The Alleged Injustice of Increasing
Land Value Taxation without Compensation
Harry Gunnison Brown
[Reprinted from the American Journal of Economics
and Sociology,
Vol. 5, No. 3 (April, 1946), pp. 327-350]
I
OF ALL THE SEEMINGLY RADICAL reforms the advocacy of which has
aroused the bitter and determined, albeit uncomprehending, opposition
of conservatives, perhaps none is capable of being realized more
imperceptibly than the reform of our land and taxation system as
proposed by Henry George. Why, then, has this reform been so
persistently and violently objected to?
In part, at least, it may well be that the truculence of the
objectors comes from the frank and even challenging recognition by
Henry George of the ultimate implications of his proposal and from the
provocative manner of his advocacy of it. This is not necessarily said
in criticism. It may be, indeed, that a less provocative phraseology,
though arousing less opposition, would also have done less to arouse
interest and support. But the opposition has to be reckoned with. And
the better we understand its ideological source or sources, the better
chance we have to deal with it effectively. In Chapter II of Book VI
of
Progress and Poverty, Henry George says that, as "the
remedy for the unjust and unequal distribution of wealth apparent in
modern civilization, and for all the evils which flow from it: "We
must make land common Property." Here at once is a challenge to
nearly all conservatives. "Surely," they are likely to
think, "this is a most revolutionary proposal containing a most
vicious element of communism or of other alien and wicked 'isms.' "
Yet it appears on careful examination that the one specific change in
policy which Henry George sought was the substitution of a land value
tax for other taxes and the taking, thus, by taxation, of all or
nearly all land rent. This, to be sure, may be said to amount to
making land "common property," on the ground that if the
rent of land goes mostly to the public, the land is, in effect, owned
mostly by the public. But if the conservative critics of Henry George
take that tack, they must logically admit that buildings, ships,
trucks, orchards, livestock, machinery and other capital (as distinct
from land) are right now partly owned by the public, since they are
taxed and since, therefore, much of their annual yield goes to the
public. If for the public to take, in taxation of such property, a
large proportion of its income does not make this property in some
degree "common property," then how can anyone logically
claim that to take, instead, most of the rent of land in taxation,
makes land "common property"?
Conservative opponents of Henry George's proposal must therefore
admit, it would seem, that only if this proposal is put into effect
and taxation is removed from the things men make, such as trucks,
buildings, ships, etc., can it be said that these items of capital are
truly and solely owned by individuals. In short, if these
conservatives reason at all consistently, they must admit that Henry
George's reform, as regards all the capital that results from
individual work and saving, would take us not towards but away from
the socialistic and communistic ideal of common ownership and
socialized operation.
Nevertheless, it is probably true that many an uncomprehending and,
therefore, illogically shocked conservative has reacted
antagonistically to the proposal for increased land value taxation,
because he has it labelled as "making land common property."
In a later chapter of Progress and Poverty occurs a passage
thoroughly consistent with the passage already quoted but one which
perhaps tends to arouse even more passionate protest from
conservatives. It runs as follows:
The truth is, and from this truth there can be no escape,
that there is and can be no just title to an exclusive possession of
the soil, and that private property in land is a bold, bare,
enormous wrong, like that of chattel slavery.
And a little farther on in the same chapter, which deals with the "Claim
of Land Owners to Compensation," Henry George still further
offends the sensibilities of conservative defenders of the status quo.
For here he comments that by the time the people of any such country
as England or the United States are sufficiently aroused to the
injustice and disadvantages of individual ownership of land to induce
them to attempt its nationalization, they will be sufficiently aroused
to nationalize it in a much more direct and easy way than by purchase.
They will not trouble themselves about compensating the proprietors
of land.
And so the conservative respecter of the status quo receives from
Henry George a three-fold shock. He is shocked at the proposal that
land be made common property. He is, perhaps, deeply offended to have
private property in land referred to as ""a bold, bare,
enormous wrong, like that of chattel slavery." And he is outraged
at the advocacy of doing away with any "respectable" form of
private property without compensation. Nor will he be greatly
mollified to read, several chapters later:[2]
Let the individuals who now hold it still retain, if
they want to, possession of what they are pleased to call their
land. Let them continue to call it their land. Let them buy and
sell, and bequeath and devise it. We may safely leave them the
shell, if we take the kernel. It is not necessary to confiscate
land; it is only necessary to confiscate rent. . . . What I,
therefore, propose, as the simple yet sovereign remedy, . . . is-to
appropriate rent by taxation.
Nevertheless, a philosophical, unbiased and really careful
consideration of the problem must lead to an entirely different state
of mind than the attitude of shock we have been discussing.
Suppose we take note, in this connection, of the case of a localized
and partial application of the land value tax policy in the United
States. When, in 1913, the Pennsylvania legislature established the
Pittsburgh (and Scranton) graded tax system, it provided that the city
tax rate on buildings should become, in 1914, only 90 per cent of the
rate on land; that in 1916 it should be 80 per cent; in 1919, 70 per
cent; in 1922, 60 per cent, and in 1925, 50 per cent. This meant that
to get the same revenue for the city, the tax on land values had to be
gradually raised. If this gradual change had been continued by
corresponding stages until 1940 and applied also to the taxes levied
by other taxing authorities, such as the County and the School
District, all taxes on buildings in Pittsburgh (and Scranton) would
have been then done away with, and the land value tax rate would
presumably be high enough by now to absorb for public use by far the
greater part of the situation rent of land.
Are we to conclude that, if such a change in the tax system can be
shown to be conducive to efficient production and favorable to the
common welfare, society ought to be estopped from introducing it?
Whether we regard it as desirable that such a reform as that proposed
by Henry George be realized fully right away or only after a lapse of
years, we should recognize that its sudden, complete and immediate
adoption is hardly possible politically. Short of revolution,
certainly-and even revolution, if directed toward a specific reform,
can come only after years of agitation and of growing desire for
change-such a reform must almost inevitably be gradual, or else not be
realized at all. In the case of land value taxation, as in the case of
other significant reforms, the slower the process of adoption the
longer delayed are the full benefits which may be fairly anticipated
from it. Nevertheless, significant reform, in a democratic society,
can come only as rapidly as mass opinion and sentiment permit.
Is, then, the opposition of conservatives to the land value tax
program, based on an unreasoning fear that it may be introduced both
completely and all at once? Or is it an opposition to any continuous
change in this direction, even a change so gradual that not within a
hundred years would the tax reach ninety per cent of the annual rent!
However this may be, something can probably be said for the view that
the advocates of the socialization of land rent would have used better
strategy had they been less impatient for its adoption. When they have
proposed its full and immediate adoption-or, even, its substantially
complete adoption in a short period such as ten years-they, by
arousing a frantic fear of the unknown, may have been instrumental in
preventing serious consideration of it by others as a reasonable
reform. There is a possibility, at least, that we can actually get
such a reform adopted more quickly if, in our propaganda, we ask for
its adoption only little by little! But even though our publicity
campaigns may have sometimes involved such a tactical blunder, this is
hardly an adequate excuse for the opposition of professional
economists. They, at least, should approach the problem objectively.
They, most of all, should assume the responsibility of gaining a full
comprehension of the considerations on which advocacy of the land
value tax program is based. Where others might react adversely to this
reform because it seems sharply different from what they are
accustomed to and because, not comprehending its real significance,
they are frightened at the thought of its sudden or rapid
introduction, the trained student of economics should be easily
capable of a quite different and, indeed, a completely unprejudiced
scrutiny. And if, by chance, he does believe that many protagonists of
the reform are unduly impatient for its adoption, this should
certainly not cause such a student to reject the reform but merely to
suggest a more gradual approach to its complete realization.
II
WITH SOME WHO OPPOSE the land value tax reform, especial objection is
made to the fact that its proponents intend to introduce it without "compensation."
And this objection is made despite the complete or almost complete
lack of any precedent for "compensating" those who are
disadvantaged by tax changes! So let us give a little attention to the
"compensation" idea.
There is a very real sense in which, should we adopt the land value
tax system, most landowners would automatically enjoy compensation.
For most owners of land are owners of capital, too-factories,
machinery, trucks, livestock, planted fruit trees, stores, houses,
etc. And these it is proposed not to tax at all. Is not such relief
from taxes on capital a very valuable compensation for higher taxes on
one's land? In his description of "Pittsburgh's Graded Tax in
Full Operation,"[3] Percy R. Williams tells us that, in "a
typical residential district," this plan of taxing land more
heavily than improvements involved a lower tax burden on 99.2 per cent
of the homes than if the city had raised the same amount of revenue by
taxing land and buildings at the same rate. The owners of homes in
this district, it would appear, were definitely benefited. Should
they, in addition, have received other compensation?
It is true that a land value tax system tends to lower the sale price
of land, so that even a home owner whose total taxes have been reduced
might contend that, in case he wished to sell his property and use up
the monetary proceeds, he would be a loser by the reduction in its
sale price. Should he then receive some special "compensation"
because of such a contingent loss?
Of course, too, if a land value tax system is introduced, it does not
automatically provide "compensation" for all landowners.
Owners of valuable unimproved land (e.g., vacant lots) and of valuable
land which is but slightly improved, will not generally gain through
their relief from other taxes as much as they will lose from the
heavier tax on land values; but since other taxes are many and rest on
different taxpayers with very unequal weight and since the vacant land
of some is worth more than that of others, we cannot say categorically
that all owners even of vacant land will suffer a net loss. But if the
owners of vacant land would, in general, suffer a net loss, it is also
true that the holding of good land out of use involves economic loss
to the community. How can we effectively prevent the waste and loss
from this speculative holding, if we are determined that neither
through our tax system nor in any other way shall we visit upon those
who thus hold land from use, any convincingly substantial penalty?
If a community is tormented by a superfluity of dogs and imposes a
dog license tax as a discouragement to dog owners, "compensation"
is not customarily demanded. Should it be? Ought "society"
to make no such change in its municipal regulations without first "compensating"
all who may have acquired dogs prior to and without specific warning
of such regulations!
The very heavy tax on cigarettes certainly discriminates against
smokers relatively to coffee drinkers, motion picture addicts, et a!.
Yet the conservative economists who are so ready to snipe at land
value taxation without "compensation," as causing
discriminatory loss to landowners have never, any of them, so far as I
am aware, offered the faintest suggestion that smokers should be "compensated"'
because of the discrimination against them in the cigarette tax or in
the various increases of it. Why do they not insist, at the very
least, that all persons who learned to smoke prior to and not
anticipating the tax-or prior to and not anticipating any particular
increase of the tax-ought to have been or ought now to be "compensated"!
Why is such protest so much more vocal for-or reserved solely
for-changes in taxation which affect landowners!
It was suggested, at an earlier point in this paper, that much of the
opposition to the land value tax program may be due to a fear of
precipitate change. Some opponents of the plan have, perhaps, pictured
in their imaginations, widows, orphans and aged persons no longer able
to work and who own nothing but unimproved land, being left suddenly
penniless by this tax reform!
It is an obvious fact that no important change in public policy,
however fundamentally desirable, will affect equally all individuals
and classes. There will, indeed, nearly always be some who lose in
their annual incomes or in the total value of their property. But to
say this is very different from asserting that any class-or even any
individual-will be made suddenly penniless.
If the land value tax system goes into effect not suddenly but over a
period of years, much of the annual rent of any land which is not
being held out of use, during the period of gradual transition, will
still accrue to the landowner. And if a particular landowner-even an
owner who has been holding valuable land out of use-desires to sell,
the fact that the succeeding owner can for some time draw a net rent
from the land, if he will himself use it or let it be used, means that
the land still has a value which the previous owner has been able to
realize by selling it.
Following this line of analysis, the objection of conservative
opponents that the introduction of a land value tax system would make
any appreciable number of landowners penniless can be effectively
answered. If and when the proposal becomes a live political issue and
is discussed heatedly in political campaigns, and this objection is
raised by (say) a heckler, the skilled campaigner should have a ready
and crushing comeback. "If any owner of land," he can say, "is
so convinced that our program is going to cause him loss, let him sell
his land now, before our party has even come to power. Let him realize
hard cash for it now. If any landowner present doesn't want to realize
hard cash for his land now and so is determined not to sell, isn't it
ridiculous for him to argue that the program is going to so lower the
sale value of land as to reduce him to poverty? Furthermore, you all
know, and he probably knows, that under our program all the
improvements he makes on his land will be relieved of taxation and
that, therefore, if he saves and so is able to make such improvements
or have them made, all the income they yield will belong to him. If
any landowner doesn't want to take advantage of this prospect or
thinks he cannot do so conveniently, let him sell his land now for
real money to someone who does want to."
No doubt it can be logically contended that the mere anticipation of
an imminent beginning of a land value tax policy would bring an
incipient fall in the selling price of land. "Coming events"
-- or, rather, the expectation that the events will come, and
regardless whether or not they do finally and actually come -- "cast
their shadows before." Thus the growth of the land value tax
sentiment might, prior to the enactment of any tax change, reduce
somewhat the price securable for his land by a landowner desiring to
sell it. But this would obviously not be due to the land value tax,
since it has not been actually introduced. Rather would it be the
result (manifesting itself through the prices bid and asked by
would-be buyers and sellers of land) of the opinion that land value
taxation will be adopted. This opinion is in turn the result of a
growing popular belief that such a tax system is desirable and so
ought to be adopted. And this growing popular belief, in turn, is, at
least in large part, the consequence of the persuasive arguments and
evidence presented by the advocates of the proposed change.
Probably conservative opponents of the change would prefer to use the
word "agitation." And some, too, would wish to suppress all
such agitation, on the ground that it tends to reduce the sale price
of land and so to disappoint landowners' previous "reasonable"
expectations. If they regard the tax change as "wrong"
because it would reduce the sale value of land, must they not regard
the "agitation" for it as likewise "wrong"' and
for the same reason? And if they think such "tagitation"' to
be a "wrongful" act, why should they not try to make it an
illegal act thus to voice "dangerous thoughts"? But in any
event, the landowner who fears more than do others the actual
introduction of the land value tax system, should logically be willing
to offer his land for cash at a price which less fearful buyers are
quite willing to pay.
Enough has been said on this matter, surely, to make clear to the
comprehending reader that the most rapid introduction of a land value
tax taking practically all the annual rent of land, would not suddenly
make penniless even persons who owned nothing but unimproved land. For
however rapidly the new system might be put into effect once change
was begun, there could be no beginning of the reform until there had
come to be a widespread demand for it. During all the years of growth
of such demand, owners would continue to draw their accustomed rents.
And though the sale price of land would presumably fall as the reform
came to be nearer and more certain, yet until or almost until its
actual and complete adoption, there would still be some sale value
remaining. Most assuredly, then, no landowner would find himself
reduced overnight from riches to poverty!
There have been a few economists, impressed with the economic
advantages of the land value tax system but nevertheless considerably
worried regarding its adoption without "compensation," who
have urged that the change be made after the deaths of present owners
who would, therefore, receive during their lives undiminished rents.
In fact, it is questionable whether such a plan gives any more -- if
as much -- consideration to the interests of present owners than does
a gradual increase in the taxation of land, going along concurrently
with a diminution of taxes on capital and of various other
contemporary taxes. While a gradual increase in the land value tax
does reduce from year to year the land rent remaining to the owner, it
also leaves him the option of being able to sell his land at a price
based on the lower net rents of future years; and he may be able,
therefore, to "cash in" before his death on net rents
continuing for a time afterward. It is to be noted, too, as an
objection to the scheme of terminating rents at and only at the deaths
of present owners, that a great many of the most valuable city sites,
power sites, mines and other resources are owned by corporations and
that corporations do not die.
III
BUT THE OBJECTION which seems to be most commonly urged by economists
is that, even though the introduction of land value taxation is not
sudden but gradual, even though many landowners gain by it, even
though no landowner suffers great and sudden loss and even though the
change is demonstrably for the common welfare, nevertheless it is "unethical."
Since, however long the prior period of growing favorable public
opinion and however gradually the reform is put into effect, some
landowners will become poorer than if the change were never made at
all, the change is held to involve an "injustice." "Society,"
it is said, would thus violate an implied "pledge" of
permanence in existing arrangements.
No claim is put forward, ordinarily, that government or "society"
has made any formal pledge that the tax system would never be changed.
The thought appears to be that the long continuance of a system of
allowing private individuals to realize the major part of the rent of
land, has created a presumption of its permanent continuance; since
that system has continued for generations, it is argued that "society"
has allowed it to continue. Men have purchased land on the assumption
that no change would be made (ever!) and at higher prices than they
might otherwise have been willing to give. "Society," by the
fact of not having changed the system over a long period and by "its"
silence as regards "its" intention to change, has implied
that "it" will never change the system and has thus "encouraged"
such purchase of land. "Society" has thus, by implication, "pledged"
that "it" will never change to the system of taking land
rent in taxation for the public in place of other taxes even by the
most gradual steps. For such a change would be likely to reduce, at
least in some degree, the sale price of land and, too, though some
landowners, even, would definitely gain, others would undoubtedly pay
higher taxes and receive lower net incomes. Thus "society"
would have done them injury by this change in the tax system and would
have been guilty of a "violation of good faith."
Just what is this "society" which, in a world of continual
change, has impliedly pledged that there will be no change in the tax
system such as to increase even slightly the taxes on owners of land
in comparison with taxes on others? And is "society"
similarly estopped from making changes of policy detrimental to any
other class? Does this mean that "society" violated an
implied pledge if in the United States, after control by the
Republican party from 1861 to 1885, a triumphant Democratic party
adopted a new policy which reduced relatively the welfare of some who
had counted on a continuing control of government by the Republicans?
Does it mean that, in Great Britain, "society' will be violating
some implied "pledge" of consistency in economic policy if
the Labor party, which is a relatively new party not even in existence
throughout hundreds of years of Parliamentary history, and which has
never hitherto had a clear majority in the House of Commons, should
now introduce and pass legislation not favored by any previous British
Parliament, and which would change in any way or in the slightest
degree the relative wealth and income of different classes or
individuals?
Will not souse conservatively minded economist be so frank as to
declare himself unequivocally on this matter of an implied "pledge"
by "society" and assure us that no party long out of power
and, above all, no new party which has never had power, has any right
to change the policy of the party or parties previously in power, when
such change of policy is likely in any way or in any degree to reduce
relatively the income or the value of the property of any class or
individual -- unless that class or individual is fully "compensated"
with funds taken from other classes of persons? Certainly it would be
most refreshing to hear or see a statement by at least one economist
of conservative persuasion, that he does or that he does not subscribe
to that view!
What, after all, does it mean to say that a particular change in
policy -- e.g., a change in taxation-cannot be fairly made because "society"
has impliedly "pledged" that the existing set-up will
continue? Just who (or what) constitute "society"?
Human affairs are full of complexities. Policies may be determined by
a king and some advisors, by a king or an emperor with his mind on the
danger of antagonizing a feudal aristocracy, by a Fascist party
subject to a tight discipline and (perhaps) limited in numbers, by a "democratic"
parliament which in turn is swayed especially by the most selfishly
alert and blatant pressure groups, and so on. And often-one is tempted
to say always-some members of "society" disapprove of
institutions and policies that others favor. Does the fact that those
who disapprove of slavery, monopolistic extortion, tariff restrictions
on exchange, or other such economic policies, have long been in the
minority or, for some other reason, out of the seats of power, mean
that if and when they get into power it is a sin for them to abolish
these evils against which they have been protesting, unless they buy ("compensate")
from those who derive income therefrom the "right" to
abolish the evils!
If part of "society" is being exploited by another part --
by monopolists, slave owners, owners of the earth who can charge
others for permission to work on it and live on it, or by any other
privileged class-how can such exploitation be ended without taking
something away from somebody and so making "society" violate
an implied "pledge"! How, for example, can slaves be freed
without such a "violation of good faith"! If they are freed
directly by means of an emancipation proclamation, property value is
certainly taken from the owners. If the owners are fully compensated,
something has certainly to be taken from others who might similarly
claim that "society" has been guilty of "bad faith"
toward them!
Will our conservative economist friends, then, be frank enough to
say, without equivocation, that if slaves are to be freed, not only
must their owners be fully compensated but that this compensation must
rightly come chiefly or only from the slaves? Will any one of these
text-writing economists have the frankness to say either that he does
believe this or that he does not?
If "society" is under a moral obligation, by virtue of an
implied "pledge," not to change any existing and long
continued economic institution or tax system without full "compensation,"
are the victims of that institution or tax system properly to be
regarded as a part of that "society"? If, for example, in a
slave state, the slaves are thus to be regarded as part of the "society"
and so as morally responsible for "society's" implied "pledges,"
and if the slaves eventually become numerous enough and strong enough,
or get enough sympathizers to help them, so as to be thereafter the
dominant force in the "society," what are their "rights"?
Are they guilty of a sinful act in case they stage a revolution,
establish a new government and become free without contributing
anything in future taxes to "compensate" their former
owners? Will some conservative professional economist please be so
kind as to tell us, without equivocation, that he does or does not
accept this view?
Then let him go further and confide to us his view that the freed
slaves would be-or that they would not be!-still more sinful if they
should go so far as to make their former masters pay taxes to
compensate the one-time slaves for their various handicaps in
education, health, etc., stemming from their long years in slavery!
Analogously, should landlords compensate the landless instead of vice
versa!
But what if the slaves themselves, never having enjoyed any other
condition of life and having been duly proselyted (or "converted")
into the religion of their masters, have accepted or (anyhow)
pretended to accept their masters' "ethical" judgment that
they-the slaves-are rightly slaves, that their enslavement is part of
"the divine plan." Might not the conservative economics
professoriate then contend all the more vigorously that the slaves, by
their long "acceptance" of their status, are clearly
participants with the other classes of "society" in the "responsibility"
for the maintenance of property rights in slaves? Would such
conservative professorial economists say, therefore, that the slaves
have some "obligation," along with the rest of "society,"
to help see that no change is made in their status unless with full
compensation to their owners? For must not such economists logically
insist that there can be no obligation on "society" unless
there is an obligation on the component parts of such a "society"?
Again, what if some slaves have inherited their slavery from
forebears who were sold into slavery by their own parents, so that, if
the present slaves have not "accepted" the institution in
their own persons, they may still be said to have "accepted"
it through acceptance by their ancestors who may even have profited by
thus selling their children! (But it is not inconceivable that these
ancestors were themselves exploited in some other way, e.g., by
landlordism, and felt obliged to sell some of their children in order
to be able to feed the others! ) Would our conservative professorial
textbook- writing economists say, therefore, that the present slaves,
vicariously through their ancestry, may properly be regarded as "responsible"
along with the rest of "society" for the "institution"
of slavery so as to make it their "duty" to oppose any steps
toward their emancipation without compensation? Would such
conservative professors say that, under such circumstances, the slaves
must continue to suffer -- and "justly" -- from the actions
of their ancestors, since "the iniquity of the fathers" is
visited "upon the children unto the third and fourth generation"?
In precisely what sense are the victims of the present land system "responsible"
for it so that they ought to insist either on its continuance in
perpetuity or on being themselves taxed to provide "compensation"
for the to-be-henceforth-more- heavily-taxed landowners? Has the
present land system been agreed to, consciously and understandingly,
by its victims? Are we to conclude that they have vicariously -- and
hence bindingly! -- agreed to it if any of their ancestors have ever
approved it? What shall be said of the fact that, throughout the
history of landlordism, the rich and influential have mostly favored
it, that arguments against it and in favor of the socialization of
land rent have rarely appeared in the public press, that university
professors of economics have mostly either ignored it in their
textbooks or have attempted to discredit it while giving only cursory
attention to the case for it, and that the victims of the present
system have, therefore, had very little chance to know the basic cause
of their unhappy predicament? If interested groups, with the aid of
ignorance and prejudice, succeed in establishing institutions that
exploit the masses, must we conclude that the longer these masses have
suffered, the more they are under an ethical obligation to continue to
suffer?
Will conservative college and university economists take issue with
these statements and insist that those who are handicapped by the
existing landlordism have had a good and adequate chance to learn and
to understand the cause and effect relations involved, that it is fair
to assume they should have understood it long ago and that, therefore,
since they have not previously changed it, for them to change it now
would be wrong?
Or will our academic text-writing economists follow a different line?
Will they admit that the victims of the system have not had, in the
past, a good opportunity to reach understanding and that their lack of
understanding of the matter may be partly the result of the very bias
and the antagonistic propaganda of the system's beneficiaries? And
will these conservative economists then say that if and when the
victims of the system do gain understanding of it and come to dominate
the political scene, these victims still cannot ethically change the
system except as they arrange for "compensation" to be
provided by the victims?
Why cannot our conservative friends in the economics professoriate
meet the issue frankly and tell us either that they do believe or that
they do not believe that the victims of a bad economic system cannot
ethically demand relief except as they give "compensation"
to those from whose exploitation they wish relief? Why hide forever
behind the vague term "society"?
No doubt it can be pointed out that some persons who own no land may
have been able, through land rents received by their parents, to enjoy
an education in (for example) law or medicine which they could not
otherwise have had and because of which they are now able to receive
above-average incomes-though not without working. Also, it can be
urged that there are some persons not now landowners who have gained
from the present system -- by which, in general, common folks have
suffered -- through sale to others of land which community development
has caused to increase in value. But few such will have reinvested the
proceeds without again becoming owners of land. In most cases they
will not have purchased buildings, etc., without purchasing the land
on which these rest. And no thoroughly competent economist can
conscientiously contend that if such sellers of land have invested in
the stocks of corporations, they no longer own land-unless the
corporations own no land. But those professorial economists who are
forever seeking some objection, however microscopic, to the land value
tax program, must surely realize that there is no way of proving what
persons, not now landowners, have indirectly gained from the landlord
system or how much these have gained, and so of making them provide
the desired "compensation." Such economists must surely
understand, if they are at all able to analyze the matter objectively,
that in any system of "compensation" which could in practice
be adopted, the "compensation" would, in fact (unless paid
by those to be "compensated"!), be largely even if not
entirely extracted from those who had been -- and who thus would still
be -- victims of the landlord system. To assert that "society"
would provide the compensation merely serves to prevent us from
inquiring into the question of who precisely would provide it and
whether the victims of the system would mostly provide it.
And so it is difficult to avoid the suspicion that the presenting of
these various considerations is a bit disingenuous, that they are not
presented with any serious idea of finding a satisfactory way of
getting to the land value tax system but rather with a desire to make
any such reform appear so complicated and difficult as to be not worth
attempting.
Since our conservative economists claim that it is "wrong"
or "unfair" or "unjust" for "society" to
change its tax system toward public appropriation of land rent,
however gradually and after however long discussion, unless there is "compensation,"
must they not logically contend that it is equally "wrong"
for previously uncomprehending victims of the present system to
support or urge in any way this "wrong" or "unjust"
policy? Might not some of these economists truly feel that "society"
should do "its" best to suppress any such ""dangerous"
agitation?
IV
THE FACT IS that the notion of any "pledge" by "society,"
making it a "violation of good faith" to change the tax
system, is fundamentally preposterous. The implied "pledge,"
if it could be said to have any reality, would be nothing more than a
long continued economic policy or custom, a sort of community habit.
But taxation has changed in such numerous ways as to suggest, rather,
the lack of any consistent taxation policy or custom and to give the
notion of an implied "epledge" very much the appearance of a
myth!
Tariffs on trade between countries have been subject to alternating
increases and decreases. Taxes on the production of specific
commodities have been successively introduced, increased, decreased,
abolished and again introduced. Property taxes have been the main
source of revenue, have been then supplemented by other taxes, have
been increased and have been decreased. Federal income taxes have been
introduced, abolished (by decision of the Supreme Court),
reintroduced, increased, decreased and again increased. States which
had previously taxed property but not incomes as such have added
income taxes. These income taxes have been levied at a fixed per cent
(above exemptions) and at graduated per cents according to the amount
of the income taxed. Our Federal income tax has at one time been
levied at the same rate on incomes of a given size, regardless of
source and at another time has been levied at a higher rate on income
from property than on income from labor. Taxes on inheritances and
bequests have been introduced and raised to very high levels after
long immunity from such taxation had given the impression to
accumulators of property that all of this property could be bequeathed
to and be enjoyed by their heirs.
The Federal government and the various state governments have levied
excise taxes on specific articles, such as intoxicating beverages,
cigarettes and gasoline and, later, many of the states have
introduced, also, the general retail sales tax. One state legislature,
that of Pennsylvania, has enacted the "graded tax law"
applying to cities of the "second class" in Pennsylvania and
providing for higher rates of taxation on land than on the buildings
thereon. This is the system described above in this paper in
connection with Pittsburgh. In various other sections of the United
States campaigns have been waged and - sometimes -- a substantial
number of votes have been cast for a land value tax system. Not a few
cities in Australia, Northwestern Canada and New Zealand tax sites and
not improvements on them, or tax sites at a higher rate than
improvements. Steps have been taken toward this system in Denmark and
in British South Africa and the policy has been debated at length in
Great Britain where a good many cities, through their local
governments, have formally requested Parliament to make possible for
them the system of (as they express it) "rating on land values."
Surely, then, those who insist that "society" has made even
an implied "pledge" not to change the tax system or not to
change it in any particular direction or not to change it in this
particular direction, are the gullible victims -- though gullible,
probably, largely because of their prejudices -- of a fatuous myth.
Indeed, in many of our economic policies other than taxation, change
has been frequent and, therefore, is reasonably to be expected. We
first allow the manufacture of intoxicating beverages, then prohibit
it, then allow it again. We allow monopolistic businesses to be free
of prosecutions and of regulation and subsequently apply one or both
of these devices. We permit young men to spend years of apprenticeship
mastering a trade and later set up trade schools, or curricula in the
regular public schools, in which we train other young men to compete
with them. We establish a monetary system through which the general
price level sometimes rises and at other times falls. Some of our
policies have been, indeed, unwise and unfair but, if so, it is
because they are intrinsically bad and lead to bad results and not
because they violate an implied "pledge" to make no changes.
In the world in which we live, it is more accurate to say with the
poet, Longfellow,[4] that
All things must change
To something new, to something strange:
Nothing that is can pause or stay:
The moon will wax, the moon will wane,
The mist and cloud will turn to rain,
The rain to mist and cloud again,
Tomorrow be today.
In such a world of constant change, including change in social and
economic policies, surely it is a ridiculous assumption that human
beings are committing a sin when they try to change one particular
line of policy -- involving land rent and its taxation -- of which
they feel many are victims. Surely it is reasonable to presume,
rather, that men purchase their property or make their other
commitments knowing that tax policies and taxed objects have changed,
do change and are likely again to change, and assuming this risk when
they purchase. Surely it is a fair presumption that purchasers of
property have, if anything, even less right, and certainly no more
right, to block a desirable change in tax policy or to be "
compensated" because such a change is made, than to block any of
the various changes to worse systems or from one bad system to
another!
Each substantial effort to educate the electorate to the advantages
of the public appropriation, by taxation, of the major part of the
rent of land, is a notice to landowners that they may not always be
able-or that the next generation of owners may not be able-to live on
the rent of land. Each step in substituting land value taxation for
various other and relatively undesirable taxes constitutes a notice to
owners of land to prepare for a time when they can no longer live by
charging others for permission to work on those parts of the earth
where work is relatively productive or for permission to live on those
parts of the earth where life is relatively pleasant or for permission
to draw from the earth subsoil deposits placed there by geological
forces.
Let those who themselves understand the evils of the present system
strive, then, to spread understanding among others as widely as
possible, to the end that adoption of a land value tax program be not
indefinitely delayed. For the slower we are in getting this program
adopted fully, the longer will the victims of the present system
continue to be victims.
But if some of our number are disturbed lest rapid progress of the
reform -- without which, as indicated above, present evils must
continue correspondingly longer -- cause sudden and substantial loss
to any owners of land for whom their sympathy may be aroused, let them
reflect that the change cannot proceed faster than an increasingly
informed and interested public opinion will permit; that even
revolution, unless there has come to be such an informed public
opinion, would almost certainly proceed in a quite different direction
and on the basis of an entirely different ideology; and that those
owners of land about whom they are concerned will have ample time to
become adjusted to the land value tax system and certainly need not be
both greatly and suddenly injured by it.
Whatever other views may be held by the economics professoriate of
the new generation, let us hope they will not hold the utterly silly
view that, in a world of constant change, some vague inchoate "society"
is under a moral obligation never to change, no matter how slowly,
towards the realization of a tax system which would appropriate all or
nearly all of the rental value of land to public use. Let us hope
that, with a new generation of teaching and text-writing economists,
the fatuous myth of a binding implied "pledge" of this sort,
on the part of "society," will finally be visited with the
ridicule it has long deserved. Let us hope that to this new generation
of professorial economists the claim of landowners to future rents
undiminished by any greater relative taxation of land values than now
will not be the sacred crocodile it has apparently been to many or
most of the text-writing\ economics professoriate of the last several
decades. Let us, in short, fervently hope that the new generation of
text-writing professors of economics -- and teachers of economics --
will approach the land and tax problem not only with sympathy for the
great majority, who are victims of the existing system rather than
beneficiaries of it, but also with a modicum of common sense.
FOOTNOTES AND REFERENCES
- Chapter III of Book VII, first
paragraph.
- Book VIII, Chapter II.
- National Municipal Review,
Vol. XIV, No. 12, December, 1925.
- In Keramos.
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