The American Tax Heritage
and the Better Way

Noah D. Alper

[A paper delivered at the meeting of the Missouri Economics Association, held 1 October, 1966, at the University of Missouri, Columbia, Missouri.]

America has a wonderful heritage of political freedom and individual liberty. The essence of this heritage is rule by law, not by man. Many think freedom is on the decline today. But with ample power in the hands of the people enough remains to correct our errors and to achieve a far greater perfection of this heritage in the future. Whether we do so depends on the ideas of economic science and social justice we generate and publicize to assure such an accomplishment.

Economic errors lie at the root of most problems that concern us today. The vast concentration of wealth and political power, the persistence of poverty with its slums and other symptoms that go with it, are politically hot issues and dominate political action. The view that these evils result from Free Enterprise, with its admitted power of productivity, is unreasonable; the view that errors in its operation cause them is not.

In the early years of America and until the end of the 19th century, an important physical fact had a vast and favorable influence on economic conditions, on the number of jobs and the amount of wages earned. An abundance of good free land existed. Economic exploitation could not be effective with such a frontier of opportunity. Yet in 1857, Lord Macaulay wrote his famous letter to Henry S. Randall, the biographer of Jefferson, which President Garfield said startled him "like an alarm bell at night." "Your fate," Lord Macaulay wrote, "I believe to be settled, though it is deferred by a physical cause. As long as you have a boundless extent of fertile and unoccupied land, your laboring population will be far more at ease than is the laboring population of the old world, and while this is the case the Jefferson politics may continue to exist without fatal calamity. But the time will come…"; and he pictured very well indeed what so many judge is happening today - the growth of the power of the State and the decline of man's personal freedom.

Along with our heritage of political freedom came our heritage of a tax system which was generally bad; and we have succeeded in making it much worse over the years. The tax policies imposed on the people of America by King George III were unpopular in the 1770's, not so much as a matter of economics as of politics. The cry of "Taxation without representation is unjust," and the resultant "Boston Tea Party," sparked our great revolution for the freedom and dignity of man. But one can imagine King George III rocking in his grave with laughter were it possible for him to see today's tax system achieved "with representation." It is difficult to believe the King and his royal and aristocratic henchmen, who were in effect the government - the law makers, administrators and judges of England, being at all unhappy with the way we tax our people. Whether from design or by its just happening, it favors the same classes of privileged economic interests in the United States that tax policy has long favored in England.

I will not be concerned in this paper with the merits or demerits of particular kinds of classifications of taxes, or whether they are progressive, regressive, or proportional; or if they accommodate to such concepts as "ability to pay" and the like. Nor will I be concerned with statistical details. I wish to relate the problem of financing Federal, state and local governments to what is considered to be the basic economic factors and principles to which we fail to adjust.

First let us briefly consider the nature and history of our tax structure in order to see how and why it became what it is. Next we will consider what can be done to change it so as to eliminate much of the harm it inflicts on our people and our government.

Originally, property plus tariffs on imports for many years provided the tax base and major revenue for government - for Federal, state and local government. Three events in recent times brought forth great tax changes that seemed inevitable considering the tax education of our people and the behavior capabilities of men who have special interests in how we tax. One was the legalizing of the income tax, another form of non-property taxation. A second was the invention of the automobile which, in effect, -reduced time and space. This was and is still a major force in imposing great changes in the relationship of the Federal to state, and Federal and state to local governments. And another was the collapse of property, real estate mortgages and common stock values in the depression of 1929 to 1932. The latter caused great financial distress to millions of individuals, greatly affecting their tax paying ability. At the same time, it stimulated others whose primary business was in real estate and land speculation to seek tax relief and in this way to secure private gain out of the situation. All this in turn caused a demand for, and assured political support for, the use of more non-real estate taxes to support government.

Previously the local governments provided most of the revenue for roads, schools and welfare. The advent of the automobile resulted in a demand for better planned and better built roads for interstate and continental use. It made possible larger and more centralized schools, including colleges, and far more centralized and higher quality welfare services and gave more prominence to state and less to county and city services. Although the total amount of their spending has increased as a percentage of income collected from the people it is the spending by the Federal Government that has greatly increased, with less being spent by the state and local governments.

The shift of the basis of taxation from real estate to non-real estate taxes -income, payroll, earnings, use, sales, gasoline, tobacco, liquor, excises and the like -increased the burden of support of government on people: as workers, as providers of capital; and as consumers. The Federal government uses non-real estate taxes exclusively. A number of states have abolished state real estate taxes, while others have reduced them to a point which means little in terms of revenue produced. Missouri, for example, has only a 6 cents tax per $100 valuation. Not only have the states shifted their tax base from real estate to non-real estate taxation, but the local governments - towns, cities, counties - have to a considerable extent done the same with permission of their state governments. From this background let us consider the meaning and effects of this amazing trend of tax shifting called by some "The Great American Tax Shift."

There is currently a great revival of interest in the property tax. And this we must consider for two reasons; first, because of its importance, especially to state and local governments; and second, for its relation to the thesis of this paper. Two important new books and numerous articles on the subject are stimulating this interest. The books are: "The American Property .Tax: Its History, Administration, and Economic Impact," by the staff of the Lincoln School of Public Finance of Claremont Men's College, Claremont, California, and "Economics of the Property Tax", by Dick Netzer, Professor of Public Finance of the Graduate School of Public Finance, New York University, published by Brookings Institution of Washington, D.C.

But possibly a more important reason for the resurgence of interest and concern about real estate taxes especially, is the massive problem of slums and the near-slum deterioration of many square miles of housing in our larger cities. The main cause of this problem has been directly attributed to our real estate taxes. A considerable number of articles appearing in magazines and newspapers have been on slums and slum clearance. Much legislation has been enacted and billions of dollars have been appropriated for this.

In the last few years the Public Revenue Education Council has reproduced a number of important articles on. property taxation. One is: "Are Property Taxes Obsolete?" This is from the March 1965 issue of Nation's Cities Magazine. It is a 16-page report on a conference on state and local taxes held June 18-19, 1964, at Claremont Men's College. Time, Life and Fortune magazines "joined with the National League of Cities (then known as the American Municipal Association), the Urban Land Institute, and the National Council of Good Cities (ACTION) in helping the Lincoln School of Public Finance sponsor a Round Table Conference of tax and municipal experts from all over the country to see how far they could agree on local tax reform policies and programs they could recommend for adoption by the Council of State Governments and the National League of Cities." The conference was unique in that it did not approach the problem as so many government and citizens committees do who seek to find out just how to raise the money. The guiding question was "how to raise these taxes in a way that will help rather than hinder the right kind of urban development - and redevelopment."

Other articles reproduced by the Council are: "The Differences Between Real Estate and Other Commodities," by Roy Wenzlick Research Corporation of Saint Louis; "Land Value Taxation, A Staff Study," by the U.S. Conference of Mayors; "Our Obsolete Real Estate Taxation," by the American Institute for Economic Research, and "TAXES and the Death of Cities", reprinted from the November 1965 issue of The Architectural Forum.

Because these articles, or some of them at least, might have escaped the attention of many economists, the Public Revenue Education Council mailed 8,095 cards offering them free of charge to economists in colleges and junior colleges in all states. Their interest was indicated by the receipt of over 1,770 requests for this material.

Because of the non-property trends of taxation and their effects, our tax structure is highly anti-incentive to producers and production. This is not altogether due to the quantity of income the taxes raise. It is largely-due to the way the tax burden is placed on the backs of the people and on industry and business. Hang a hundred pound sack of flour on the head of a donkey and he will travel neither far nor fast; place the load properly on his back and he will do well indeed. And so it is with taxation: properly placed, we will need far less total revenue than we seem to need now, and we can have a considerable increase of production with the use of the same labor and capital.

Such considerations as these raise the question: Why do we retain a tax system which is so complex, so costly and difficult to administer, so wide-open to temptation and corruption of both tax collectors and tax payers, and so likely to cause, and does cause, much harm that could otherwise be avoided? In some part this is due to the political and educational influence of a comparative few whose profits depend so largely on the choice of taxes that are used to support government. To the extent such people are dealers in land sites suitable for any purpose as users or as speculators, they cannot profit at all unless they keep taxes off of their particular and peculiar source of income.

Profit in land dealing also requires that land dealers favor and engage in activities which cause public and private improvements to be placed in advantageous position so as to add value to land locations they control. Another reason for the existence of such a tax system is that it encourages complexity and confusion which serves as a smokescreen to conceal their special profit interest - and often a conflict of interest - in how people are taxed. Yet there is another more basic reason - faulty tax-education. Let us consider this last reason next.

Today, taxation is taught in a way that resembles the case- study system used in the study of law. However well such a method may work in teaching law it fails as a method of teaching the economics of public revenue. The confusion of our people - of even generally well educated people, and of those who write and administer our laws of taxation as well, is substantial proof of this. The latter may be experts in knowing what the tax laws say, how they are to be administered; they may have some knowledge of whether given taxes are progressive, regressive, or in accordance with "ability to pay," which are so often taken as criteria as to what are good or bad taxes. Their very interest in this type of tax-learning has practically stopped their search for the more scientific and revealing facts. And of this we can be certain; few of these people understand the truly basic science factors and principles which form the structure of economic science, and which must, therefore, also form the basis of any proper understanding of taxation, and of how tax laws should be written and serviced.

Tax-education today, as suggested before, is based on case-like studies of tax laws enacted by legislative bodies. These taxes are scholastically organized into classifications such as property, sales, motor fuels, excises, profits and the like. Property taxes, for -example, are listed as tangible, intangible, on improvements and on land or real estate. Sales can be general or limited, placed on the manufacturer or on the retailer. Income taxes can be personal or corporate, gross or net. Excises are numerous and of various kinds.

Some attempt is made to evaluate all these taxes as to their incidence - that is as to just who really pays the tax in the end. Is it paid by the person or business first receiving the tax bill? Or, is it shifted in higher prices and paid by the ultimate consumer of the product or receiver of the service?

A tax may be progressive, regressive, proportional; or levied according to "ability to pay" or on "benefits received," etc. Ability to pay is the best known and most popular idea today in making value judgment of taxes, primarily due to its charitable or religious or church-supporting connotation. This is the case regardless of how morally wrong it may be as a way of supporting government, a public and not a private institution.

Such social or ideological concepts or rules of taxation are most certainly not formed of objective economic "cause and effect" patterns. Yet these are most often remembered by students of economics and social studies than are the more vital facts. Fortunately, the latter are also found in textbooks even though they are seldom used to project their finer implications for society and what our tax-actions and tax laws ought to be.

Are we to judge from what is taught today as tax-education, or from what may be called practical experience, that our present tax structure is the best or the only way - the only practical way - to raise revenue for government? Or is it a matter of going along with things as they are because this may be the easiest way for most people concerned? Of course it is not the only way, or the best way; and we can be sure, judging by results, that it is far from being a truly practical way. And we can also be sure of this as well; that what is bad in our inherited customary and traditional ways of taxation can be corrected by education of a scientific nature which shows a better way. Let us consider this latter possibility.

The basic structure of economic science consists of two primary factors and one derived or secondary factor. The two primary factors are: Land - man's material universe exclusive of man and his products; and, Labor - all human exertion, mental and physical, in the production of wealth and services. Capital, a derived or secondary factor, is all wealth used to produce more wealth for income or exchange; it is wealth still in the course of exchange, wealth not yet in the hands of the consumer.

To be wealth an object must have these four characteristics: 1) it must be material; 2) exist in its present form or shape and location because of labor; 3) must have in itself a capacity of satisfying human desires; and 4) have value in exchange.

"Management" is a job classification and is here included in and under the term Labor. "Government" is a social-political institution which itself uses Land, Labor and Capital. Here we will not consider Management or Government as factors of production although some economists, in error we believe, so classify and treat them.

In classical economics the theory is that the Product (wealth and services) results from Labor, using Capital, working on Land and on materials taken from Land. It is distributed as Wages to Labor, and Interest to Capital; and RENT-of-land (Economic Rent) is a third share. The latter is naturally attributed to land locations which, due to its enrichment with natural resources (oils, minerals, etc.) and/or to public improvements will produce an excess or surplus - a rent - over that which it would produce on marginal or "break-even" land. Marginal land is the poorest land in use - land which yields only enough market determined rewards to labor and capital providers to keep such land in production.

Practically all economists teach what is known as Ricardo's Law of Rent. This law or principle indicates that RENT-of-land is an excess or extra amount due to the use of better land - land which is more productive than the "break-even" or "marginal" land. This RENT-of-land can be collected by the title holder without effort or provision of capital on his part. It is, however, a proportionate part or percent of the total product. Wages and Interest are what is left to labor and capital providers after RENT-of-land is first deducted from the total product.

While the facts are obvious to any student of economic science, it was left to an American economist. Henry George, to clarify the problem of distribution and its laws. He asserted that if the Law of Rent accounts for one share or segment of the total product, complementary laws must exist to account for the remainder - for the proportionate share going to Labor or capital providers. In a scientific manner, and in language which accommodates to the Ricardian expression, George made formal statements of the Laws of Wages and of Interest taken together, or taken separately. Those wanting to know more of the relationship of these laws in distribution - of the shares to each other - -can refer to Henry George's book, Progress and Poverty. I have ventured to bring this correlation of the Laws of Distribution to your attention because it involves an important concept about public revenue (taxation) which follow from understanding Distribution and its three laws.

An important fact directly deductible from these Laws of Distribution is this: The three distributive shares, RENT-of-land, Wages and Interest, which together account for the total product, are also the three basic sources of public revenue. Yet, while there are technically three shares in distribution and therefore three sources of public revenue, we can, because of the cooperative nature and relationship of Labor and Capital (and capital providers) - and to achieve simplicity and citizenship understanding as well - treat Wage sand Interest as one joint fund - as one SOURCE. [*] This combined source we here identify as REWARDS-of-human-effort. We can then say that all taxes, and the public RENT-of-land charge - really not a tax - draw income to government from one or the other, or from both of these sources - RENT-of-land and REWARDS-of-human-effort. [1]

To illustrate and make this concept of source clear let us assume a man has wages of $100 a week as his only income. Now consider how many taxes, direct and indirect, such a man pays in any one year. What is the source of his tax payments? Clearly, his labor, or to use a more scientific expression, his wages. In the same manner, by assuming men with incomes consisting only of Interest, or of RENT-of-land, which is possible, we can see that these distributive shares can be isolated and each can be used as a separate source of revenue to support governments.

This reasoning, which dictates shares of the product of industry are also the sources of public revenue, raises another question. This is: if these distributive shares are sources of public revenue, what then are taxes which so many economists and most law makers constantly, and we believe erronously, refer to as sources?

Once thought about the answer to this question is quite clear. Taxes relate to these different sources of public revenue as pumps relate to the water they pump; as pumps relate to water in wells, rivers, lakes or reservoirs. Taxes are like pumps; they are used to draw revenue for the use of Federal, state and local governments from the sources - RENT-of-land and the REWARDS-of-human-effort, or from both, depending on the source or sources of peoples income, and the nature of the tax. [2]

Recently, The Wall Street Journal headed an editorial about the three income taxes citizens of the City of New York must pay in this way: "Three Taxes - One Pocket." Perhaps we will one day see an editorial in the Journal with this heading: "Many Taxes - Two Sources." For it is indeed a serious and socially a most important question we now raise. If there are only two basic sources of public revenue why do we need so many taxes (pumps)? A city could have a water pump for each precinct or ward -but it doesn't. Cities generally have one pumping station. Water is budgeted or distributed to the various areas according to need. Possibly governments can do the same thing in collecting public revenue. The idea of shared revenue is not new. But let us examine this concept.

In the "Special Report" in "Nation's Cities" to which we have previously referred, we read: "The property tax is not one tax but two taxes whose economic impacts are -directly opposite." This statement means that land and improvements are different classes of things; and that their price reaction to the imposition of a tax is opposite - the price of land going down, the price of improvements going up. If we substitute for the word improvements the term wealth (all man-made things of value), we then have a general, rather than a particular, principle of truly great importance. We can then say that with the application of taxes, the price of land goes down while the price of all things of value produced by labor and capital providers .[3]

The principle of the non-shiftability of a tax which collects the publicly earned RENT-of-land for public use i is well established in today's economics. Yet few students think of or are concerned with this knowledge after graduation. There is a reason for their neglect of this vital and beneficial idea, if they learned it at all. This is that the principle is not emphasized sufficiently; its social significance is not made known to students or others.

As indicated above the public collection of the publicly earned RENT-of-land source of public revenue actually is a payment for benefits received by the holder of title to the land, and so, as noted before, is not a tax. The use of this source of revenue does not increase the price of either land or of products and services. In fact, by using this location value land "tax" land speculation is practically eliminated. This assures the use of better land to Labor and capital providers - the kind of land speculators always try to hold and to hold out of use. With the use of better land productivity is increased and the prices of products and services are lowered. On the other hand, as all economists agree, taxes levied on improvements and all other human productions of economic concern, tend to reduce supply and to increase the price of such things.

This economic science knowledge has great value to society. By its use we can cause the prices of both land and of products and services to be either higher or lower. Taxing land location values more and taxing improvements and all other man-made capital or consumers wealth less will lower both prices of land and improvements, and of other products and services; taxing land location values - less and products and services more will increase the prices of both land and of improvements, and of other products and services.

This suggests a question: Which will make it easier for people to get food, clothing and shelter and other desirable products and services, and which will make it harder, high priced or low priced land and products? The answer to this question will enable us to solve or greatly reduce the size of the economic and social problems now escaping fundamental solution. Unfortunately the political and social remedies now being generally used are not based on the. economic science principle of basic prevention. Today's type remedies, in the main, allow our problems to recur over and over again. Economic science offers the best single-type solution of these problems which is to free the people of the shameful economic and social bind between HIGH PRICED LAND and HIGH PRICED PRODUCTS AND SERVICES in which our people are caught.

It is the lower price of land and of products and services, not higher prices - which our non-scientific, anti-incentive, anti-Free Enterprise tax structure more than anything else now causes, that will allow the Free Enterprise system to work best to prevent, and so eliminate or reduce the size of most of these problems. It is the existence of lower prices for land and products that will assure easier and less costly access to land and more and less costly use of capital; that will assure quicker and more certain adjustments to automation and all other cost reducing methods of production. It is lower prices of products and services that will increase the standards of living of all willing and able to work and of those dependent on private or public charity, or on political-financial aid.

We must keep in mind that since human wants -- quantity, quality, and variety of products and services considered - are unlimited and much land space and resources exist unused or poorly used in the world, there is little logic to the reasoning that we need fear the use of automation or the principles of economic science to increase production. The nature of man, the source of all wants and jobs, and our free system - freed of its restricting tax chains, is such as to assure employment to all who can or can be trained to add profitably to production. We would not expect unemployment to be anything like some of the mass unemployment periods we have known in the past. What we may have could be corrected by monetary actions.

The question of making it easier to have access to land and to build improvements was recognized in the matter of slum clearing and providing housing in the Urban Renewal and Public Housing programs. The essential fact of these programs was to lower the price of land and to give tax reductions on improvements as incentives to prospective builders. The most political and artificial tactics were used. By use of the power of or threat of condemnation, land was bought at speculatively high prices - what land might be worth 20 or 25 years from now - for use today. After clearing it at great cost to the taxpayers, it was offered at prices specially, and possibly politically, organized groups felt they could pay, and yet profit from their activity. The companion incentive policy was to untax improvements completely for ten years, and to tax them at 50 per cent of their assessed value for an additional fifteen years. Public Housing had its own price lowering arrangements.

While the program did put some contractors to work and physically increase housing - much of it bad - it has many defects and caused much injustice. It involved a mass removal of established communities and the destruction of well established neighborhoods; it led to over-crowding of other areas and the conversion of these into slum-like neighborhoods if not actual slums. It caused unfairness of competition to all other property owners who were given no such special privileges. It, of course, solved no true problem in its attempt to treat isolated and limited areas officially declared blighted - although, in fact often not blighted. Urban Renewal was and is a shamefully narrow-visioned and limited political concept of the problem of development and redevelopment of housing and communities. The problem demands total-type conditioning or environmental incentive solutions; it demands general land value taxation to lower the price of all land, and untaxed improvements to give natural incentives to all to build and improve. These are certain lessons of economic science. But economic science has much more to offer than to rid our communities of slums, for the time being, by use of political tax expedients which leave our tax system as it is to create new crops of slums. In this case, Urban Renewal and Public Housing programs will have to be re-created to relieve us of these in the future. Let us consider what economic science really has to offer a free and progressive people in this matter of the use of the proper source of public revenue to support government.

Economic science reveals how we can end much of the tax confusion of our people and greatly simplify our tax structure. Few think we can support today's governments - whose problems are caused mainly by a bad tax structure which are then, supposedly, to be relieved by more bad taxation - by the exclusive use of the RENT-of-land source. We could try collecting as much as 90 or 95 per cent of the publicly earned RENT-of-land for public use to go as far as it can in supporting government. This will produce a tremendous amount of revenue based on free market determination of this income. Naturally this income would be based on full cash value assessments of land with rates of taxation sufficiently high to collect approximately the full amount of the RENT-of-land. Such an approach will practically end all destructive speculative influence in the use of land and would be a very good beginning.

Any extra income to meet government expenditures over and above what RENT-of-land provides will have to come from the other source - REWARDS-of-human-effort. Three non-property taxes already in use could provide this: 1) the Income Tax applied only to Wages and Interest; 2) the Inheritance Tax; and 3) the Gasoline Tax (the latter has qualities - as does the RENT-of-land source - of being in the nature of paying for benefits received by the payers.) In addition to these, all possible fees - direct charges - for particular services rendered to owners and renters of homes, and apartments, and to users of industrial, commercial, and other property should also be substantially used.

All governments - Federal, state and local - should use these same taxes on a sharing basis, the share to each being determined by the functions allocated to each level of government to perform. Why would the use of more kinds of taxes (pumps) be necessary? How would or can the use of more kinds of taxes (pumps) benefit the people? Which is more honest and best suited to a free and democratic - and most generally moral - people, a few simple, above-board and direct taxes, or the complex, compounding tax structure of direct and indirect taxes imposed on our people today?

In time the public revenue collected by these non-land value taxes could and should be reduced. (Possibly some can be abolished altogether.) This is not so much of an impossibility as many may think who are unaware of the quick benefits that will result from the use of a direct, selective and simplified tax structure such as is here suggested. The costs of land needed by government at all levels and for all purposes will go down; the cost of materials and supplies for government, being untaxed or taxed less, and subjected to increased production otherwise, will go down; and the cost of welfare aid - since more people can and will take care of themselves under the better conditions established - will also go down.

A very great waste, one that greatly increases costs of both governmental and privately provided public services, is our misuse of land space because of land speculation and the urban and suburban sprawl this causes. All private users of space know and avoid, as best they can at all times and in all circumstances, the cost of wasteful use of space they service in many ways. The notorious waster and cause of misuse of space serviced in so many ways by government is government itself. In this it is "egged on" and encouraged by those who make it their business to deal in nature or land space, serviced and made valuable by the community, as businessmen deal in man-made products and services as a way of getting a living. The moral and economic difference is observable and great. These costs appear in the daily use of public and private transportation, in the day to day cost of all public and privately provided utility services and die needless higher cost of extension of these services. They are to be-found in added costs- of our privately and publicly provided schools and hospitals, and in our publicly provided police and fire departments, parks, playgrounds; and in the privately provided stores and places of industry as well. These costs which are in great part avoidable, fall on all people, directly or indirectly.

As such waste and costs are reduced by use of a more just and helpful tax structure, general production will tend to increase. The labor of former, but now unneeded, government employees; of many now of relief; and of many who formerly lived - and to die extent they lived - on incomes of RENT-of-land, will now add to production. In time there will be better use of services already established within the city. Then there will begin a normal - non-leap-frog checkerboard - extension of the community in solid - but closer in - areas. This extension of the community, as all economists know, will tend to increase the total RENT-of-land income available for the use of government. Such added income can be used to provide more old or some new public services the people might desire. And, as a bonus, the new world-wide image which the Free Enterprise system will create will win friends for Freedom and lose them for Communism and Socialism. Freed of its land-dealers forged tax-chains, as it can and ought to be, the Free Enterprise system can become so attractive to people everywhere and in this way defeat the MARXIST type of economy, and in all probability, in peace too.

In closing I would be amiss if I did not pay special tribute to Dr. Harry Gunnison Brown, Professor Emeritis of Economics, and teacher of this subject for many years at the University of Missouri. While Dr. Brown did not teach what is sometimes called the "Single Tax", he did teach thoroughly the difference between Land and man-made Capital. He saw clearly that a tax system that punished incentive of Labor and Capital providers, while encouraging the incentives of land speculators, land hoarders and monopolists and those who held land generally under-improved, would make it difficult for Free Enterprise to produce the stability, and the steady progress in production and in just distribution it is fully capable of producing. Dr. Brown advocated theories of monetary policy to secure stability; but we can be certain that he felt that under the improved conditions that could be secured from untaxing Capital and capital providers, and by the use of more land value taxation, monetary control would play a smaller, yet more sensitive part than seems to be necessary today to secure working stability.


* A demand for labor is a demand for capital, and vice versa; when wages tend high, interest tends high - they tend to go up and down together, although not necessarily at the same time. From this relationship we can deduct that the use of a SOURCE good for Labor is also good for capital providers and vice versa.
1. RENT-of-land collected by government is, in fact, a payment for direct benefits received by the title holder as expressed by the market price or rental value of the land held. It is in no real sense a ''tax."
2. Whether general, as in the case of an income tax which collects from all incomes, or as a direct tax on land value or on RENT-of-land which does not fall on either Wages or (true) Interest. We could also have a direct wages tax, as the earnings tax, and a direct tax on interest.
3. You are invited to write for our educational bulletin entitled: "Why Do We Ignore One of Economic Science's Most Important Principles?" This explains why the use of the RENT-of-land source of public revenue lowers rather than increases prices of products and services.