Wealth from Privatizing Land Rent
estimate of costs of maintenance
depreciation
other tax benefits
Louis Post: Outlines of Louis F.
Post's Lectures, with Illustrative Notes and Charts (1894)
3. THE SINGLE TAX FALLS IN PROPORTION TO BENEFITS
To perceive that the single tax would justly measure the value of government
service we have only to realize that the mass of individuals everywhere and
now, in paying for the land they use, actually pay for government service in
proportion to what they receive. He who would enjoy the benefits of a government
must use land within its jurisdiction. He cannot carry land from where government
is poor to where it is good; neither can he carry it from where the benefits
of good government are few or enjoyed with difficulty to where they are many
and fully enjoyed. He must rent or buy land where the benefits of government
are available, or forego them. And unless he buys or rents where they are greatest
and most available he must forego them in degree. Consequently, if he would
work or live where the benefits of government are available, and does not already
own land there, he will be compelled to rent or buy at a valuation which, other
things being equal, will depend upon the value of the government service that
the site he selects enables him to enjoy. 14 Thus does he pay for the service
of government in proportion to its value to him. But he does not pay the public
which provides the service; he is required to pay land-owners.
14. Land values are lower in all countries of poor
government than in any country of better government, other things
being equal. They are lower in cities of poor government, other things
being equal, than in cities of better government. Land values are
lower, for example, in Juarez, on the Mexican side of the Rio Grande,
where government is bad, than in El Paso, the neighboring city on
the American side, where government is better. They are lower in
the same city under bad government than under improved government.
When Seth Low, after a reform campaign, was elected mayor of Brooklyn,
N.Y., rents advanced before he took the oath of office, upon the
bare expectation that he would eradicate municipal abuses. Let the
city authorities anywhere pave a street, put water through it and
sewer it, or do any of these things, and lots in the neighborhood
rise in value. Everywhere that the "good roads" agitation
of wheel men has borne fruit in better highways, the value of adjacent
land has increased. Instances of this effect as results of public
improvements might be collected in abundance. Every man must be able
to recall some within his own experience.
And it is perfectly reasonable that it should be
so. Land and not other property must rise in value with desired improvements
in government, because, while any tendency on the part of other kinds
of property to rise in value is checked by greater production, land
can not be reproduced.
Imagine an utterly lawless place, where life and property
are constantly threatened by desperadoes. He must be either a very
bold man or a very avaricious one who will build a store in such
a community and stock it with goods; but suppose such a man should
appear. His store costs him more than the same building would cost
in a civilized community; mechanics are not plentiful in such a place,
and materials are hard to get. The building is finally erected, however,
and stocked. And now what about this merchant's prices for goods?
Competition is weak, because there are few men who will take the
chances he has taken, and he charges all that his customers will
pay. A hundred per cent, five hundred per cent, perhaps one or two
thousand per cent profit rewards him for his pains and risk. His
goods are dear, enormously dear — dear enough to satisfy the
most contemptuous enemy of cheapness; and if any one should wish
to buy his store that would be dear too, for the difficulties in
the way of building continue. But land is cheap! This is
the type of community in which may be found that land, so often mentioned
and so seldom seen, which "the owners actually can't give away,
you know!"
But suppose that government improves. An efficient
administration of justice rids the place of desperadoes, and life
and property are safe. What about prices then? It would no longer
require a bold or desperately avaricious man to engage in selling
goods in that community, and competition would set in. High profits
would soon come down. Goods would be cheap — as cheap as anywhere
in the world, the cost of transportation considered. Builders and
building materials could be had without difficulty, and stores would
be cheap, too. But land would be dear! Improvement in government
increases the value of that, and of that alone.
Now, the economic principle pursuant to which land-owners are thus able
to charge their fellow-citizens for the common benefits of their common
government points to the true method of taxation. With the exception
of such other monopoly property as is analogous to land titles, and which
in the purview of the single tax is included with land for purposes of
taxation, 15 land is the only kind of property that is increased in value
by government; and the increase of value is in proportion, other influences
aside, to the public service which its possession secures to the occupant.
Therefore, by taxing land in proportion to its value, and exempting all
other property, kindred monopolies excepted — that is to say, by
adopting the single tax — we should be levying taxes according
to benefits.16
15. Railroad franchises, for example, are not usually
thought of as land titles, but that is what they are. By an act of
sovereign authority they confer rights of control for transportation
purposes over narrow strips of land between terminals and along trading
points. The value of this right of way is a land value.
16. Each occupant would pay to his landlord the value
of the public benefits in the way of highways, schools, courts, police
and fire protection, etc., that his site enabled him to enjoy. The
landlord would pay a tax proportioned to the pecuniary benefits conferred
upon him by the public in raising and maintaining the value of his
holding. And if occupant and owner were the same, he would pay directly
according to the value of his land for all the public benefits he
enjoyed, both intangible and pecuniary.
And in no sense would this be class taxation. Indeed, the cry of class
taxation is a rather impudent one for owners of valuable land to raise
against the single tax, when it is considered that under existing systems
of taxation they are exempt. 17 Even the poorest and the most
degraded classes in the community, besides paying land-owners for such
public
benefits as come their way, are compelled by indirect taxation to contribute
to the support of government. But landowners as a class go free. They
enjoy the protection of the courts, and of police and fire departments,
and they have the use of schools and the benefit of highways and other
public improvements, all in common with the most favored, and upon the
same specific terms; yet, though they go through the form of paying taxes,
and if their holdings are of considerable value pose as "the tax-payers" on
all important occasions, they, in effect and considered as a class, pay
no taxes, because government, by increasing the value of their land,
enables them to recover back in higher rents and higher prices more than
their taxes amount to. Enjoying the same tangible benefits of government
that others do, many of them as individuals and all of them as a class
receive in addition a tangible pecuniary benefit which government confers
upon no other property-owners. The value of their property is enhanced
in proportion to the benefits of government which its occupants enjoy.
To tax them alone, therefore, is not to discriminate against them; it
is to charge them for what they get.18
17. While the landholders of the City of Washington
were paying something less than two per cent annually in taxes, a
Congressional Committee (Report of the Select Committee to Investigate
Tax Assessments in the District of Columbia, composed of Messrs.
Johnson, of Ohio, Chairman, Wadsworth, of New York, and Washington,
of Tennessee. Made to the House of Representatives, May 24, 1892.
Report No. 1469), brought out the fact that the value of their
land had been increasing at a minimum rate of ten per cent per annum.
The Washington land-owners as a class thus appear to have received
back in higher land values, actually and potentially, about ten dollars
for every two dollars that as land-owners they paid in taxes. If
any one supposes that this condition is peculiar to Washington let
him make similar estimates for any progressive locality, and see
if the land-owners there are not favored in like manner.
But the point is not dependent upon increase in the
capitalized value of land. If the land yields or will yield to its
owner an income in the nature of actual or potential ground rent,
then to the extent that this actual or possible income is dependent
upon government the landlord is in effect exempt from taxation. No
matter what tax he pays on account of his ownership of land, the
public gives it back to him to that extent.
18. Take for illustration two towns, one of excellent
government and the other of inefficient government, but in all other
respects alike. Suppose you are hunting for a place of residence
and find a suitable site in the town of good government. For simplicity
of illustration let us suppose that the land there is not sold outright
but is let upon ground rent. You meet the owner of the lot you have
selected and ask him his terms. He replies:
"Two hundred and fifty dollars a year."
"Two hundred and fifty dollars a year!" you
exclaim. "Why, I can get just as good a site in that other town
for a hundred dollars a year."
"Certainly you can," he will say. "But
if you build a house there and it catches fire it will burn down;
they have no fire department. If you go out after dark you will be
'held up' and robbed; they have no police force. If you ride out
in the spring, your carriage will stick in the mud up to the hubs,
and if you walk you may break your legs and will be lucky if you
don t break your neck; they have no street pavements and their sidewalks
are dangerously out of repair. When the moon doesn't shine the streets
are in darkness, for they have no street lights. The water you need
for your house you must get from a well; there is no water supply
there. Now in our town it is different. We have a splendid fire department,
and the best police force in the world. Our streets are macadamized,
and lighted with electricity; our sidewalks are always in first class
repair; we have a water system that equals that of New York; and
in every way the public benefits in this town are unsurpassed. It
is the best governed town in all this region. Isn't it worth a hundred
and fifty dollars a year more for a building site here than over
in that poorly governed town?"
You recognize the advantages and agree to the terms.
But when your house is built and the assessor visits you officially,
what would be the conversation if your sense of the fitness of things
were not warped by familiarity with false systems of taxation? Would
it not be something like what follows?
"How much do you regard this house as worth? " asks
the assessor.
"What is that to you?" you inquire.
"I am the town assessor and am about to appraise
your property for taxation."
"Am I to be taxed by this town? What for?"
"What for?" echoes the assessor in surprise. "What
for? Is not your house protected from fire by our magnificent fire
department? Are not you protected from robbery by the best police
force in the world? Do not you have the use of macadamized pavements,
and good sidewalks, and electric street lights, and a first class
water supply? Don't you suppose these things cost something? And
don't you think you ought to pay your share?"
"Yes," you answer, with more or
less calmness; "I
do have the benefit of these things, and I do think that I ought
to pay my share toward supporting them. But I have already paid my
share for this year. I have paid it to the owner of this lot. He
charges me two hundred and fifty dollars a year -- one hundred and
fifty dollars more than I should pay or he could get but for those
very benefits. He has collected my share of this year's
expense of maintaining town improvements; you go and collect from
him. If you do not, but insist upon collecting from me, I shall be
paying twice for these things, once to him and once to you; and he
won't be paying at all, but will be making money out of them, although
he derives the same benefits from them in all other respects that
I do."
... read the book
Frank Stilwell and Kirrily Jordan: The
Political Economy of Land: Putting Henry George in His Place
George saw land as a community resource provided by nature, to
which every human being had an equal right. He argued that, since land
was fixed in supply, the system of private land ownership allowed the wealthy
few to enjoy exclusive rights to land and its benefits, while alienating
the poorer majority from land ownership and forcing them to pay rent to
landowners in order to access this necessary resource. Moreover, the
collection of rents by landowners allowed them to increase their wealth
without contributing
to the productive efforts of society. As the population grew, so too did
the demand for land, forcing rents and land values ever higher. In addition,
increases in land value resulting from publicly-funded developments, such
as roads and public transport systems, unduly benefited landowners at the
expense of the community. Such unearned gains from landownership encouraged
speculation in land, pushing prices even higher, while exposing the economy
to the risks of speculative ‘booms’ and ‘busts.’... read
the whole article
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