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 and
legislation.
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.
Hence:
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 others.
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 innocent.
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?
That the value attaching to land with social growth is intended for
social needs is shown by the final proof. God is indeed a jealous God
in the sense that nothing but injury and disaster can attend the effort
of men to do things other than in the way he has intended; in the sense
that where the blessings he proffers to men are refused or misused
they turn to evils that scourge us. And just as for the mother to withhold
the provision that fills her breast with the birth of the child is
to endanger physical health, so for society to refuse to take for social
uses the provision intended for them is to breed social disease.
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