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.
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
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
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
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?
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