Value
Henry George: The Common Sense of Taxation (1881
article)
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
Rev. A. C. Auchmuty: Gems from George,
a themed collection of excerpts from the writings of Henry
George (with links to sources)
THE phenomena of value are at bottom illustrations of one principle. The
value of everything produced by labor, from a pound of chalk or a paper of
pins to the elaborate structure and appurtenances of a first-class ocean
steamer, is resolvable on analysis into an equivalent of the labor required
to reproduce such a thing in form and place; while the value of things not
produced by labor, but nevertheless susceptible of ownership, is, in the
same way, resolvable into an equivalent of the labor which the ownership
of such a thing enables the owner to obtain or save. — A
Perplexed Philosopher (Mr.
Spencer's Confusion As To Value)
WHEREVER land has an exchange value there is rent in the economic meaning
of the term. Wherever land having a value is used, either by owner or hirer,
there is rent actual; wherever it is not used, but still has a value, there
is rent potential. It is this capacity of yielding rent which gives value
to land. . . . No matter what are its capabilities, land can yield no rent
and have no value until some one is willing to give labor or the results
of labor for the privilege of using it; and what anyone will thus give, depends
not upon the capacity of the land, but upon its capacity as compared with
that of land that can be had for nothing. — Progress & Poverty Book
III, Chapter 2 — The Laws of Distribution: Rent and the Law of Rent
STATED reversely, the law of rent is necessarily the law of wages and interest
taken together, for it is the assertion, that no matter what be the production
which results from the application of labor and capital, these two factors will
only receive in wages and interest such part of the produce as they could have
produced on land free to them without the payment of rent — that is the
least productive land or point in use. — Progress & Poverty Book
III, Chapter 2 — The Laws of Distribution: Rent and the Law of Rent
... go to "Gems from George"
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