use and not for private monopoly, how
can a contrary inference hold? Caused and increased by social growth,
97 the benefits of which should be common, and attaching to land, the just
to which is equal, Rent must be the natural fund for public expenses. 98
97. Here, far away from civilization, is a solitary settler.
Getting no benefits from government, he needs no public revenues, and
none of the land about him has any value. Another settler comes, and
another, until a village appears. Some public revenue is then required.
Not much, but some. And the land has a little value, only a little; perhaps
just enough to equal the need for public revenue. The village becomes
a town. More revenues are needed, and land values are higher. It becomes
a city. The public revenues required are enormous, and so are the land
98. Society, and society alone, causes Rent. Rising with
the rise, advancing with the growth, and receding with the decline of
society, it measures the earning power of society as a whole as distinguished
from that of the individuals. Wages, on the other hand, measure the earning
power of the individuals as distinguished from that of society as a whole.
We have distinguished the parts into which Wealth is distributed as Wages
and Rent; but it would be correct, indeed it is the same thing, to regard
all wealth as earnings, and to distinguish the two kinds as Communal
Earnings and Individual Earnings. How, then, can there be any question
as to the fund from which society should be supported? How can it be
justly supported in any other way than out of its own earnings?
If there be at all such a thing as design in the universe — and who
can doubt it? — then has it been designed that Rent, the earnings of
the community, shall be retained for the support of the community, and that
Wages, the earnings of the individual, shall be left to the individual in
proportion to the value of his service. This is the divine law, whether we
trace it through complex moral and economic relations, or find it in the
eighth commandment. ... read the book
Charles B. Fillebrown: A Catechism
of Natural Taxation, from Principles of
Natural Taxation (1917)
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 title deed.
Q47. What is the distinction between taxation and confiscation?
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 landowner?
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.
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." ... read the whole article
Ted Gwartney: Estimating
The economic market rental value
of land should be sufficient to
finance public services and to obviate the need for raising revenue
from taxes, such as income or wage taxes; sales, commodity or
value-added taxes; and taxes on buildings, machinery and industry.
Public revenue should not be supplied by taxes on people and
enterprise until after all of the available revenue has been first
collected from the natural and community created value of land. Only
if land rent were insufficient would it be necessary to collect any
The collection of land rent, by
the public for supplying public
needs, returns the advantage an individual receives from the
exclusive use of a land site to the balance of the community, who
along with nature, contributed to its value and allow its exclusive
EFFICIENCY OF PUBLIC
Adam Smith, in The Wealth of Nations, suggested that any "tax"
should be a charge for services which benefit all people and are more
efficiently performed by a single cooperative effort. He postulated
four principles of taxation which any source of revenue should
1. Light on the
production of wealth, and does not impede
or reduce production;
2. Cheap to collect, requiring few collectors, and easy to
3. Certain; can't be avoided, little opportunity for
and provides adequate revenue;
4. Equitable and fair, payment for benefits received,
Collecting public revenue from
land rent is the only revenue
source, or "tax", that meets these criteria.
While the major argument for
raising public revenue from land rent
and natural resources is because it is equitable and fair, it is also
the most efficient method of raising the revenue which is needed for
public facilities and services. Land is visible, can't be hidden and
its valuation is less intrusive than valuations of income and sales.
Taxes on labor and capital cause people to consider alternative
options, including working with less effort, which produces less real
goods. For example, a tax on wages will reduce after-tax net wages
and weaken the incentive to work. A person might be willing to work
hard for a wage of $20 per hour, but decide to drop out if the taxes
take $8 and the net wage is only $12 per hour. Economists claim that
present taxes account for a 25% loss in production in the United
States. Production and consumption would be greatly improved if
public revenue came primarily from land rather than a wage tax. The
same would occur when buildings and machinery are taxed. The tax on
building reduces the quantity and quality of buildings produced. A
tax on sales, commerce or value added reduces consumption, production
and net wealth. Sales tax evasion in the United States has exceeded
30% in recent years.
As new inventions and
more efficient ways of producing goods are
discovered, people's economic well-being is not improved, because
they have lost access to land and must pay both rent and taxes. (5)
Instead of rent being used to provide community services, capital and
wages must be depleted, which obstructs private enterprise.
When the rent of land is taken for public purposes production and
distribution are not held back. This is because the same amount of
rent would otherwise have been taken by some private individual. The
rent would be the same, the difference is how it is utilized. There
is evidence that communities who raise their revenue from land,
rather than from labor and capital, are more prosperous, many
increasing productivity by more than 25%.
HOW MUCH LAND RENT
SHOULD THE COMMUNITY COLLECT?
In order to preserve the
environment, it is necessary and possible
to better utilize our communities. If the producers of the land
market value (nature, government and people) don't utilize land rent,
someone else will. This is why efficient land use fails under
contemporary land systems in most countries. All countries collect
some of the land rent, perhaps 10%, 20% or 30%, but none yet, collect
all of the market rent of land.
Studies have been produced that
demonstrate that communities
prosper and succeed in proportion to the percentage of the land rent
that they collect. The first communities that decide to collect all
of the ground rent will have an enormous competitive advantage over
all other communities. They will be able to reduce or eliminate
regressive taxes on labor and capital. They will attract new business
and industry and become prosperous.
To determine how much land rent
the community should collect,
let's consider the alternatives. Whatever is not collected will be
capitalized into market value by land owners. Buying land at inflated
market prices is a block to new industry. Land owners sell the
capitalized land rent (known as land value) which is uncollected by
the community even though it is unearned income. This causes a
disparity between landowners and non-landowners. In the United States
5% of the population, which does not include many homeowners or
farmers, own 70% of the total national land and natural resource
People will come to a well run
community because they will be
better off than living by themselves or in an impoverished locale. A
city must secure revenue in order to provide good quality
This revenue can best be procured
when the community recaptures
the value of the benefits and services that it provides. This is done
by collecting the rental revenue from land that reflects the value of
the services and facilities provided in that community. The land rent
belongs equally to all people that live in the locale who helped to
produce that value. In a well run community, there is sufficient land
rent to provide adequate funding for the social purposes requested
of, and provided by, the local city government.
Cities which choose to collect
land rent as their primary source
of revenue have the advantage of not requiring burdensome taxes to be
paid by workers, businesspeople, entrepreneurs or citizens.
Individuals who work to create wealth should be allowed to keep what
they produce. When labor is not taxed, greater production and
consumption occurs. Investment capital is formed which is used to
produce more wealth. New jobs are created and economic diversity
Each person has a right to keep
what he or she produces, but no
one has the right to waste what belongs to all people, the land which
includes the natural environment. Each person should have an
opportunity to use the best land for his business or personal needs,
as long as they are willing to pay the land rent that other land
users are willing to pay.
If the value of land rent exceeds
the community's needs for public
services a method of dispensing of the revenue can easily be
found. To maintain an equitable society, where nobody has special
benefits that they do not pay for, it is important to collect all of
the land rent. The community should use what is needed for public
services and improvements such as schools, hospitals, parks, police,
roadways, utilities and defense -- and reserve a fund for
An ethical proposal might be to
then divide the excess revenue
that is not needed for public facilities and services at the end of
each year and send each citizen in that community an equal portion of
the remaining revenue. This is similar to the method used in Alaska
and Alberta. Equality of opportunity to be productive can only be
accomplished by recapturing all of the market rent of land and
ensuring that all people benefit from its value.
Not only is land rent potentially
an important source of public
revenue, collecting all of it would ensure that the equal opportunity
to be productive would be available to all citizens. People could
fund useful buildings, equipment and wages, rather than having to buy
land at inflated prices. Many countries, including the United States,
were started on the premise of using land rent to fund public
services. Many countries suffer economic loss because they no longer
collect the market rent of land.
The value of land can be estimated
with an acceptable accuracy, at
a cost which is very small compared to the revenue to be obtained. A
proper system of assessment and taxation of land can provide for the
proper economic use of the land. A land site should be available to
the user who can make the highest and best use of the site and
maximize the site benefits for all people. A land tax can provide a
major source of public revenue which the local governing body could
use for the benefit of all people. A land tax can prevent the
dispossession of our children, the future producers in the society.
Justice requires that land values, which are created by society and
nature, be made available for public improvements. This is the
responsibility of good government. ... Read
the whole article
Weld Carter: An Introduction to
However, what is the effect on
production of taxes levied on
products and of taxes levied on the value of land?
Of taxes levied on products,
George said: "The present method of
taxation operates upon exchange like artificial deserts and
mountains; it costs more to get goods through a custom house than it
does to carry them around the world. It operates upon energy, and
industry, and skill, and thrift, like a fine upon those qualities. If
I have worked harder and built myself a good house while you have
been contented to live in a hovel, the taxgatherer now comes annually
to make me pay a penalty for my energy and industry, by taxing me
more than you. If I have saved while you wasted, I am mulct, while
you are exempt. If a man build a ship we make him pay for his
temerity, as though he had done an injury to the state; if a railroad
be opened, down comes the taxcollector upon it, as though it were a
public nuisance; if a manufactory be erected we levy upon it an
annual sum which would go far toward making a handsome profit. We say
we want capital, but if anyone accumulate it, or bring it among us,
we charge him for it as though we were giving him a privilege. We
punish with a tax the man who covers barren fields with ripening
grain, we fine him who puts up machinery, and him who drains a swamp.
How heavily these taxes burden production only those realize who have
attempted to follow our system of taxation through its ramifications,
for, as I have before said, the heaviest part of taxation is that
which falls in increased prices" (1879, rpt. 1958, p. 434).
Turning to taxation levied on the
value of land, George went on to
For this simple device of placing
all taxes on the value of land
would be in effect putting up the land at auction to whosoever would
pay the highest rent to the state. The demand for land fixes its
value, and hence, if taxes were placed so as very nearly to consume
that value, the man who wished to hold land without using it would
have to pay very nearly what it would be worth to anyone who wanted
to use it.
And it must be remembered that
this would apply, not merely to
agricultural land, but to all land. Mineral land would be thrown open
to use, just as agricultural land; and in the heart of a city no one
could afford to keep land from its most profitable use, or on the
outskirts to demand more for it than the use to which it could at the
time be put would warrant. Everywhere that land had attained a value,
taxation, instead of operating, as now, as a fine upon improvement,
would operate to force improvement (1879, rpt. 1958, p. 437).
A few pages before this he had
told us that, "It is sufficiently
evident that with regard to production, the tax upon the value of
land is the best tax that can be imposed. Tax manufactures, and the
effect is to check manufacturing; tax improvements, and the effect is
to lessen improvement; tax commerce, and the effect is to prevent
exchange; tax capital, and the effect is to drive it away. But the
whole value of land may be taken in taxation, and the only effect
will be to stimulate industry, to open new opportunities to capital,
and to increase the production of wealth" (1879, rpt. 1958, p. 414).
In other words, according to
George, taxation of products checks
production, whereas taxation of land values stimulates production. ...
The Ethics of
It was but a short step from the ethics of property to the
of taxation. George's position here was that as labor and capital
rightfully and unconditionally own what they produce, no one can
rightfully appropriate any of their earnings; nor can the State. On
the other hand, land value is always a socially created value, never
the result of action by the owner of the land. Therefore this is a
value that must be taken by society; otherwise, those who comprise
the social whole are deprived of what is rightfully theirs.
Furthermore, to charge the owner for this value, in the form of
taxation, is only to collect from him the precise value of the
benefit he receives from society.
As to the justice of taxes on
products, George spoke of "...all
taxes now levied on the products and processes of industry -- which
taxes, since they take from the earnings of labor, we hold to be
infringements of the right of property."
the justice of taxes on land values, he said, "Adam Smith
speaks of incomes as 'enjoyed under the protection of the state'; and
this is the ground upon which the equal taxation of all species of
property is commonly insisted upon -- that it is equally protected by
the state. The basis of this idea is evidently that the enjoyment of
property is made possible by the state -- that there is a value
created and maintained by the community, which is justly called upon
to meet community expenses. Now of what values is this true? Only of
the value of land. This is a value that does not arise until a
community is formed, and that, unlike other values, grows with the
growth of the community. It exists only as the community exists.
Scatter again the largest community, and land, now so valuable, would
have no value at all. With every increase of population the value of
land rises; with every decrease it falls. ...
"The tax upon land values is,
therefore, the most just and equal
of all taxes. It falls only upon those who receive from society a
peculiar and valuable benefit, and upon them in proportion to the
benefit they receive. It is the taking by the community, for the use
of the community, that value which is the creation of the community.
It is the application the common property to common uses."
... read the whole article
Nic Tideman: The
Ethics of Coercion in Public Finance
Taxation began as extortion by
conquerors. Over the centuries,
regimes that started as tyrannies have evolved into democracies. The
public sector has evolved from an apparatus for implementing the will
of despots into a mechanism for carrying out democratic decisions.
But public finance continues to rely on the power of tax collectors,
developed under early tyrants, to coerce citizen to pay taxes. The
wrath that citizens feel toward tax collectors is probably the
strongest antagonistic feeling that citizens have toward a
governmental institution. Nevertheless, few economists question the
need for continued reliance on coercion to collect public revenues in
How do we justify coercion?
Legislators and bureaucrats who devise
coercive tax collection rarely bother to address the question. Nor do
interest groups that promote expansions of the public sector, with
their inevitable accompaniment of higher coercively collected taxes.
Thus coercive tax collection has every appearance of a power play
against the weak by those who have the strength to get away with
We need to reexamine our
acceptance of coercion in public finance.
If we are going to continue to rely on coercion, we need to develop a
consensus about the framework that justifies it.
This paper begins with a definition
of justice and a taxonomy of
theories that might be used to justify coercion in public finance. I
argue that theories based on Conservatism,
or Libertarianismall have value in some
circumstances, but not for justifying the use of power to extract
resources from people. None of these
theories are consistent with
what we ought to understand justice to be, because they do not accept
the equal standing of all persons in defining what is good. A
of justice that does accept the equal standing of all persons in
defining what is good is Liberalism as
elucidated by Bruce Ackerman
To oblige people to pay taxes
while satisfying the limitations
that Liberalism sets on the use of power, three conditions must be
1. People must be free to
emigrate to any jurisdiction that will
2. If the fraction of natural opportunities claimed by a
jurisdiction exceeds the fraction of population in the jurisdiction,
the jurisdiction must compensate those who would otherwise be
accorded smaller-than-average shares of natural opportunities.
3. Sub-units of jurisdictions must be allowed to secede, provided
that they are willing to pay appropriate costs.
What is Justice?
Begin with what justice is not. Justice is the antithesis of
might-makes-right. A powerful person might say, "This is just because
I say it is just, and if you voice any disagreement I will silence
you," and he might have the power to make his threat stick. However,
he would be misusing language.
Justice entails the recognition by
those who have power that the
use of power ought to be constrained by principles whose relevance
does not depend on the views of those with power.
Justice is well represented by the
classical figure of the
blindfolded goddess, with scales lifted up in one hand and a sword in
the other. The scales convey the idea of equal division. The
blindfold represents complete impartiality in determinations of what
constitutes equal division. The sword says that there will be power
to ensure that the determinations of justice are carried out. In
Justice is the evenhanded
adjudication of conflicting claims, backed by the threat of force.
To achieve the impartiality that
justice requires, we generally
insist that the person making a judicial determination have no
personal interest in the matter being decided. The maxim that no
person should be the judge of his own case is offered repeatedly in
classical discussions of justice. But in the most fundamental
questions of justice, we have no choice but to abandon this valuable
rule. When it comes to determining the foundations of justice, there
are no disinterested parties. When a person determines what we must
all accord to one another, he determines for himself as well as for
One way to sidestep the lack of
disinterested parties to define
justice is to identify justice with tradition. ...
As valid as these claims for
tradition are, they are not
sufficient to make tradition an adequate source for justice. In some
times and places, tradition has given us slavery, serfdom, denial of
voting rights to women, and any number of other inequalities that we
have come to realize we cannot accept. While the Conservative
perspective is valuable for the insights it provides into rationales
for the status quo, its automatic acceptance of tradition cannot
guarantee the evenhandedness that is essential in a theory of
In rejecting tradition as a
fundamental source for justice, we
must also reject the ultimate authority of laws and constitutions as
sources for justice. Justice is the standard to which we hold laws
and constitutions; it is not defined by them. ...
A second common way of coping with
the lack of disinterested
parties is through Contractarianism. This is the axiom that it is
just to coerce people to abide by rules to which they would have
agreed before they knew how they would be personally affected by the
The most famous modern
application of Contractarianism is John
Rawls' 1971 book, A Theory of Justice. Rawls argues
that behind a "veil of ignorance" regarding one's personal
characteristics, a person would want the rules that maximized the
well-being of the representative member of the least advantaged
class. To most economists, Rawls' specification of what would concern
people behind a veil of ignorance sounds completely arbitrary and
unfounded. If people are going to be overwhelmingly concerned about
losing in the lottery of life, why would they focus on the
representative member of the least advantaged class and not on the
worst possible individual outcome? Why would people be unwilling to
trade a minute loss by the least advantaged class for a substantial
gain by the second-least advantaged class?
John Harsanyi (1975) argues that
behind Rawls' veil of ignorance,
people would not be concerned exclusively with the well-being of the
representative member of the least advantaged class. Rather, they
would recognize that they had equal chances of being all persons, and
therefore, to maximize their expected utility, they would choose the
rules that maximized the sum of individual utilities. The Buchanan
and Tullock framework is consistent with Harsanyi's claim.
Another theory that applies the
Contractarian axiom is Ronald
Dworkin's (1981) theory of justice as equality of resources. Dworkin
justifies an income tax as the expression of an insurance policy that
people would desire before they knew their talents.
The fact that people using the
basic idea of Contractarianism
could come to conclusions as different as those of Rawls and Harsanyi
is a reflection of a limitation of the axiom. ...
Utilitarian and Contractarian
theories of justice share the
feature that they do not acknowledge self-ownership. Under
Utilitarianism, persons are inputs into the generation of aggregate
utility. Under Contractarianism, persons might have owned themselves
in the contractual setting, but there they sold themselves. The
rights of real people are gone. Theories in these classes can be
contrasted with a class of theories that justify power with direct
responses to those who question power, treating them as individuals
who own themselves. There are two theories in this class:
Liberalism and Libertarianism. The two theories share the idea of
self-ownership, the idea that each person is free to decide the
purpose of his or her life, provided that the rights of others to
the same are respected.
The fundamental difference between Libertarianism and
Liberalism concerns the basis for claims to own things. ...
The Libertarian and Liberal theories both have limitations in
terms of efficiency. Acceptance of the Libertarian theory promotes a
land rush, in which people waste resources doing the minimal work
necessary to establish claims to land, so that they can later sell it
to others. (Whoever burns down the most rain forest gets the most
land.) This first inefficiency is compounded by a continuing
inefficient use of land, arising from the inability of people to
manage all that they have claimed. If the Liberal theory is accepted,
an opposite inefficiency occurs. There is no incentive for people to
seek to discover opportunities hidden in nature, because whatever is
discovered belongs equally to all. ...
The basic problem with the justice
of Libertarian theory is that
it allows the first arrivers to deprive those who come later of any
natural opportunities that it suits the first arrivers to claim and
transform. To permit this is inconsistent with the evenhandedness
that justice requires. ...
A Just Framework
Consider how Ackerman's
principle of Neutrality constrains a
person who wishes to levy taxes. How can person say to others, "You
must pay these taxes," without violating Neutrality? One possibility
is by permitting emigration. If there were unclaimed land with
natural opportunities as good as those of existing nations, where
those who did not like existing nations could form their own nations,
then a right of emigration would make taxation consistent with
Neutrality. The person who levied taxes would not be claiming more
for himself than he left for others. In fact, the best natural
opportunities are fully claimed. Still, a right of emigration goes
some of the way toward making taxation just. It prevents at least the
worst exploitation of taxpayers.
When the most valuable natural
opportunities are fully
appropriated, Neutrality requires that any effort to induce people to
accept an obligation to pay taxes provide an alternative of leaving
the tax-levying jurisdiction while retaining a level of access to
natural opportunities that is no less than the per capita level
within the tax-levying jurisdiction. "Leaving" could mean emigrating,
or it could mean seceding.
The most straightforward way of
achieving equal access to natural
opportunities for emigrants is to recognize the requirements that
Neutrality places on relations among nations or their subunits with
respect to claims on natural opportunities. To guarantee equal access
to natural opportunities, governments must acknowledge that their
claims to natural opportunities, that is, their claims to land and
natural resources, are just only if they are not disproportionate to
the number of persons making the claim.
If land were uniform in its
economic potential and there were no
depletable natural resources, the application of such a rule would be
straightforward. But land is not economically uniform and there are
depletable natural resources, so the problem of equal access is
conceptually more difficult.
To consider a simple case first,
suppose that there is no
disagreement about the relative value of land in different places and
that there are no depletable natural resources. Equal access to
natural opportunities is satisfied if the ratio of aggregate land
rent to population is the same in all jurisdictions. Equal access is
also satisfied if there is a set of transfer payments among
jurisdictions, such that the ratio of the sum of aggregate land rent
and net transfers received to population is the same in all
The rent of land in these formulas
is not calculated on a
site-by-site basis, but rather on an aggregate basis, under the
that there are no man-made improvements in the territory being
evaluated. Thus, in asking whether the United States was claiming
more than its share of natural opportunities, one would ask what the
rental value of the territory occupied by the U.S. would be if it
were completely devoid of human improvements and human habitation,
and the only bidders were other nations or their citizens. A similar
calculation would be made for every other nation. Of course there can
be no guarantee of agreement about such valuations, but agreement on
the need to make such estimates and to try to reach consensus on
their magnitudes would constitute enormous progress in global
Next, suppose that there are
depletable natural resources.
This raises two new issues: appropriate depletion and
intergenerational equity. Appropriate depletion is depletion on a
path that maximizes the present value of net returns from using a
resource. ... Read the whole article
Bill Batt: Stemming Sprawl: The Fiscal Approach
In addition, a tax on site value (that is, the collection of economic rent)
restores moral principle to tax theory. By collecting rent on that value
that is generated by the collective activity of the community, it offers
to relieve tax burdens on value that is generated by individual effort.
Put another way, any value that individuals create by their own bodies and
is left for them to keep; that which is socially created value is recovered
by the community to pay for its collective purposes. "Tax what you take,
not what you make," is one way to say it. "Tax bads, not goods," or "Tax
waste, not work," is another way. At the heart of this approach is
a very profound message: The earth is the common heritage of humanity;
to everyone. That which grows out of our own personal efforts and ingenuity
is ours to keep, and no part of it should be subject to taxation. Taxes
on income, sales, savings, structures, and things that come from the sweat
of our brow can be replaced by taxes on land rent — which, when all
forms of it are included, is revenue source that can fully pay for the
of government and is nonetheless essentially burden-less to taxpayers. What
economists call the "excess burden" or "deadweight loss" of
the current tax structure — by many calculations at least 25 percent — is
reduced to zero, thereby increasing our collective productivity by that
amount That effectively makes us all 20 percent wealthier. ... read the whole article
Bill Batt: The
Compatibility of Georgist Economics and Ecological Economics
As with all nineteenth century
moral philosophers, Henry George
subscribed to a belief in natural law. The natural order of things as
he saw it required that land be held in usufruct and that rent from
such should be returned to society. The theory was inspired by his
deeply religious roots and grounded in his reading of the prominent
thinkers that predated him. The natural order was also a moral order,
and the failure to comply with the order of nature and society as he
saw it was a perversion of justice. The fruits of the land belonged to
everyone, just as the fruits of one’s own labor were uniquely one’s
own. Since one owned one’s body, one was entitled to keep the product
of one’s physical efforts. Society had no more right to confiscate the
earnings of one’s sweat and brow than it ought to leave in the hands of
rich landowners the rent that was everyone’s inherent birthright to be
shared. There were just and unjust
taxes, and the only just tax was that which grew out of rent, of the
unearned increment that visited certain land sites as windfall gains
because of the efforts and investments by the community. Income and
excise taxes were unjust and confiscatory— even theft, as especially
were tariffs. Taxing or collecting land rent alone was the means of
ending poverty and restoring progress. Indeed many Georgists reject use
of the word tax entirely, preferring instead to talk instead about rent
collection. There is even a lapel button Georgists use that says
“Abolish all taxes; collect ground rent instead.” ...
There was another dimension to George’s economic views as well.
Locke and later classical economists argued, one owned the items with
which one “mixed his labor.” By extension one also owned items
which one purchased in trade from others who had similarly created their
wealth. Hence it was unjust and
immoral for society to claim any parts
of the fruits of one’s own efforts in the form of tariffs, sales taxes,
and especially the income tax. Of course, except for a short
during the American Civil War, the American government had never
implemented an income tax. But Britain had, and there was much
discussion of a need for an income tax in the United States; it was
again instituted in this country in 1913. ... read the whole article
Alanna Hartzok: Who Would Jesus Tax?
The Saga of Susan Pace Hamill's Alabama Tax Crusade
A University of Alabama School of Law Professor has asked God's forgiveness
for the years she lived in the sin of ignorance about tax injustice. Susan
Pace Hamill, a tax expert, business consultant, and dedicated United Methodist
church goer, thought there was a misprint when she first read that personal
incomes as low as $4,600 for a family of four were being taxed by the state,
while timber owners holding 71% of the land of Alabama were paying less than
$1 per acre in property taxes. Two hours later she found out there had been
no mistake and that Alabama has the most regressive tax code in the country.
Her righteous rage spawned a tax crusade that has reverberated onto the national
"As somebody who knows a lot about taxes, I could not have imagined a design
of a tax structure this bad," she said in a Tuscaloosa Newsstory last
February. "The state's tax code is really horribly unjust and has no moral,
ethical leg to stand on. Period."
Alabamians with incomes under $13,000 pay 10.9 percent of their incomes in state
and local taxes while those who make over $229,000 pay just 4.1 percent. Commercial
property owners pay more than 50 percent of property taxes, with homes approaching
one-third. Alabama's sales taxes are among the highest in the nation, up to 10
percent in some areas, and do not exempt even the most basic necessities such
as food. The state's 1901 constitution was written primarily by large landholders
to secure their economic interests, consequently property taxes are extremely
light on their holdings. ...
While resoundingly condemning the current system (she uses words like "horrific" and "monstrous
injustice") Hamill clearly articulates a tax reform approach which shifts
taxes off of low wage earners and onto large land owners. Through a combination
of her own reasoning, caring heart, and inherent sense of justice and a
thorough investigation of Judeo-Christian ethics, Hamill arrived at a tax
which bears remarkable similarities to the economic justice crusades of
19th century reformer, Henry George. ... read
the whole article
Charles T. Root — Not a Single Tax! (1925)
... let us lay down and briefly defend the proposition that —
Taxation as a means of meeting the proper expenses of government is oppressive,
unjust, inexpedient and unnecessary.
This proposition will strike a good many readers as absurd, but all must
at least recognize the timeliness of the topic and the importance of any
contribution to the discussion of a subject which is agitating the whole
civilized world, for the methods, subjects and amounts of taxation are among
the pressing problems of every country.
The most obvious question which arises in the mind of anyone who reads for
the first time the proposition above laid down is this:
"If taxation is unnecessary, what is to take its place? Government
and its functions are increasingly expensive. They require a lot of money.
Where is it to come from?" The answer may be placed in the form
of a second proposition:
Every community, whatever its political name and extent — village,
city, state or province or nation — has its own normal, unfailing
income, growing with the growth of the community and always adequate
to meet necessary
To explain: Every community has an indefeasible original right to the land
on which it exists, and to all the natural, unmodified properties and advantages
of that particular area of the earth's surface. To this land in its natural
state, undrained, unfenced, unfertilized, unplanted and unoccupied, including
its waters, its contents and its location, every individual in the community
(which may consist of any political unit selected) has an equal right, while
all the individuals together have a joint right to the value for use which
society has conferred upon these natural advantages.
This value for use is known as "Land Value," or by the not particularly
descriptive but generally adopted name of "Economic Rent."
Briefly defined the land value or economic rent of any piece of ground is
the largest annual amount voluntarily offered for the exclusive use of that
ground, or of an equivalent parcel, independent of improvements thereon.
Every holder or user of land pays economic rent, but he now pays most of
it to the wrong party. The aggregate economic rent of the territory occupied
by any political unit is, as has been stated above, always sufficient, usually
more than sufficient, for the legitimate expenses of the government of that
unit. As also stated above, the economic rent belongs to the community, and
not to individual landowners.
On the other hand, the result of every utilization or enhancement of the
natural advantages of land (such as farm profits, the rent and selling value
of buildings and other improvements), when accomplished by an individual,
belongs wholly to that individual, and should never, and need never, be taken
from him by taxation. ...
Under the normal system which this article advocates, the user of land would
pay substantially the same economic rent as now, for the reason that economic
rent is fixed by the payer and not by the payee; but it would be paid to
the credit of the community instead of for the benefit of the individual
landowner. And the economic rent is all the land user would have to pay;
no taxes on industry or personal product and no other forced contribution
for governmental purposes.
It follows that, under the normal system, the holder of unimproved land
would usually contribute more than at present toward the expenses of government,
while the holder of well improved property would contribute, in most instances,
less than the total of his present taxes.
To illustrate simply, let us suppose a state which has never parted with
its natural income but is supported by its own economic rent. ...
This principle of economic rent applies to all the users of land, including
mining, use of waterpower, and rights of way over or under its surface. Had
this principle always been recognized, and the economic rent always been
retained by the community, taxation would never have been heard of. When
the economic rent is reclaimed by the community, the need of taxation will
Let us roughly restate the proposition: All members of the community having
a joint right to the income which the social advantages of the land will
command, they are all partners in this income.
Therefore, when one of their number wishes to take for his private use a
parcel of this land, he should buy out his partners, i.e., the rest of the
community, by paying regularly into the common treasury the economic rent
of that parcel, instead of paying, as at present, the purchase price, i.e.,
the right to collect the economic rent, in a lump, to some other individual
who has no more original right to it than himself.
But before this time the reader, unless he has given previous attention
to the subject, is full of objections to the above doctrine: "How about
the law?" he is asking. "Hasn't a man the right to buy a piece
of land as cheaply as he can, to do what he pleases with it, and hold on
to it till he gets ready to sell?" The answer is that at present
he certainly has this statutory right, which has been so long and so
recognized that most people suppose it to be not only a legal, but a
real or equitable right. A shrewd man, foreseeing the direction of growth
in a city, for example, can buy a well-located block at a moderate figure
from some less far-seeing owner, can let it grow up to weeds, fence it
off against all comers and give it no further attention except to pay
small tax usually imposed upon vacant land.
Meantime the increasing community builds up all around it with homes, banks,
stores, churches, schools, paving and lighting the streets, giving police
and fire protection, etc., and at last comes to need this block so urgently
that the owner is fairly begged to sell it, at three or ten or fifty times
what it cost him. Quite often the purchaser at this enormous advance is the
very community which has through its presence and the expenditure of its
taxes created practically the whole value of the land in question!
It was said above that an individual has a statutory right to pursue this
very common course. That was an error. The statement should have been that
he has a statutory wrong; for no disinterested person can follow the course
of land speculation as almost universally practiced, without feeling its
How did so evident a wrong become so firmly established? ...
he landlords, being also the lawmakers, have seen to it that their tenure
of this easy money should not be disturbed, but on the contrary have so buttressed
it with centuries of legislation, precedents, and judicial decisions, that
any proposition to hark back to the terms of the original bargain, whereby
the owners of the land agreed to pay the expenses of the government, is now
denounced as anarchy and sacrilege.
Lapse of time, however, never can transform wrong into right, nor can a buyer
acquire any better title than the seller possessed. The economic rent belongs
to the community, which can and will begin to reclaim it as soon as the
voters thoroughly awake to the facts and the right and wrong of the matter,
which are not hard to grasp when the subject is presented in its simplest
An illustration has already been given of the case of a piece of farm land.
Let us take an example in a large city. Let us take a corner lot centrally
located in New York City, the title to which lot is held by, say, Mr. John
William Rhinelastor. This lot was a part of an old Dutch farm, and is an
heirloom. It did not cost the present owner anything, nor his father nor
his grandfather. There is a little old building on it, which has always been
rented at a figure ten times as large as the taxes imposed, so that the owner
has been handsomely subsidized each year for storing his title-deeds during
a period of the city's growth in which the increase in population and the
expenditure of public money in that neighborhood have raised the value of
this corner location to, say, two hundred times its early value. ...
Now suppose this $20,000 and all the rest of this same community product — i.e.,
the site or location rent of its ground — were paid every year
to its rightful owner, the treasurer of New York City, what would become
with its inseparable retinue, Fraud, Evasion, Perjury, Inequality, and
an all-pervading public sense of injustice?
An authority on municipal taxation estimates the present economic rent of
the land embraced in the City of New York at from $350,000,000 to $400,000,000.
Assuming the lesser of these figures and adding the receipts from licenses,
fees and fines, New York City should receive, of her own income, enough to
pay all her own legitimate bills, to make her proper contributions to county
and state and build a new subway or its equivalent every year.
And this with nobody paying a dollar of taxes, or, if we except the fines,
a dollar that he was not ready and glad to pay for his own advantage.
We repeat, this is not taxation; but for the sake of those who cannot grasp
the idea of public revenue without taxation, let us state the matter in their
Think of a tax which both assesses itself and collects itself, which burdens
no one, which is paid voluntarily, and only by those who do so for their
own profit or other advantage. Compare this with our present system of
taxes, which everyone despises, which can be collected in full only from
scrupulous and from the helpless, from trust funds of widows and orphans,
or from estates which lie naked before the tax gatherer on the records
of court; a system which drives men of property from state to state and
to town in flight from the assessor, and well-nigh forces many worthy
citizens to practices of evasion which must make it hard for them to look
own mirrors during the season for "Correction of Assessments;" there
can be but one verdict upon such comparison.
But again the voice of the objector is heard, possibly to this effect: "This
plan may be all right for the community, but how about poor Mr. Rhinelastor?" ...
Reclaim for the community its natural income, making it expensive either
to keep needed land vacant or to withhold it from the ready and willing to
improve it to the full extent of its possibilities.
Does it require severe intellectual effort to foresee the results? Better
and better houses, apartments, tenements, offices and stores, more employment
for labor in all enterprises now held back by the shadow of the tax-gatherer,
an end of all tax-lying, tax-evasion and tax-injustice, and withal, a public
revenue adequate to all real public needs.
What a contrast to the existing plan of pouring public money into the laps
of individual landowners ...
Henry George gave the first impulse, and his followers of the Single Tax
have continued the good work. There is one objection, however, to the statement
of their case by the Single Taxers: the nature of this objection is indicated
by their name. Most persons will infer that, under their proposal, whatever
portion of the economic rent is taken by the community is taken as a tax
on the land.
This seems to the present writer to show a misconception of the nature of
the transaction, and one which tends to retard the cause which is being advocated.
The amount of economic rent which is taken by the community for public purposes
is not a tax paid by the land-holder, but whatever amount of such rent is
left in his hands is a gift to him by the community, or else is the compensation
which the community allows him for acting as its agent and collector in the
matter of economic rent.
This is an important distinction which is necessary to make the facts
and the relations clear. It is also highly expedient. Taxation and the
it are abhorrent to men. As a result of long experience the very word
Taxation connotes to them injustice, oppression, and antagonism between
and the community. To the mass "The Single Tax" means simply
rolling into one the manifold injustices and oppressions of the present
Only slow headway can be made by a proposition which at first sight seems
to promise merely to shift the burden from one shoulder to the other.
But make it plain to the wayfaring man that taxation can be abolished
and will be abolished whenever the voters of any political unit so decree,
a force of hope and purpose will be liberated which must bring nearer
the time when the things that are the community's will be rendered to it,
the things which are the individual's will be left in his unmolested
possession. The watchword of our friends the Georgeites is "A Single Tax." The
true slogan is "Not a Single Tax!"; and the triumph of the
cause behind that slogan would cut more of the taproots of poverty, vice
unrest than any other progressive step which is a legislative possibility. read
the whole article