Free Gifts of Nature
Henry George: The Common Sense of Taxation (1881
These are truisms. Yet so widespread and persistent is the notion that all
property should be taxed, that they are generally ignored. Nothing is clearer
than that when a farmer who wants more capital puts a mortgage on his farm,
no new value is thereby created. Yet, in most of our States, both the farm
and the mortgage are taxed; though so obvious is the double taxation that
in some of them the clumsy expedient of making an exemption to the debtor
is resorted to.
But it is manifest that property of this kind is not a fit subject for
taxation, and ought not to be considered in making up the assessment rolls.
It has, in itself, no value. It is merely the representative, or token, of
value — the certificate of ownership, or the obligation to pay value.
It either represents other property, or property yet to be brought into existence.
And, as nothing real can be drawn from that which is not real, taxation upon
property of this kind must ultimately fall, either upon the property represented,
in which case there is double taxation, or upon those whose obligations it
expresses, in which case men are taxed, not upon what they own, but upon
what they owe; and all cumbrous devices to prevent the unjust effects of
such taxation, like other complications of the revenue system, simply give
to the stronger and more unscrupulous opportunities of throwing the burden
upon the weaker and more conscientious. Property of this kind ought not to
be taxed at all. Property in itself valuable is clearly that with which any
wise scheme of taxation should alone deal.
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. ... read the whole article
Peter Barnes: Capitalism
3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)
Gifts of creation were produced only once and are irreplaceable. By contrast,
products traded in markets tend to be mass-produced and highly disposable. It’s hard to imagine a deity who’d view such temporal goods
as equivalent to his or her enduring handiwork. The question is whether
creation’s irreplaceable gifts are different enough to merit different
treatment by our economic operating system. A strong case can be made that
The case is moral as well as economic. The moral argument is that we have
a duty to preserve irreplaceable gifts of creation, whereas we have no comparable
duty toward transient commercial goods. The economic argument is that any
society that depletes its natural capital is bound to become impoverished
over time. I find both lines of argument convincing.
But what’s the reality today? Here we encounter two disconcerting
facts. The first is that there are very few property rights protecting nature’s
gifts. With the exception of a few set-asides such as parks and wilderness
areas, we subject creation’s gifts to the same rules as Wal-Mart’s
merchandise. The second is that the right of corporations to profit dominates
all other rights.
It’s time to treat creation’s gifts differently, to put different “tags” on
them so markets will recognize them and apply different rules to them. This
chapter shows how we can do that. ...
At the moment, there’s one law that does give preference to creation’s
gifts: the Endangered Species Act, which says a species’ right to survive
trumps capital’s right to short-term gain. The trouble is, the law
comes into play only when a species has been so devastated it’s on
the brink of extinction. Even then, the courts don’t always enforce
it. Recently, in a very dry year, the government reduced its delivery of
subsidized water to California farmers because endangered fish needed it
to survive. Some farmers sued, arguing that the government had unconstitutionally “taken” their
property. A federal court agreed, the Bush administration refused to appeal,
and the farmers collected $13 million in damages.
It seems to me that, if anything is divine, it should be gifts of
creation. Morally, they’re gifts we inherit together and must pass on, undiminished,
to future generations. Economically, they’re irreplaceable and invaluable
capital. Protection of these shared assets should trump transient private
gain. Broad benefit should trump narrow benefit. The commons should trump
capital. This should be written into our economic operating system and enforced
by the courts. ...
A trustee isn’t the same thing as a steward. Stewards care for an
asset, but their obligations are voluntary and vague. By contrast, trustees’ obligations
are mandatory and quite specific. Trusteeship is thus a more formal and rigorous
responsibility than stewardship.
Trusts can be in charge of financial as well as physical assets. In this
chapter, my concern is natural assets — gifts we inherit from creation.
One of my premises is that each generation has a contract to pass
on such gifts, undiminished, to those not yet born. If we are to keep this
someone must act as trustee of nature’s gifts, or at least of the most
endangered of them. The question is, who?
The candidates are government, corporations, and trusts. I argued earlier
that neither corporations nor government can fulfill this function; they’re
both too bound to short-term private interests. That leaves trusts. ... read
the whole chapter