Light On The Land Question

Anonymous

[Excerpts from a 1930 pamphlet published in the United Kingdom. The following excerpts are reprinted from an article published in Land & Liberty, January-February 1984, under the title "Nations Cannot Prosper if Land Monopoly Survives"]

In 1930 a distinguished British journalist decided to investigate the reason why so many people devoted time and effort to advance an idea -- the taxation of land values.
br> He approached his enquiry as a sceptic, but became increasingly convinced that he had stumbled on a solution to so many of the bleak economic problems that confronted the world of his day.

While struggling to resist the central thesis, which was expounded in Henry George's Progress & Poverty, he nonetheless decided to itemise on paper a list of what appeared to be the injustices of the existing system. One of these was:

That there should be over 2,000,000 unemployed while many thousands of acres are going out of cultivation largely because the prices and rents of land are too high, and because landowners can keep sites vacant and land idle, or make it an exclusive pleasure-ground, and pay nothing or only a trivial sum in taxation.

The results of his enquiry were published anonymously in London as a six-penny pamphlet. It was called Light On The Land Question. We publish an extract as a reminder of the parallels between the 1930s and the 1980s.

I FAILED to think of anything that could be compared with the grasping hand of the land monopolist. I then had to decide whether it was necessary to accept the whole of Henry George's idea.

I began to think again of my half-acre, and of how the scheme for handing over to the community the rent I could get for it would affect me.

It was obvious that its selling value would practically vanish. In that sense I should certainly be a loser. I should also have to pay £25 a year to the community for the privilege of being able to call my half-acre my own.

I was anxious to see how Henry George would meet this case. This is how he deals with it:-

"Take now the case of the homestead owner -- the mechanic, storekeeper, or professional man who has secured himself a house or lot, where he lives, and which he contemplates with satisfaction as a place from which his family cannot be ejected in case of his death.

"He will not be injured; on the contrary, he will be the gainer.

'The selling value of his lot will diminish -- theoretically it will entirely disappear. But its usefulness to him will not disappear. It will serve its purpose as well as ever. While, as the value of all other lots will diminish, or disappear in the same ratio, he retains the same security of always having a lot that he had before."

You see how ingenious he can be! And he goes on:-

"He is a loser only as the man who has bought himself a pair of boots may be said to be a loser by a subsequent fall in the price of boots. His boots will be just as useful to him, and the next pair of boots he can get cheaper.

"Other things considered, he will be much the gainer. For although he will have more taxes to pay on his land, he will be released from taxes on his house and improvements, on his furniture and personal property, on all that he and his family eat, drink, and wear, while his earnings will be largely increased by the rise of wages, the constant employment, and the increased briskness of trade.

"His only loss will be if he wants to sell his lot without getting another, and this will be a small loss, compared with a greater gain."

Was I convinced? Was I as completely convinced, I asked myself, of the justice of this proposal as of the injustices of which I had made a list?

I could not dispute the claim that land value belongs to the community, nor the view that it is wrong to tax houses or anything else produced by labour; but how about the idea that land values would provide all the revenue necessary for public purposes?

I DOUBTED if Henry George, if he were living now, would insist, as he did in 1879 and till his death in 1897, that the whole of the expenditure of this country, both local and national, could be met by land value taxation.

At the time he wrote, the world was a comparatively reasonable place.

• It had not slaughtered ten million men or blown thousands of millions of capital into the air.
  
• It had not piled up huge national debts.
  
• There were no expensive unemployment insurance schemes or old age pensions.
  
• Armies and navies were comparatively cheap. No country had to raise a national revenue, as we have to, of over £800,000,000 -- to say nothing of another £180,000,000 of local revenue.

His world was quite a different one, and I found it difficult to believe that he would have suggested raising the whole of this revenue by land value taxation alone.

No doubt the value of the land of this country has increased considerably since he wrote -- but has it increased enough?

To make it possible to raise the whole of the revenue by merely taking the annual value of the land, the true economic rent would have to be £1000,000,000. Is it so much?

No reliable figure exists. I have seen estimates of the selling value of all the land of Great Britain, and the highest is £10,000,000.000, which is based on the ascertained fact that the selling value of the land of all New Zealand (apart from buildings and improvements) is £315,000,000, equivalent to £206 per head of the population.

The selling value per head of the land of Great Britain is not likely to be less, and if you multiply our population of 46,800,000 by that figure, you get nearly £! 0,000,000,000.

Further, the assessed selling value of the land on which the City of New York stands is over £1500,000,000. In Greater London this is not likely to be less. Assuming that London land is worth £1500,000,000, it appears to be credible that the land value of the whole country should be seven times as much, i.e., upwards of £10.000,000.000.

But. even so, this selling is equivalent to an annual value of only £500,000,000. while the sum we need annually for public expenditure is at least £900,000,000.

At best, it seemed, only half the expenditure of this country could be raised by land value taxation and rating.

PRESUMABLY, therefore, I argued, as Henry George would not be able to offer me the remission of all other taxes and rates in return for taking the whole of the annual value of my half-acre, and practically destroying its selling value, he could not expect me to agree to his proposal as a whole.

But at this stage two important points occurred to me.

First, I remembered that these estimates had been based on the selling value of the land, which is an untaxed value. That is to say, it is the amount which the owners would get for the land if each piece were sold subject to existing rates and taxes. It is an enormous sum. but it does not represent the full value of the land; it represents only that part of the value which the landowners are able to put in their pockets.

Obviously a large portion of taxation to-day does come out of the rent of land, though in a crude and unfair way - that is, from land that is used and only as it is used. Income Tax on ground rents, for example, naturally lessens the selling value of land subject to that burden.

It follows, therefore, that if we are to put "land value" on one side of our budget and "public expenditure" on the other side, we must enter the whole land value and not just that part of it which has a certain selling value.

Unhappily there appeared to be no possibility of arriving at such an estimate. But in spite of the absence of this figure of the "whole land value", I found myself, after considering this aspect of the problem, more willing to agree that the merits of the case were not affected by what appears at first sight to be a gap in the argument.

At any rate. I could see the force of the view that we should concentrate taxation as far as possible on land value and get rid as far as possible of the taxes on trade and industry. This means that Income Tax and Death Duties would also disappear.

Further, I remembered that a great part of our expenditure goes in unemployment pay, housing subsidies, small-holding subsidies, etc. I remembered also the enormous sums that are given year by year in organised charity to mitigate distress.

And I had to confess that no Government has been able to make any impression on unemployment -- that insidious malady from which the country is suffering acutely.

• The 1929 Derating Act, by taking rates off some land and buildings, chiefly at the expense of the motorist and the ordinary taxpayer, was expected by its authors to make an impression -- but the number of unemployed has risen steadily since it was passed. According to Lord Snowden, it added £34,000,000 to indirect taxes.
  
  The inevitable effect has been to reduce real wages, to put more money into the pockets of the wealthy landowners and to encourage the tendency to keep land out of use in the hope of higher rents or prices.
  
• Schemes for spending £100,000,000 over a number of years on road-making and other work have similarly failed.
  
• Protection -- the only other remedy suggested -- has failed completely in every country where it has been tried. Clearly it was necessary to consider the land value policy in relation lo unemployment and low wages.

Eventually I found it necessary to agree that the great problems with which we are confronted cannot be detached from the system under which the land monopoly is allowed to flourish.

I came, therefore, to this position -- that, aside from the question whether our present national and local expenditure of at least £900,000,000 could be wholly raised from land value taxation, the point to be emphasized was that the economic effect of the proposal would be to reduce public expenditure by hundreds of millions a year -- that part of our public expenditure necessary to-day to supplement wages that are at or below subsistence level.

Present day taxation, I realised, is so levied as to restrict production, and it has to be screwed up more and more to dispense subsidies or pay for costly pro-poverty expedients in the attempt to undo the evil it causes.

"With all the burdens removed," I read, "which now oppress industry and hamper exchange, the production of wealth would go on with a rapidity now undreamt of..."

"Give labour a free field and its full earnings; take for the benefit of the whole community that fund which the growth of the community creates, and want and the fear of want would be gone. The springs of production would be set free and the enormous increase of wealth would give the poorest ample comfort."

WHO could dispute that? When treating a sick patient, a doctor is now rarely content merely to give him a bottle of medicine. He tells him that he must live under more healthy conditions, that he must cut down this and that, and generally give his body a chance to respond to the treatment. Otherwise the doctor will not be responsible.

It was easy to imagine Henry George saying to this sick country: "If you follow my advice, it will mean leaving behind you the unhealthy, enervating luxury of land monopoly, the suffering that springs from it, and the anomaly of having great wealth on the one hand and extreme poverty on the other. Take my advice, act with courage, and I promise you that before many years you will be strong and fit again."

This country cannot prosper white the land monopoly continues to exact its ruinous toll. Free the country from its throttling grip, and we would at once breathe more freely. New life would flow into the national activities, and with the burden of land monopoly would go many other burdens that now weigh us down.

By these steps it became clear to me, after so sceptical a beginning, that in our enormously increased national and local expenditure may be found not an argument against the Henry George idea, but a convincing argument for it.

Our difficulties are now too great to allow us to trifle any longer with the taxation of land values and the untaxing of industry; and my vote, for what it is worth, will certainly go to the political party that will put it into practice.