and Moral Law
What passes for conversations about "tax reform" usually is a matter of
discussing what the tax brackets and tax rates should be for the federal
or state income
tax. But income taxes are neither moral nor otherwise desirable: their perverse
incentives are exceeded only by their immoral quality — they take from
the individual that which he labors to create.
But taxes on land value are fundamentally different. None of us created land,
nor can we trace our title in land to the one who created it. All of us were
created equal, and should share equally in the value of our common assets,
which includes the economic value of America's land. Land's value comes from
the presence of each one of us, from naturally provided amenities, from increases
of population, and from the economic activity of the society as a whole. Why
on earth should its value be subject to privatization? ("Tradition" is no better
an answer to this question than it was to the question of whether chattel slavery
was or is just in a society devoted to the proposition that all of us are created
Land value taxation, unlike any other kind of taxation, takes from individuals
only that which SOCIETY, NATURE and OUR FELLOWS have created, not what he himself
created. So it is supremely moral, unlike taxes on wages, sales and buildings.
Even better, the incentives it creates are consistent with the common good,
with widely shared prosperity, with abolishing poverty.
That's the intersection of taxes and moral law.
Henry George: The Condition
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 price by checking supply, and whatever tends to reduce such
cost decreasing price by increasing supply. Thus taxes on wheat or tobacco
or cloth add to the price that the consumer must pay, and thus the cheapening
in the cost of producing steel which improved processes have made in
recent years has greatly 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 Wages of
Consider the taxes on the
processes and products of industry
by which public revenue is collected:–
- 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 that 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
- They take by force what
belongs to the individual;
- they give to the unscrupulous an advantage
over the scrupulous;
- their effect is, nay they are largely intended, to
increase the price of what some have to sell and others must buy;
- they make oaths a mockery;
- they shackle commerce;
- they fine industry and thrift;
- they lessen the wealth that men might
- enrich some by impoverishing others.
What most strikingly shows how
opposed to Christianity is the
existing system of raising public revenue 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
political economy, and proclaims laws for the nation 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. ... 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 right 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 values.
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
Nic Tideman: Improving
Efficiency and Preventing Exploitation in Taxing and Spending Decisions
A possible difficulty with classical liberalism as a justification for
government action is that it may justify little if any government action.
upon individual liberty. How is this intrusion to be justified? One way
to try to get around this difficulty is by the claim that some expenditures
on protecting individual rights are so valuable that anyone would understand
that, for these expenditures, the reduction in individual liberty from
is less than the addition to individual liberty from the protection of
individual rights that is possible with taxation. However, if improving
of all citizens is the justification, then one should ask whether there
is adequate justification for even these government actions if they do
unanimous support. ... read the whole article
Nic Tideman: The Morality of
Taxation: The Local Case
There is a gentler side of taxation that provides some explanation of
our tolerance of this coercion. Taxation can be the way that people achieve
common purposes. People may agree to be taxed so that there will be money
to pay for public services that they want. From this perspective, taxation
may be considered no more than the dues for belonging to a club that
provides people with things that they would rather pay their share of than
make this "voluntary exchange" theory of taxation relevant, people must be able
to choose freely whether or not to "join the club," to be a citizen of the
taxing jurisdiction. With all land claimed by some taxing jurisdiction, the
The problem of morality in taxation is the following:
- How do we retain the possibility of people pooling their contributions
to the cost of services that they agree are worthwhile, while eliminating
the possibility of citizens treating their fellow citizens as targets
- What are the limits of obligations that we can justly impose on our
- And how do we set up a structure of government that will ensure that
these limits are observed?
The turn-of-the-century Swedish economist, Knut Wicksell, had ideas that
dealt with some of these questions (Wicksell, 1958 ). Wicksell argued
if a public expenditure is worthwhile, then there must be some allocation
among citizens of the taxes that are needed to finance the expenditure
make everyone better off. If legislatures were required to achieve unanimity
to pass spending programs, then they would have to find allocations of
taxes that were unanimously acceptable before they could pass those programs.
that case, majorities would have no opportunity to exploit minorities,
and inefficient proposals would be prevented from passing as well. Wicksell
that if complete unanimity were required, strategic holdouts would be likely
to prevent any program from passing, so he was content to recommend a rule
of "near-unanimity," without being specific about what this meant.
While Wicksell's insights are interesting, they do not fully solve the problem
of moral taxation, because any departure from unanimity opens the door to exploitation
of minorities, and the requirement of more-than-majority approval means that
the costs of coalition-building will leave some worthwhile activities unapproved.
Still, we would probably have a much more efficient public sector if every
public expenditure required two-thirds approval in legislative bodies.
But to make taxation truly voluntary, the option to leave must be viable.
If people could move costlessly from one jurisdiction to another, taking all
of their belongings with them, then competition among jurisdictions would tend
to eliminate oppressive taxation. This would leave only the fees that people
were prepared to pay to have public services (Tiebout, 1956). ... read
the whole article
Weld Carter: An
Introduction to Henry George
The Ethics of Taxation
It was but a short step from the ethics of property to the ethics 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."
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