Solving the Problem
of Rising Land Prices

Howard Hardiman

[A letter addressed to the Realtors of New Jersey by the President of the Perth Amboy Real Estate Board. Reprinted from Land and Freedom, January-February 1928]

Existing New Jersey land and tax laws encourage the holding of land by absentees and estates for an indefinitely long time. This is against the business interests of realtors, who, like all business men, are in business to make all the transactions in their particular line that can be made. In no other business do the laws of a state encourage the holder to hold on so long to an object, or commodity, of purchase and sale.

Prices of manufactured and agricultural commodities are subject to fluctuation, and the law offers no inducement to hold for increased prices. There is a widespread belief that the way to make money is to buy land and hold it until the price advances. Land is often willed in such way that it cannot be sold for a long time, and often the heirs voluntarily continue to hold for a hoped-for increase in value. The realtor rarely has a commission to sell for such holders, and in fact, often has a buyer at a good price, and the holder refuses to sell. Then the brokers' efforts go for naught.

The state legislature encourages this condition in failing to recognize that the site-value of land is automatically created by mere increase in population and social services: that it is a publicly-created value and not a privately-created value to be privately appropriated. Instead of levying sufficient taxes on this publicly-created site-value to pay the expenses of government, the legislature impose taxes on privately-created property, such as buildings, machinery, commodities, earnings, etc., to balance the budget.

The lower the tax is on site-value of land the easier it is to hold sites indefinitely for an increased sale price, or rent. Such practice restricts industry and housing in cities, and agriculture in the country, and thereby retards the rightful development of any community.

Some may think the realty business is helped by land speculation, but on second sober thought they will realize that the material success and prosperity of realtors depends largely upon the prosperity of the communtiy in which they operate. Any place where development of industry is retarded by law is a poor place for realtors.

A tax on dogs is levied, not especially for revenue, but to suppress dogs. A high license fee on saloons was levied years ago largely to restrict saloons. Just so will a tax on industry drive industry away and keep others from coming in. That is now the condition throughout New Jersey, and as cost of government, and the tax on all forms of labor products is increasing year by year, the economic burden becomes more unbearable.

As has been rightfully said, the earth is the mother, and labor the father of all wealth, and any restriction put on the application of labor to land (and New Jersey tax laws do this) increases the army of unemployed.

Try as we may to find a source of revenue to replace the tax on labor products that will not again rest on labor products, we shall find none except the publicly-created site-value of land.

There is a rapidly increasing sentiment and demand for more public revenue from site-value, and less from industry, farms and homes. A bill will be introduced in the coming session of the New Jersey Legislature to enact this, and it is especially to the interest of all realtors to help advance it.