Privilege Fights With Lies
Noah D. Alper
[Reprinted from The Freeman, October, 1938]
In September, 1933, Judge Jackson H. Ralston, of Palo Alto,
California, appeared before the Annual Convention of the California
State Federation of Labor in Monterey and asked if this organization
would support a movement to free labor and industry from the burden of
unjust taxation. The result is the present Amendment offered the
electorate in California.
The principal purposes of this amendment are:
- It repeals the Sales Tax and the Use Tax, which together
account for some $92.000,000 in revenue. It repeals the Motor
Vehicle License Tax which collects some $10,000,000. It abolishes
over a period of nine years all taxes on Improvements and Tangible
Personal Property which today produce about $135,000,000 in
- It carries prohibitions which, except for police and regulatory
purposes, prevent the use of tangible production values as the
measure for licensing, excise, sales or other possible forms of
- The Amendment retains existing Income, Inheritance, Gasoline,
Corporation taxes, and permits severance taxes.
- Land value taxation is retained. The bulk of some $250,000,000
in taxes will in ten years be shifted from sales and produced
property to land values.
The total (bill of the people of California, including federal, state
and local government, is some $750,000,000. Neither the federal nor
the state government recovers one cent by land value taxation,
although their expenditures create or maintain in California vast land
value benefiting a comparative few, many being absentee land holders.
The local governments of California collect about $130,000,000 in land
Thus it can be seen that California, an empire in resources and
population, collects less than 20% of its total government costs from
ground rent. It permits some 80% of this publicly made value to be
privately appropriated by interests who have no more to do with making
it than the other Californians. Accompanying this private "communism"
of the publicly created wealth are the cries of ever-hungry
politicians and bureaucrats for more confiscation of the private
wealth of the people.
The tactics and character of the opposition to this Amendment can be
indicated by two direct quotations.
The San Francisco Examiner, July 29, said editorially: "Divested
of its cumbrous, pseudo-intellectual theorizing, the single tax
proposal is simply to penalize the home owner.
"To double or triple his taxes, make him the sole financial
beast of burden; to eliminate Other taxes, no matter how equitable or
sensible or easy to pay, and squeeze the home owner to the point that
he will surrender his property."
The California Real Estate Boards and their "front," the
California Association Against "Single Tax," have featured a
line of propaganda in almost all the papers of the State which reads:
"This vicious proposal is an exorbitant land tax -- a tax on your
home, your rent, your farm, your business."
The truth of the contentions of the opposition hinges on the answer
to two questions. 1. Where are the land VALUES of California and who
holds them? 2. Can a tax levied on the value of land be shifted?
Basic data for the use of the proponents of the Ralston Amendment was
compiled by Prof. Alfred S. Miles of Standford University. Taking the
data Issued by the State (or Counties) for 1936 and 1937, the
following facts are revealed:
- Three counties, Los Angeles (36%), San Francisco (11%) and
Alameda (5.7%), of a total of 58, have more than half the total
California land values.
- Cities have 60 per cent of the total, rural areas 40 per cent.
- The city areas of Los Angeles and San Francisco counties have
as much land assessments as all of rural California.
To arrive at any exact idea of how much farm land value there is in
rural California is almost impossible. However the basis for good
judgment exists. Great discrimination in favor of city and town
property assessments of land exist because in cities only location
value is considered, while in farms fertility, leveling, ditching,
etc., are classed as land values. Prof. John R. Commons of the
University of Wisconsin is of the opinion that perhaps as much as 50
per cent of what is called farmers' land value should be classed as
improvements. Under the Ralston Amendment the farmers will demand
exemption of such values from their land assessment, for with varying
rates and exemptions as between land values and improvement values it
will pay them well to do so.
Considering the mineral, timber, oil, gas, water-power and water
rights, right-of-ways, airport and pleasure resort areas, zones for
subdivision developing near large cities, one can see that bare,
unimproved farm land location and natural fertility values are but a
small part of the rural values of California.
Prof. Niles' study of San Francisco illustrates the tendency of land
values to largely concentrate in downtown retail and wholesale areas
of any city or town. One-fourth of San Francisco's land values are in
what is officially known as the Central Traffic District, an area of
less than one-third of a square mile (210 acres). The land in this
district is worth more than that in any ONE of 51 Counties of the
State. Included in the Central Traffic District are five triangular
blocks, average size 1.4 acres, the land being assessed at over
$2,100,000 in each block. These seven acres have more land value than
any one of 23 counties in the state, but not a single building is
assessed for as much as the land on which it stands.
Less than half of California's voters hold any title to land
whatever. Of those who do hold land few hold any of great value. Most
of them hold what might be termed "sleeping room only" or "hard
work" land. Therefore, under land value taxation, these people
would either receive no direct tax bill, or one of little consequence
compared to the consumer taxes which this Amendment would remove.
The bulk of land values are concentrated in downtown, industrial and
natural resource areas and have long been "owned" by a few
estates, corporations and rich individuals. One would be safe in
saying that, absentee land holders considered, less than ten per cent
of the people of California control ninety per cent of its land
values. While the question of revenue for government is ordinarily
considered a public question, a comparative few, knowing that the
value of their special privileges absolutely depend upon it, have
ganged up on the people and business men and they have said: In tax
matters, "WE ARE THE STATE."
The universal acceptance of the fact that a tax on land values cannot
be shifted would seem to make any argument superfluous. Prof. Harry G.
Brown summarizes the matter in his book "The Economic Basis of
Tax Reform" (p. 57) when, he says: "One thing at least can
be asserted with positiveness, viz., that a tax on the rental value of
all land, however used, can neither be shifted from one land-owner to
others, nor from land-owners as a class to any other class."
Prof. William H. Kiekhofer, of the University of Wisconsin, whose
text took, "Economic Principles, Problems and Policies" is
used by the University of California, says: "A tax on the income
of land, known as its Economic Rent, on the value of land obtained by
the capitalization of its Economic Rent, cannot be shifted."
The large land holders can shift taxes on improvements, because of
known economic laws, in prices, and that is why they oppose tax
exemption on improvements. But taxes levied on land values they must
pay out of their land rent income, which is not in any way increased
toy the tax. If they could shift these land value taxes why expend so
much money to defeat the Ralston proposal?
In the practical working out of the Campaign in California the forces
of reaction and opposition to increased land value taxation, such as;
the California, State Chamber of Commerce and local affiliates, the
Real Estate Board, and the political hirelings, especially the
California State Board of Equalization, admit that a tax on land
values cannot be shifted. They constantly harp on what they term "confiscation"
of land by the Amendment. They ignore the certain confiscation of
wages and salaries, the earned incomes, toy the tax structures they
themselves set up and maintain.
In a memorandum by the Research Department of the California State
Chamber of Commerce, dated April 1, 1938, there is the following: "...
the effect" of exemption of improvements and personal property,
as an average over the state as a whole, would be to impose land value
taxes equal to nearly three-fourths of the indicated rental value of
land. Attempted addition of a state ad valorem tax to raise
$100,000,000 annually, would bring the average levy up to nearly 100%
of average land rents, actual and potential. ...In other words, the
best available evidence supports the conclusion that this measure is
an attempt forcibly to graft onto existing structures of local
governments the 'Single Tax' plan of confiscating land rents."
The proponents estimate that some 60% of the total annual rental the
people create may be recovered for the use of the people by the
success of the Ralston Amendment.
Throughout opposition literature will be found frequent references to
the destruction of the market or selling price of land, which, while
used as an identical term as "land value" is in fact but a
part of land value.
The California State Chamber of Commerce, principal source of "misinformation"
on what they call "Single Tax," in a printed piece of
literature issued some time ago, said: "The proposed single tax
would increase the total, tax load on property and SHIFT A LARGER
SHARE of the tax burden from ... Public Utilities -- Office Buildings
-- Expensive Residences ... To ... Small Homes, or Flats-Farms --
It goes on to say: "The present taxable value of public utility
property is about ONE-TENTH in land and NINE TENTHS in improvements
and tangible personal property. For a skyscraper business property,
about one fifth or less of the total taxable value is in LAND and
four-fifths or more is in the building and office equipment.
"In residence property, land is one-fourth (or less) of the
total, for new and expensive homes. On older and less expensive types
of homes, the ratio of LAND to total value increases. It may be a
third, or a half, or even more. On farms, LAND comprises from one-half
to four-fifths or more of the total value."
Of course the falsity of this propaganda is evident to one slightly
conversant with the basic principles involved. The "tax shift"
is NOT from ANY ONE KIND of "land AND improvements"1
combined in a UNIT as the California State Chamber of Commerce
declares. The basic shift is SPECIFICALLY from ALL improvements and
tangible personal property to land VALUES. On this basis the tax shift
is absorbed by land VALUES wherever they may be. One acre in downtown
Los Angeles owned by one estate or corporation may absorb as much land
value tax as 10,000 acres of residential land, owned by 50,000
The California State Chamber of Commerce and the California Real
Estate Boards seek to deliberately mislead the people into opposing
this tax reform so essential to the preservation of Democracy and
American ideals! They carefully refrain from saying, and they know it
is true, that the taxes on improvements and tangible personal property
used in utilities, office buildings, stores, apartments and houses for
income purposes are NOW shifted to other property holders or
non-property holders; to farmers, home owners, renters, and consumers
as "hidden taxes" in higher prices and rents. They
discreetly fail to indicate or discuss WHERE THE TAX BURDEN FALLS
TODAY under the tax system they have created, and in defense of which
they are willing to risk their honor.
In this connection it is so odd that what is termed "Spreading
the Tax Base" is so well known to the economists and people,
while the economic truths conveyed to the mind by the term "shifting"
or "incidence of taxation," taught in the same chapters as a
rule in our college textbooks on economics, is not known.' There is
real humor and tragedy in the thought of how the "Tax Base Spread"
rolls up into price and "soaks" the consumer.
With land value taxation as a base, the burden falls where the land
values are: in downtown retail and wholesale and industrial districts,
in large holdings of land of less value, and not in farms (family
sized) and in residential areas which have little total value, and the
area of which is divided among many holders. And since land value
taxes cannot be shifted to non land value holders, but must be paid
out of income the land now gives the holder, the holders of the bulk
of the land values must contribute much more to the cost of government
under this Amendment.
The California experience indicates that the real estate and land
value monopolists will fight "single tax," no-tax, or any
suggestion of land rent collection at the "drop of a hat."
Whether it be home rule in taxation, step by step, or taking land rent
all at once, they are against it. They recognize the danger of the
idea securing a foot-hold. They have seen gasoline taxes, income
taxes, inheritance taxes grow from small beginnings to sizeable
proportions. They fear that once the principle of land VALUE taxation
is truly established the people will see its advantage to themselves.
Regardless of the correctness of the collection of the full land rent
practical considerations require a ''step by step" process of
abolition of taxes, and the substitution there for of the public
collection of the rental value of land. Nowhere has the "all at
once" program ever had even a chance to start or succeed. On the
other hand "steps" have been made. The failure to "keep
stepping" does not indicate the failure of the policy.
Today a new environment exists That the movement will produce the
needed man power, thanks to the Henry George School of Social Science
and other developments, there is no doubt. That it will continue "stepping"
wherever started, though the first steps were taken long ago, there is
also no doubt.