Skirts, Orphans and Family Farmers
Widows' skirts are something like the
Family Farmer whose farm is lost
to the estate tax. (See David Cay Johnston's book, Perfectly Legal:
The Covert Campaign to Rig Our Tax System to Benefit the Super Rich
— and Cheat Everybody Else, chapter 6.) But Winston Churchill
speaks of the Market
Farmer outside Glasgow much the
same way, and implores that we let the widow rest! (See below.)
The Bible, like most other ethical systems, calls for us to take care
of widows and
lot of things get justified as protections for widows and orphans
which largely serve much larger special interests. California's Proposition
13 is a contemporary example.
We don't worry nearly as much about the rack-rented tenant as we do about
the person who claims they will not be able to afford their property taxes,
while the latter has a huge asset to sell to the next generation, at prices
that will keep them wage slaves for years. What a system!
The alternative, of course, is to acknowledge that land is different from
houses, that while buildings shouldn't be taxed at all, land value should
be, and should be taxed rather heavily. Doing so will reduce the price of
land, making it affordable to those who need it (but they won't buy more
than they need for themselves, or speculate on it) and will put it to good
use, either for housing or for commercial pursuits.
Henry George: The
Land Question (1881)
It is that peasant proprietors
would strengthen the existing
system that makes schemes for creating them so popular among certain
sections of the propertied classes of Great Britain. This is the
ground on which these schemes are largely urged. These small
landowners are desired that they may be used as a buffer and bulwark
against any questioning of the claims of the larger owners. They
would be put forward to resist the shock of "agrarianism," just as
the women are put forward in resistance to the process-servers.
"What! do you propose to rob these poor peasants of their little
homesteads?" would be the answer to any one who proposed to attack
the system under which the larger landholders draw millions annually
from the produce of labor.
... read the whole article
Henry George: In Liverpool: The Financial
Reform Meeting at the Liverpool Rotunda (1889)
That is what we strive for — for
the freedom of all, for self-government to all (hear, hear) — and
for as little government as possible: (Laughter and cheers) We don't believe
that tyranny is a thing alone of kings and monarchs; we know well that
majorities can be as tyrannous as aristocracies (hear, hear); we know that
mobs can persecute as well as crowned heads. (Hear, hear) What we ask for
is freedom — that in each locality, large or small, the people
of that locality shall be free to manage the affairs that pertain only
that locality (hear, hear, and cheers); that each individual shall
be free to manage the affairs that relate to him; that government shall
to say of whom he shall buy or to whom he shall sell, shall not attempt
to dictate to him in any way, but shall confine itself to its proper
function of preserving the public peace, of preventing the strong from
the weak, of utilizing for the public good all the revenues that belong
of right to the public, and of managing those affairs that are best
managed by the whole. (Cheers) Our doctrine is the doctrine of freedom,
is the gospel of liberty, and we have faith in it, why should we not?
The Old Argument
The People who say that such terrible things would follow the institution
of the single tax are simply like the people who had predicted terrible
things to follow the building of railroads and the abolition of chattel
Why I remember, and Mr. Garrison well remembers, the day when in the
United States all the arguments that are used in this country against the
tax were used against the abolition of chattel slavery, even down to
We used to be told — I was only a boy then — we used to be told,
when William Lloyd Garrison, father of this man, was the best denounced man
on two continents, that it might be well if we could find the people who
originally brought these slaves from Africa, to make them give them up. "But," it
was urged, "these negroes are owned by people who paid their money for
them. (Laughter) Would you take away from a man without any compensation
the property that he bought?" (Laughter) Then we used to be told, as
you are told now, about that hard working mechanic. "Here is a hard
working laboring man. He has toiled early and late, and he has bought a slave
to help him. Are you going to take a man's slave without compensation and
rob him of the products of his labor?" (Laughter) So they say today
of the English mechanic, or English laborer, who has bought himself a little
bit of land. And then we used to be told: "Here is a man who worked
hard and saved his money, and he invested in half-a-dozen slaves. He died,
and those slaves are the only means of subsistence the widow has to support
his orphan children. Would you emancipate those slaves, and let that poor
widow and those little orphans starve to death?" (Laughter)
Slavery and Slavery
It is the old, old story! And no wonder, for property in land is just
as absurd! just as monstrous as property in human beings. (Hear, hear,
What difference does it make whether you enslave a man by making his
flesh and blood the property of another, or whether you enslave him by
property of another that element on which and from which he must live
if he is to live at all? (A voice: "None whatever!" and cheers)
Why, in those old days slave ships used to set out from this town of Liverpool
for the coast of Africa to buy slaves. They did not bring them to Liverpool;
they took them over to America. Why? Because you people were so good,
and the Englishmen who had got to the other side of the Atlantic, and had
there, were so bad? Not at all. I will tell you why the Liverpool ships
carried slaves to America and did not bring them back to England. Because
population was sparse and land was plentiful. Therefore to rob a man
of his labor — and that is what the slaveowner wanted the slave for — you
had got to catch and hold the man. That is the reason the slaves went to
America. The reason they did not come here, the reason they were not carried
over to Ireland was that here population was relatively dense, land was relatively
scarce and could easily be monopolized, and to get out of the laborer all
that his labor could furnish, save only wages enough to keep him alive even
the slaveowner had to give this — it was only necessary to own
What is the difference, economically speaking, between the slaves of South
Carolina, Missouri, Mississippi, and Georgia and the free peasantry of
Ireland or the agricultural laborer of England? (Cheers) Go to one of those
states in the slave days, and there you would find a planter, the owner
of five hundred slaves, living in elegant luxury, without doing a stroke
work, having a fine mansion, horses, [and a] carriage — all the
things that work produces, but doing none of it himself. The people who
work were living in negro huts, on coarse food; they were clothed in
coarse raiment. If they ran away, he had the privilege of chasing them
them up and whipping them and making them work.
Come to this side of the Atlantic, in a place where you saw the same state
of development. There you found also five hundred people living in little
cabins, eating coarse food, clothed in coarse raiment, working hard, yet
getting only enough of the things that work produces to keep them in good
times, when bad times came having to appeal to the world for charity. But
you found among those little cabins, too, the lordly mansion of the man who
did no work. (Hear, hear, and groans)
You found the mansion; you did not often find the man. (Laughter and cheers)
As a general rule he was off in London, or in Paris, enjoying himself on
the fruits of their labor. (Hear, hear) He had no legal right to make them
work for him. Oh! no. If they ran away he could not put bloodhounds on their
track and bring them back and whip them; but he had, in hunger, in starvation,
a ban dog40 more swift, more keen, more sure than the bloodhound of the south.
The slaveowner of the south — the owner of men — had to make
those men work for him. He went to all that trouble. The landlord of Ireland
did not have to make men work for him. He owned the land, and without land
men cannot work; and so men would come to him — equal children of the
Creator, equal citizens of Great Britain — would come to him, with
their hats in their hands, and beg to be allowed to live on his land,
to be allowed to work and to give to him all the produce of their
enough to merely keep them alive, and thank him for the privilege.
. . . read the whole speech
Winston Churchill: Land Price as
a Cause of Poverty (1909 speech in Parliament)
... I do not think the Leader
of the Opposition could have chosen a
more unfortunate example than Glasgow. He said that the demand of
that great community for land was for not more than forty acres a
year. Is that the only demand of the people of Glasgow for land? Does
that really represent the complete economic and natural demand for
the amount of land a population of that size requires to live on? I
will admit that at present prices it may be all that they can afford
to purchase in the course of a year. But there are one hundred and
twenty thousand persons in Glasgow who are living in one-room
tenements; and we are told that the utmost land those people can
absorb economically and naturally is forty acres a year.
What is the explanation? Because
the population is congested in
the city the price of land is high upon the suburbs, and because the
price of land is high upon the suburbs the population must remain
congested within the city. That is the position which we are
complacently assured is in accordance with the principles which have
hitherto dominated civilised society.
when we seek to rectify this system, to break down this
unnatural and vicious circle, to interrupt this sequence of
unsatisfactory reactions, what happens? We are not confronted with
any great argument on behalf of the owner. Something else is put
forward, and it is always put forward in these cases to shield the
actual landowner or the actual capitalist from the logic of the
argument or from the force of a Parliamentary movement.
Sometimes it is the widow.
But that personality has been used to
exhaustion. It would be sweating in the cruellest sense of the word,
overtime of the grossest description, to bring the widow out again so
soon. She must have a rest for a bit; so instead of the widow we have
the market-gardener -- the
market-gardener liable to be disturbed on
the outskirts of great cities, if the population of those cities
expands, if the area which they require for their health and daily
life should become larger than it is at present.
What is the position disclosed
by the argument? On the one hand,
we have one hundred and twenty thousand persons in Glasgow occupying
one-room tenements; on the other, the land of Scotland. Between the
two stands the market-gardener, and we are solemnly invited, for the
sake of the market-gardener, to keep that great population congested
within limits that are unnatural and restricted to an annual supply
of land which can bear no relation whatever to their physical,
social, and economic needs -- and all for the sake of the
market-gardener, who can perfectly well move farther out as the city
spreads and who would not really be in the least injured. ...
the whole piece
Charles B. Fillebrown: A Catechism
of Natural Taxation, from Principles of
Natural Taxation (1917)
Q50. How could the landowner escape the alleged burden of an increase
in his land tax?
A. Simply by assuming the legitimate role of a model landlord, by putting
his land to suitable use, in providing for tenants at lowest possible price
the best accommodations and facilities appropriate to the situation that
money can buy.
... read the whole article
Upton Sinclair: The Consequences of Land
Speculation are Tenantry and Debt on the Farms, and Slums and Luxury in the
I know of a woman — I have never had the pleasure of making her acquaintance,
because she lives in a lunatic asylum, which does not happen to be on my
visiting list. This woman has been mentally incompetent from birth. She is
care of, because her father left her when he died the income of a large
farm on the outskirts of a city. The city has since grown and the land is
at conservative estimate, about twenty million dollars. It is covered with
office buildings, and the greater part of the income, which cannot be spent
by the woman, is piling up at compound interest. The woman enjoys good
health, so she may be worth a hundred million dollars before she dies.
I choose this case because it is one about which there can be no disputing;
this woman has never been able to do anything to earn that twenty million dollars.
And if a visitor from Mars should come down to study the situation, which would
he think was most insane, the unfortunate woman, or the society which compels
thousands of people to wear themselves to death in order to pay her the income
of twenty million dollars?
The fact that this woman is insane makes it easy to see that she is not
entitled to the "unearned increment" of the land she owns. But how about all
the other people who have bought up and are holding for speculation the most
desirable land? The value of this land increases, not because of anything these
owners do — not because of any useful service they render to the community — but
purely because the community as a whole is crowding into that neighborhood
and must have use of the land.
The speculator who bought this land thinks that he deserves the increase,
because he guessed the fact that the city was going to grow that way. But it
seems clear enough that his skill in guessing which way the community was going
to grow, however useful that skill may be to himself, is not in any way useful
to the community. The man may have planted trees, or built roads, and put in
sidewalks and sewers; all that is useful work, and for that he should be paid.
But should he be paid for guessing what the rest of us were going to need?
Before you answer, consider the consequences of this guessing game.
The consequences of land speculation are tenantry and debt on the farms,
and slums and luxury in the cities. A great part of the necessary
land is held out of use, and so the value of all land continually increases,
until the poor man can no longer own a home. The value of farm land also
increases; so year by year more independent farmers are dispossessed, because
they cannot pay interest on their mortgages. So the land becomes
a place of serfdom, that land described by the poet, "where wealth accumulates
and men decay." The great cities fill up with festering slums, and a
small class of idle parasites are provided with enormous fortunes, which
they do not have to earn, and which they cannot intelligently spend.
This condition wrecked every empire in the history of mankind, and it is wrecking
modern civilization. One of the first to perceive this was Henry George, and
he worked out the program known as the Single Tax. Let society as a whole take
the full rental value of land, so that no one would any longer be able to hold
land out of use. So the value of land would decrease, and everyone could have
land, and the community would have a great income to be spent for social ends.
In Philadelphia, as in all our great cities, are enormously wealthy
families, living on hereditary incomes derived from crowded slums. Here
and there among these rich men is one who realizes that he has not earned
what he is consuming, and that it has not brought him happiness, and is bringing
still less to his children. Such men are casting about for ways to invest
their money without breeding idleness and parasitism. Some of them might
be grateful to learn about this enclave plan, and to visit the lovely village
of Arden, and see what its people are doing to make possible a peaceful and
joyous life, even in this land of bootleggers and jazz orchestras. read
the whole article
Henry George: The Condition of
Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)
Thus, that any species of property is permitted by the state does not of
itself give it moral sanction. The state has often made things property that
are not justly property, but involve violence and robbery. For instance,
the things of religion, the dignity and authority of offices of the church,
the power of administering her sacraments and controlling her temporalities,
have often by profligate princes been given as salable property to courtiers
and concubines. At this very day in England an atheist or a heathen may buy
in open market, and hold as legal property, to be sold, given or bequeathed
as he pleases, the power of appointing to the cure of souls, and the value
of these legal rights of presentation is said to be no less than £17,000,000.
Or again: Slaves were universally treated as property by the customs and
laws of the classical nations, and were so acknowledged in Europe long after
the acceptance of Christianity. At the beginning of this century there was
no Christian nation that did not, in her colonies at least, recognize property
in slaves, and slaveships crossed the seas under Christian flags. In the
United States, little more than thirty years ago, to buy a man gave the same
legal ownership as to buy a horse, and in Mohammedan countries law and custom
yet make the slave the property of his captor or purchaser.
Yet your Holiness, one of the glories of whose pontificate is the attempt
to break up slavery in its last strongholds, will not contend that the moral
sanction that attaches to property in things produced by labor can, or ever
could, apply to property in slaves.
Your use, in so many passages of your Encyclical, of the inclusive term “property” or “private” property,
of which in morals nothing can be either affirmed or denied, makes your meaning,
if we take isolated sentences, in many places ambiguous. But reading it as
a whole, there can be no doubt of your intention that private property in
land shall be understood when you speak merely of private property. With
this interpretation, I find that the reasons you urge for private property
in land are eight. Let us consider them in order of presentation. You urge:
1. That what is bought with rightful property is rightful property. (RN,
paragraph 5) ...
2. That private property in land proceeds from man’s gift of reason.
(RN, paragraphs 6-7.) ...
3. That private property in land deprives no one of the use of land. (RN,
paragraph 8.) ...
4. That Industry expended on land gives ownership in the land itself. (RN,
paragraphs 9-10.) ...
5. That private property in land has the support of the common opinion of
mankind, and has conduced to peace and tranquillity, and that it is sanctioned
by Divine Law. (RN, paragraph 11.) ...
6. That fathers should provide for their children and that private property
in land is necessary to enable them to do so. (RN, paragraphs 14-17.) ...
7. That the private ownership of land stimulates industry, increases wealth,
and attaches men to the soil and to their country. (RN, paragraph 51.) ...
8. That the right to possess private property in land is from nature, not
from man; that the state has no right to abolish it, and that to take the
value of landownership in taxation would be unjust and cruel to the private
owner. (RN, paragraph 51.)
1. That what is bought with rightful property is rightful property. (5.)*
Clearly, purchase and sale cannot give, but can only transfer ownership.
Property that in itself has no moral sanction does not obtain moral sanction
by passing from seller to buyer.
If right reason does not make the slave the property of the slave-hunter
it does not make him the property of the slave-buyer. Yet your reasoning
as to private property in land would as well justify property in slaves.
To show this it is only needful to change in your argument the word land
to the word slave. It would then read:
It is surely undeniable that, when a man engages in remunerative labor,
the very reason and motive of his work is to obtain property, and to hold
it as his own private possession.
If one man hires out to another his strength or his industry, he does this
for the purpose of receiving in return what is necessary for food and living;
he thereby expressly proposes to acquire a full and legal right, not only
to the remuneration, but also to the disposal of that remuneration as he
Thus, if he lives sparingly, saves money, and invests his savings, for greater
security, in a slave, the slave in such a case is only his wages in another
form; and consequently, a working-man’s slave thus purchased should
be as completely at his own disposal as the wages he receives for his labor.
Nor in turning your argument for private property in land into an argument
for private property in men am I doing a new thing. In my own country, in
my own time, this very argument, that purchase gave ownership, was the common
defense of slavery. It was made by statesmen, by jurists, by clergymen, by
bishops; it was accepted over the whole country by the great mass of the
people. By it was justified the separation of wives from husbands, of children
from parents, the compelling of labor, the appropriation of its fruits, the
buying and selling of Christians by Christians. In language almost identical
with yours it was asked, “Here is a poor man who has worked hard, lived
sparingly, and invested his savings in a few slaves. Would you rob him of
his earnings by liberating those slaves?” Or it was said: “Here
is a poor widow; all her husband has been able to leave her is a few negroes,
the earnings of his hard toil. Would you rob the widow and the orphan by
freeing these negroes?” And because of this perversion of reason, this
confounding of unjust property rights with just property rights, this acceptance
of man’s law as though it were God’s law, there came on our nation
a judgment of fire and blood.
The error of our people in thinking that what in itself was not rightfully
property could become rightful property by purchase and sale is the same
error into which your Holiness falls. It is not merely formally the same;
it is essentially the same. Private property in land, no less than private
property in slaves, is a violation of the true rights of property. They are
different forms of the same robbery; twin devices by which the perverted
ingenuity of man has sought to enable the strong and the cunning to escape
God’s requirement of labor by forcing it on others.
What difference does it make whether I merely own the land on which another
man must live or own the man himself? Am I not in the one case as much his
master as in the other? Can I not compel him to work for me? Can I not take
to myself as much of the fruits of his labor; as fully dictate his actions?
Have I not over him the power of life and death?
For to deprive a man of land is as certainly to kill him as to deprive him
of blood by opening his veins, or of air by tightening a halter around his
The essence of slavery is in empowering one man to obtain the labor of another
without recompense. Private property in land does this as fully as chattel
slavery. The slave-owner must leave to the slave enough of his earnings to
enable him to live. Are there not in so-called free countries great bodies
of working-men who get no more? How much more of the fruits of their toil
do the agricultural laborers of Italy and England get than did the slaves
of our Southern States? Did not private property in land permit the landowner
of Europe in ruder times to demand the jus primae noctis? Does not the same
last outrage exist today in diffused form in the immorality born of monstrous
wealth on the one hand and ghastly poverty on the other?
In what did the slavery of Russia consist but in giving to the master land
on which the serf was forced to live? When an Ivan or a Catherine enriched
their favorites with the labor of others they did not give men, they gave
land. And when the appropriation of land has gone so far that no free land
remains to which the landless man may turn, then without further violence
the more insidious form of labor robbery involved in private property in
land takes the place of chattel slavery, because more economical and convenient.
For under it the slave does not have to be caught or held, or to be fed when
not needed. He comes of himself, begging the privilege of serving, and when
no longer wanted can be discharged. The lash is unnecessary; hunger is as
efficacious. This is why the Norman conquerors of England and the English
conquerors of Ireland did not divide up the people, but divided the land.
This is why European slave-ships took their cargoes to the New World, not
Slavery is not yet abolished. Though in all Christian countries its ruder
form has now gone, it still exists in the heart of our civilization in more
insidious form, and is increasing. There is work to be done for the glory
of God and the liberty of man by other soldiers of the cross than those warrior
monks whom, with the blessing of your Holiness, Cardinal Lavigerie is sending
into the Sahara. Yet, your Encyclical employs in defense of one form of slavery
the same fallacies that the apologists for chattel slavery used in defense
of the other!
The Arabs are not wanting in acumen. Your Encyclical reaches far. What shall
your warrior monks say, if when at the muzzle of their rifles they demand
of some Arab slave-merchant his miserable caravan, he shall declare that
he bought them with his savings, and producing a copy of your Encyclical,
shall prove by your reasoning that his slaves are consequently “only
his wages in another form,” and ask if they who bear your blessing
and own your authority propose to “deprive him of the liberty of disposing
of his wages and thus of all hope and possibility of increasing his stock
and bettering his condition in life”? ... read the whole letter
Mason Gaffney: The Taxable
Capacity of Land
Mason Gaffney: Unearned
increments and reality in California's recall
Making the property tax
more progressive is not just
equitable, it raises its revenue capacity. That is because visible
damage to the poor and marginal puts a cap on any tax. You can't
squeeze blood out of a turnip, and if you try you'll look like the
Sheriff of Nottingham. A land tax won't drive the poor from their
humble huts, because it exempts the huts, and the sites have low tax
valuations. It may tax a few off valuable land, if their poor huts
are there and they own the land. However, if they own such land, are
they really poor?
They may be "land-poor:" a
few folks always are. They have
non-cash assets, but are illiquid. "Illiquid" may be just a euphemism
for "holding out for more" -- there is always a market at a price.
Even so their plight, genuine or affected, traditionally evokes
sympathy and support. We must address it.
backward in many ways, has addressed it
effectively. In our special improvement districts (SIDs),
State law allows the SID to contract with the landowner as follows.
You don't have to pay your annual charge
you choose not to, we take an equity in your property, charging a
modest rate of interest. Our equity accumulates over time. When you
die, we sell the property and take our share; your estate gets the
rest. Should our equity reach 100% during your lifetime, you stay
there for the duration, tax free.
Objectively, it looks like a
good deal for the taxpayer.
They can't come out behind, even if they die soon; if they live long,
they come out ahead. The instructive
result is that very few people
take this apparently advantageous option. UCLA's Donald Shoup
published several works on the program. One way or another, they
manage to pay on time. Perhaps it attracts the attention of potential
heirs, in a compelling way, but somehow the cash comes forth. While
intending only to relieve distress, the program seems to have called
a great bluff. The lachrymose plea of the cash-poor widow is
unanswerable in debate, without appearing callous, doctrinaire, and
jackbooted. Meantime wealthy interests, thoroughly undistressed, hide
behind the widow's skirt and get their way.
We also hear, sometimes,
that "it's never been done," or
it's only been done by our drab neighbor Pennsylvania, for whom
familiarity may have bred contempt? Only "far kine have long horns."
Or, whatever progress ensued there was happening anyway. We are
destiny's tots in the grip of cosmic forces. We rise and fall with
the tide. We cannot control Fate; relax and accept what the gods dish
out. Fatalism: it's a sure recipe for milling around ineffectually
while life passes us by. ... Read
the whole article
California homeowners are
wallowing in unearned increments beyond
the dreams of avarice, while its governments are courting bankruptcy. Warren Buffett dared point
this out, and overnight changed from
the Oracle of Omaha into the Numbskull of Nebraska because he does
not understand the "reality of California politics," the oxymoron du
for Governor fled like startled deer. Buffett's
sponsor, well-tailored Mr. Muscles, recalled meeting a tearful widow
who said she would have been taxed out of her home were it not for
Prop 13. Poor thing, her home had risen in value. No one asked her
name, or whether she knew what she was talking about, or had her
claims audited - being a tearful widow "on a fixed income" insulates
one from reality checks. The press chimed in with pix of poster
oldsters, gazing from their multi-million dollar perches over the
blue Pacific, fretting about Buffett's solecism and its possible
effect on them, never mind anyone else.
Fact is, unearned increments ARE
income, at the time they accrue. Illiquid? They are better than cash income because
you can turn them
into cash by borrowing on them, and pay no income tax on the cash. If
you have trouble with that, the tax man himself will arrange it
for you by placing a tax lien on your appreciated home, rather than
foreclose and evict you. This
helps explain why we never actually
see one of these evicted widows suffering from unearned increments --
they are maudlin figments for mythmakers. The evictees we do see
are renters who couldn't pay, and had no equity to mortgage. Who
cries for them? ...
Governor Gray Davis, supposedly
fighting to close a deficit,
chimed in endorsing Prop 13, citing the mythical widow again to
explain why non-residential property, about 2/3 of the tax base,
should enjoy low rates. Faced with a negative poll, he backed right
down from his "land tax on wheels," the higher vehicle registration
- No one has said a word about a severance tax on oil and
although California is the only major producing state without one.
- No one has crusaded for a severance tax on water
although it would solve both our revenue and water crises in one
- No one has said word one about taxing the taboo lands used
for golfing, timber, or farming. ...
Cruz Bustamante has proposed any specifics. He would begin
dismantling Prop 13 -- still not menacing the mythical widow -- by
raising assessments on industrial/commercial property. A
campaign right off has it that Bustamante is leading an Hispanic
conspiracy to take over the southwest and turn "white, European"
Americans into a minority to kick around. We observe mixed marriages
on every hand, and Spain is still European, but this is California,
where "reality" means mythology. May Warren Buffett continue to get
in our faces with facts. ... Read the whole article
Jeff Smith: Subsidies at
Their Worst: Privileges
Money is the mother's milk of
politics. Yet the milk invested by
lobbyists and those they represent is a drop in the bucket compared
to the flow they get back from the public tit, thanks to the milkmaid
state. Politicians grant well-connected big businesses:
a. direct cash
outlays, such as cash to corporations for advertising overseas,
b. lucrative contracts, such as with
weaponeers et al campaign contributors, and
c. tax breaks that burden would-be competitors,
such as tariffs that protect GM and Ford but not autoworkers. Even if
we were to abolish subsidies (a) and taxes, eliminating the advantage
of tax breaks (c), and negotiate responsible contracts (b), that'd
still leave in place
d. seven subtle privileges, mere pieces of
paper that government grants its customers at nowhere near market
value, positioning the privileged to claim all the surplus value of
1. The corporate charter's salient feature is to
limit the liability of those choosing to profit by putting others at
2. Pollution permits, performance waivers, land use
exemptions -- whether granted by bureaucracies, legislatures, or courts
- are worth much more than however much government charges and business
3. Patents protect the basement inventor, right? Wrong.
4. Utility franchises create monopolies in exchange for
some public service, such as providing electricity, phone
communication, etc. ...
5. Communication licenses for TV, radio, cell phones, and
the like are given away for free or for far less than market value,
turning recipients into "instant billionaires" (the business press
gleefully notes). ...
6. Resource leases for public oil, minerals, forests, and
grazing land, are often let at "fire-sale" prices. ...
7. Land titles do
protect the average homeowners but because they cost virtually nothing
(a paltry filing fee often about $2.00), they also protect enormously
wealthy absentee landlords. ...
Land titles are the granddaddy of
all privileges. Historically,
titles preceded all others and created a class of elite owners with
the power to win the six other indirect subsidies, along with the
more direct ones – grants, contracts, and tax favors. To undo
and reverse this history, it's necessary to collect and share the
natural rents from all seven inconspicuous privileges.
For these pieces of paper,
government should charge full market
a Citizens Dividend would not
only eliminate poverty, it'd also erase any rationale for subsidies -
direct or indirect - to the poor or to the privileged. Repealing
free ride of privileges would be like repealing capitalism. Without
those subtle detours imposed upon public revenue, owners would have
to work to amass a fortune, and work is one of the worst ways known
to strike it rich.
What you can do: Dry up the
milkmaid state. Dispense with the
notion that the state must meddle in enterprise. Dispense the notion
from others, too. Focus government on its lone raison d'etre - defend
rights. Demand your right to a fair share of natural revenue. ...
Read the whole article
Michael Hudson and Kris Feder: Real Estate and the Capital
have won congressional support for
real estate exemptions in large part by mobilizing the economic
ambitions of homeowners. Most families’ major asset, after all, is
their home. Two Federal Reserve studies trace the rise in gross house
value from 26 percent of household wealth in 1962 to 30.1 percent in
1983 (falling back to 28.5 percent in 1989). Household real estate
assets substantially exceeded holdings of stocks, bonds and trust funds (20.5
percent in 1989), liquid assets (17
percent) and total debt (14 percent). The
giveaway to real estate interests is thus presented ostensibly as a
popular middle class measure. The real estate industry (and the
financial sector riding on its shoulders) have found that the middle
classes are willing to cut taxes on the wealthy considerably, as long
as their own taxes are cut even lightly. It is no surprise that
President Clinton’s first major concession to the pressure for cutting
capital gains taxation is directed at homeowners, despite the fact that
preferences for home ownership cannot be justified as a boost to
entrepreneurial investment. Such is the foreshortened economic
perspective of our times. Read the whole article
Henry George: Concentrations
of Wealth Harm America (excerpt from Social Problems)
This element of monopoly, of
appropriation and spoliation
will, when we come to analyze them, be found largely to account for
all great fortunes....
Take the great Vanderbilt
fortune. The first Vanderbilt was a
boatman who earned money by hard work and saved it. But it was not
working and saving that enabled him to leave such an enormous
fortune. It was spoliation and monopoly. As soon as he got money
enough he used it as a club to extort from others their earnings. He
ran off opposition lines and monopolized routes of steamboat travel.
Then he went into railroads, pursuing the same tactics. The
Vanderbilt fortune no more comes from working and saving than did the
fortune that Captain Kidd buried.
Or take the great Gould fortune.
Mr. Gould might have got his
first little start by superior industry and superior self-denial. But
it is not that which has made him the master of a hundred millions.
It was by wrecking railroads, buying judges, corrupting legislatures,
getting up rings and pools and combinations to raise or depress stock
values and transportation rates.
So, like wise, of the great
fortunes which the Pacific
railroads have created. They have been made by lobbying through
profligate donations of lands, bonds and subsidies, by the operations
of Credit Mobilier and Contract and Finance Companies, by
monopolizing and gouging. And so of fortunes made by such
combinations as the Standard Oil Company, the Bessemer Steel Ring,
the Whisky Tax Ring, the Lucifer Match Ring, and the various rings
for the "protection of the
American workman from the pauper labor of
Or take the fortunes made out of
successful patents. Like that
element in so many fortunes that comes from the increased value of
land, these result from monopoly, pure and simple. And though I am
not now discussing the expediency of patent laws, it may be observed,
in passing, that in the vast majority of cases the men who make
fortunes out of patents are not the men who make the inventions.
Through all great fortunes, and,
in fact, through nearly all
acquisitions that in these days can fairly be termed fortunes, these
elements of monopoly, of spoliation, of gambling run. The head of one
of the largest manufacturing firms in the United States said to me
recently, "It is not on our ordinary business that we make our money;
it is where we can get a monopoly." And this, I think, is generally
true. ... Read the entire article
Mason Gaffney: The
Partiality of Indexing Capital Gains
to ignoring land is
minimizing its weight. Thus
one may acknowledge it indulgently, while actually dismissing it. In
fact, though, land comprises some half the assessed value of taxable
real estate in California, and is not dismissable. Half the assessed
value means more than half the market value because of assessment
discrimination favoring land. A raft of studies of assessment
discrimination, like the sales/assessment ratio studies of the U.S.
Census, show consistent patterns of discrimination favoring land. In
addition to ordinary assessment discrimination there is much
legislated underassessment, for land in forest, farm, country club,
and other favored uses.
[An interesting recent
involves Charles H. Keating, Jr. of
Arizona. He and Kemper Marley posed as farmers to secure "millions of
dollars in agricultural tax breaks on land they planned to develop."
The breaks result from lower assessed land values for "farmers." [Steve
Yozwiak, "Land-tax bill OK reached," The Arizona Republic, 13 April 89.]
... read the whole article
Mason Gaffney: Full
Employment, Growth And Progress On A Small Planet: Relieving Poverty
While Healing The Earth
spoke for the
landless, the tenants, the young, the upwardly mobile, orphans with
nothing to inherit (as opposed to the mythical orphans who own all
the property in the country), the students and trainees, the
exploited workers, the innovators and entrepreneurs and adventurers
who turn their capital and turn the wheels of capitalism – not
so much for stolid settled burghers and retirees who own land.
buildings, yes, he would exempt. But if those buildings rest on
of high social utility, they are playing the role of land
speculators. Call them Type #3 speculators: the
“passive-aggressive” type. ...
It is not that George or his
allies are against homeownership.
Georgist tax reform makes it easier
for first-time buyers to enter
the market, and tends to raise the number of owner-occupants.
that sometimes entails inducing Type #3 speculators, melded in among
existing homeowners, to let go of excess land they do not need. That
basic point gets lost when campaigners pitch their message solely to
existing homeowners, lumping them all as a class.
Folklore and commercial drama make
sympathetic figures of Type #3
speculators. Environmentalists cozy up to landed gentry as soon as
these set aside some land for wildlife, and abate the bloodlust of
their foxhunting. The challenge for educators and economists is to
explain that their role in the land market can be just as anti-social
as those who are more transparently aggressive and greedy. It is a
mighty challenge, I allow; but it is what’s out there, and we
must face it, or settle for tokenism that absorbs our lives and
resources while papering over the major issues.... read the whole article
Mason Gaffney: Land as a
Distinctive Factor of Production
... The dominance of "fusers" is
shown by the prevalence of 2-factor models, wherein the world is
divided into just labor and capital.3 Land is melded with capital, and
simply disappears as a separate category, along with its distinctive
attributes. A number of economists don't buy it, but don't do
anything about it - acquiescing in error by silence, indifference,
passivity, or anxiety of the professional consequences. They
handle the question by "going into denial," as it were, resolving a
vexing issue by pretending it isn't there. Anything else spoils the web
of interpretation through which their art seeks to make human
experience intelligible. Truth will not be made manifest by
donning blinders or hedging, especially against such motivated forces
as have an interest in hiding unearned wealth behind the skirts of
Land is not convertible into
Each unit of land is permanently unique. Capital, on the
other hand, is a homogeneous "pool" over time: as each unit degrades
and yields back its substance, the owner may reinvest the Capital
Consumption Allowances in anything. Thus, capital is fungible:
one specific item of capital is universally convertible into any
other. Land is not at all fungible: no specific unit of land is
convertible into any other.
J.B. Clark, as is well known, tried to wipe out this
distinction, which brought him into debate with Boehm-Bawerk over
whether capital has a "period of production". Frank Knight,
following Clark, renewed the debate with Friedrich von Hayek. The intent of both Clark and
Knight was to shelter land behind the skirts of capital, to counter a
popular movement for taxing land more and capital less. Students
are still required to study these dreary, mystical exchanges, which
seem to have no other purpose.
The rate of turnover of capital may vary, and does, over a wide
range, from once a day for restaurant fresh vegetables to once a
century for slow growth timber. Thus, the "valence" with which
capital combines with labor is highly variable. The land/labor
valence is not fixed, but it contains no such extreme factor as this.
... read the whole article
Mason Gaffney: Privatizing
Annual revaluation of land for
tax purposes might seem to impose
extra uncertainty on landowners, in comparison to the lot of lessees
on fixed terms. However it is only the amount of the tax that is
uncertain; the principle of it is known and certain. Furthermore the
principle is such that the tax only rises when exogenous forces raise
the earning potential of land; thus the added tax is neither
arbitrary nor grievous to bear. When exogenous forces lower earnings,
they also lower the tax burden, so that the fisc shares the risk with
Annual revaluation occasionally
will penalize a landowner when the
best use of land changes in the midlife of a durable building.
Anticipating that hazard, landowners in some times and places will
avoid long commitments. This is not such a bad effect, however. Life
is uncertain; economic tides are uncertain; optimal land use calls
for frequent adjustments to new forces and data. Therefore the most
fixed, durable improvement should rarely be encouraged. It is too
ponderous and inflexible, too likely to be a monument or white
elephant that will obsolesce before it pays off. Some examples are
the C&O Canal, the Great Wall of China, the Edsel plant, the
Maginot Line, and a dozen buildings we could all pick out in our own
cities. In my own neighborhood, near a growing shopping center, over
half the parcels have been cleared and rebuilt in the last fifteen
years, even without any tax stimulus. In dynamic times and places it
is good for builders to anticipate fairly early demolition and
renewal, and plan accordingly.... read the whole article
Mason Gaffney: The
Property Tax is a Progressive Tax (1971)
needed correction is the
treatment of realized capital
gains. Say an asset rises slowly for twenty years and is sold.
the year of sale, reported income is high, but property taxes are
normal or fall. In the first 19 years
there were property taxes and
no reported income. This creates a statistical illusion of
regressivity. If accrual of value were treated as current income,
the illusion would be dispelled.
needed correction is the treatment of normal life-cycles
of accumulation and liquidation. It is normal for the retired
elderly to draw on savings in years of low income, and get help from
children, if needed, to hang onto property the children will inherit. The
property tax which has not been regressive in a lifetime sense
looks regressive when no correction is made for this statistical
illusion. ... read the whole article
Louis Post: Outlines of Louis F. Post's
with Illustrative Notes and Charts (1894) — Appendix: FAQ
Q7. If a man owns a city lot with a $5000 building on it, what, under
the single tax, would hinder another man, perhaps with hostile intent,
from bidding a higher tax than the first man was able to pay, and thus
ousting him from his building?
A. The question rests upon a misapprehension of method. The single tax is
not a method of nationalizing land and renting it out to the highest bidder.
It is a method of taxation. And it would not only hinder, it would prevent
the unjust ousting of another from his building. The single tax falls upon
land-owners in proportion to the unimproved value of their land; and this
value is determined by the real estate market — by the demands of the
whole community — and not by arbitrary bids. No one could oust a man
from his building by bidding more for the land on which it stood than the
occupier was paying; the single tax would not be increased in any case unless
the land upon which it fell was in so much greater demand that the owner
could let it for a higher rent.
Q50. Would not the single tax take away the home place, and so tend to crush
out the home sentiment?
A. When the home place now becomes valuable, it is parted with.
Q51. Yes; but when the home place is parted with now, the home owner is
compensated by the high price he gets.
A. Then your question does not turn upon the home sentiment but upon the
dollar sentiment. As a matter of sentiment, the condition would be no worse
in any case than now, and in many cases far better; as a matter of dollars,
the question is one of justice and not of the home. Under the single tax
any one who wanted a home could have it, and never be obliged to abandon
one home for another, unless such changes took place in the neighborhood
as to make the place inappropriate for a home. He could not then, as he does
now, play dog in the manger, saying to the community, "I will not use
this place for appropriate purposes, nor will I allow any one else to do
Q56. Rich man with large mansion; poor widow with small house on same sized
lot adjoining. The two pay the same tax. Is that right?
A. There is no reason in justice why the community should not charge poor
widows as much for monopolizing valuable land as it charges rich men. In
either case it confers a special privilege and should be paid what the privilege
is worth. The question is seldom asked in good faith. Poor widows who live
on lots adjoining large mansions are not numerous, and when they exist they
are simply land-grabbers. In our sympathy for these widows, let us not forget
the vast armies of widows who not only do not live next to mansions, but
have no place in the whole wide world upon which to rest. ... read