The Manufacturer versus
the College Professor
Noah D. Alper
[A pamphlet published by the Public Revenue Education
Council, St. Louis, Missouri -- 1951. The original version of this
document included four illustrations that did not reproduce clear
enough to include below. ]
A leading California Manufacturer, Mr. Joseph S. Thompson, President,
Federal Pacific Electric Company of San Francisco, in an address
before the Tax Committee of the National Association of Manufacturers
of which he is a member, proposed that government derive its income
from a "single source." Dr. H. L. Lutz, adviser to the Tax
Committee, issued a memorandum in opposition to this proposal in
which he said:
"The product of the economy results from the joint
contribution of land, labor, capital and management. Granted that
government costs too much, it is still true that the proper
way to cover this is by spreading the tax burden across the
board instead of seeking to concentrate it at any one point."
A Natural Scientific Tax-Structure Exists
The fact that the "product of the economy results from the joint
contribution of land, labor, capital and management" in no way
warrants the conclusion that the idea of "taxing across the board"
is either best or desirable. In truth, this idea is most arbitrary and
unscientific, and is dangerous to the Free Enterprise economy. On the
other hand, the very statement made by Dr. Lutz that "the product
results from the joint contribution of land, labor, capital and
management" suggests that a simple, helpful and natural tax
structure is revealed by these factors.
Tax-Structure to Be Compared
We propose to compare the natural tax-structure revealed by the
truths of the Science of Economics with -
- 1. The tax-structure based on the doctrine of Dr. Lutz of "taxing
across the board," which is now well established in the
United States. In fact, this has served for years as a background
of tax-education in the great majority of our colleges and
- 2. The tax-structure of the Communist Manifesto which was
designed in 1847 by Karl Marx and Frederich Engels as one that
would destroy Free Enterprise (Capitalism) and advance the
- 3. A particular "single source" of revenue for
government proposed by Mr. Thompson in his address to the Tax
Committee of the National Association of Manufacturers.
This comparison and the direct and logical deductions based on it
will show which tax-structure, or proposal - that of the Manufacturer
or of the College Professor - will best serve the interests of the
Free Enterprise system and the producers of wealth and services.
Furthermore, this comparison will show which tax-structure will be
more apt to increase this nation's chances of winning the economic war
being waged against it by the Communists.
The Meaning of Taxing Across the Board
What does "spreading the tax burden across the board" mean?
Dr. Lutz suggests its meaning when he says that the "product is
the joint contribution of land, labor, capital and management."
This statement is back of his notion that taxation should be made to
fall, in one way or another, on all the factors of production. Dr.
Albert I. Meyers, in his book "Modern Economics - Elements and
Problems," says that in this doctrine, which he calls the "Diffusion
Theory," "it is postulated that the burden should be spread
over as many people as possible."
The doctrine of "taxing across the board," so far as it can
be explained by the facts and principles of the Science of Economics,
means this: Land and Labor are the two
primary factors of production, and Capital, a man-made or
derived factor - derived, that is, from the first two - is the secondary
factor. Economic Science then logically shows that the product -
wealth and services (or monetary claims on them) - divides into a
three-way flow, that is, into three Avenues of Distribution. These
are: RENT-of-land, Wages and Interest. Therefore, "taxing
across the board" means the taking by government of Wages.
Interest and RENT-of-land without scientific discrimination or
consideration of the origin and nature of these shares, or of the,
effect of such taxation on men and women, the Free Enterprise economy,
and the national well-being.
Sources of Public Revenue Revealed
An important fact is that when we have thus identified the Avenues of
Distribution of wealth and services we have also identified the basic
sources of Public Revenue (and of private revenue as well).
This positive and most useful economic science fact, if known to
today's economists, is, unfortunately, generally ignored. Dr. Lutz
stopped short of the inevitable conclusion that the Avenues of
Distribution are, in fact, also the SOURCES OF PUBLIC REVENUE.
As we have pointed out, the only meaning the doctrine of "spreading
the tax burden across the board" can have is that all three of
these sources of Public Revenue are to be used by government. It would
appear that the doctrine of Dr. Lutz of taxing all these sources in
some fashion is to be followed in the face of this fact - that by
using the source that is most naturally and most properly Public
Revenue, and by refraining from using the other sources, we can
greatly increase the efficiency of and respect for the Free Enterprise
Scandalous Tax Confusion Can Be Ended
We can end the scandalous amount of tax confusion that has been
imposed on the American people by correcting the inept and distorted
teaching of economics of taxation in our colleges and universities and
through other mediums. Many intelligent people, who are otherwise well
educated, have been led to believe that our public revenue problem is
taxes rather than one of sources. Never has a more
harmful economic error been made. This error is the cause of much of
the tax hocus-pocus by which many men of Labor and many
Capital-owners, as well as other people, are kept fooled. This error
is the source of endless squabbling and squawking about taxes -
whether to increase or lower rates of this or that tax - whether to
use manufacturers' sales rather than retail sales or gross
transactions taxes - whether to lower the income tax (or abolish it
and use as a substitute, in whole or in part, manufacturers' excise
taxes) - whether to increase the tax on cigarettes, liquors, baby
food, cosmetics - whether to make utilities collect more taxes, etc.,
etc. In this way people are kept in a continuing state of excitement
by schemes that stir up the tax mess but never end it. We can end most
of this tax nonsense -
1. By recognizing the difference between a tax
and a source - an extremely simple economic science truth. A
tax is no more a source of Public Revenue than a pump is the source
from which it pumps, such as a lake, watershed, spring, etc. A tax
is like a pump. This truth alone, when recognized, will go far in
causing a reorganization of economic instruction in our institutions
of higher learning.
2. By recognizing the fact that we have a choice of one or the
other of the two basic sources of Public Revenue, and by recognizing
the further fact that the one and only basic administrative
decision we must make, as citizens, is not which tax to use
but which source to use, or to use first - RENT-of-land or the
Rewards of human effort.
Three Sources Are Really Two
There is a natural affinity between Labor and Capital-owners.
(Capital is created by laborers who consume less than they produce,
save and invest. Capital-owners create more capital by this same
process.) A demand for Labor is a demand for Capital, and vice versa.
And, except when obstructed by government or by individuals or groups
of individuals, operating immorally or illegally, Interest rises as
Wages rise and fall as they fall, although a time lag is usually
involved. For these reasons we here treat Wages, including wages of
Management, and Interest as one basic source. We consider, therefore,
that only two basic sources of Public Revenue exist, viz. -
1. Rewards of human effort.
What Is RENT-of-land?
Before proceeding it is necessary for us to discuss one of the basic
terms of economic science - RENT-of-land - what it is, how it arises,
who really earns it and who should use it. Actual RENT-of-land, and
speculative RENT-of-land, is the measure of the value of land for use
in production, for home use, or for other uses, as compared with land
so poor in desirability that while it may be used no one can afford to
pay for its use. It is a value which attaches to land - the factor of
production that is
not made by. man. Land is publicly serviced by all the
people, through their agent, government, and by their privately
provided services, including public utilities which are privately
financed and owned. Land is in no way serviced in these ways by
title-holders as such.
RENT-of-land is the sum of money a title-holder can collect from a
tenant for the use of a land site or its natural resource contents.
People who want the use of land voluntarily offer to pay title-holders
a market determined rental for the use of the site and, when involved,
its natural resource advantages. None of these community produced or
natural resource advantages are provided by the title-holder as such.
In truth, the title could be held by a native of Timbuktu, a fifth
generation descendant of the first title-holder who, himself may never
eyen seen his property, or by a cat and dog estate, and the same
economic and social phenomenon of RENT-of-land would occur.
It happens that this same amount of RENT-of-land which the free
market allows a title-holder to collect from a tenant, is also the
amount the people, through government - as an agent, not as a land
owner - can collect from the title-holder. This is his payment of
obligation - his "ground debt." It is his obligation to pay
for community services as certainly as it is the obligation of a
tenant to pay this sum to a title-holder.
Title-Holders' Rights Not Changed
It must be pointed out that when this balancing obligation - this
payment of RENT-of-land in exchange for title privileges - is demanded
of the title-holder his legal right as a property owner remains
unchanged. He retains possession of the land and disposition of his
legal rights can be made as he wishes during his lifetime or at death.
Ownership of all value in improvements and tangible personal property,
added to or placed in or on the land, is assured. The right to enjoy
the income that arises from such privately provided improvements,
personal property and services
untaxed, should also be assured.
Two Vital Economic Science Facts
Two scientific facts, familiar to practically all economists, are
vital to our presentation. These are -
1. RENT-of-land can be separated from the total national
product by principles of economic science as surely as cream can be
separated from milk, or minerals from rock and other matter in which
they are found by principles of the science of physics. This process
leaves Wages and Interest intact. The separation of RENT-of-land
from Wages and Interest is achieved each day through the mechanism
of the free market as title deeds to land are sold or as land is
leased, with or without improvements. It is due to this fact that we
have a choice between the two basic sources of Public Revenue, and
between the kind of results we can secure by using one and not the
other. We should, of course, tax the Source that provides the
greatest benefits to all and not the one that gives unearned gain to
a few in special and privileged positions of socially created
2. The second vital fact is that a tax placed on the value of land,
or on its RENT, cannot be shifted. This tax can only be applied on
land good enough to yield a rent; it does not fall on the "no-rent,"
yet competitive, marginal or sub-marginal land. The
RENT-of-land payment is paid by the title-holder out of the current
RENT-of-land he collects. He cannot shift it to others either in a
higher price for land or for products. Many readers who have not
studied this fact may doubt its truth. However, if this were not
true, there would be no opposition to the use of RENT-of-land to
support government from those who gain unfairly by the present
tax-structure. Any textbook on economic principles that includes a
discussion of land and its RENT will usually give an explanation of
why title-holders must pay a tax on this RENT, or land value, and
why they cannot then collect more RENT to recover the amount
of the tax paid.
The Tax Structure of the Communist Manifesto
The Communist Manifesto offers three tax proposals:
1. A heavy progressive, or graduated, income tax.
2. The abolition of all inheritances.
3. The application of all rents of land to public purposes.
These three proposals, if used, would certainly spread the burden of
government costs on Land, Labor, Capital and Management. By calling
for the abolition of all inheritances, past accumulations of Capital
and practically all consumer wealth, would be confiscated. This
Communist tax scheme, in principle, conforms to the Dr. Lutz
doctrine of "taxing across the board." It is the stated
intent of the Communists (and Socialists) to destroy Free Enterprise
(Capitalism). This is not, of course, the intent of Dr. Lutz, nor of
the many college professors and those who offer tax-education through
foundations and industrial economics courses who, knowingly or
unknowingly, support the "taxing across the board" doctrine.
The difference is one of degree, not of principle. The greater the
intensity of application of this doctrine, the greater the danger to
Free Enterprise. Wrong principles are not made correct by a mere
modification in degree of application.
Dr. Lutz Proposes a "Single Source" of Revenue
It should be noted here that the effect of using taxes of various
kinds, without discrimination as to basic economic sources, is really
"to concentrate the tax burden at one point." This is what
Dr. Lutz says we should
not do. His plan, however, does concentrate it largely on the
source we have identified as the Rewards of human effort. It is in
this way that tax relief is given to the collectors of the
publicly created rental value of land which attaches, not to wealth -
man-made objects - but to land, an object of vastly different origin -
a natural object. Since this is the generally known effect of "taxing
across the board," it must be assumed that it is known to Dr.
Lutz and further, that his proposal is made to achieve and perpetuate
this type of tax concentration.
It is a fact that the great majority of people live entirely, or
primarily, from this "single source" of Public Revenue - the
"Rewards of human effort." This source is now being taxed by
multiple taxes often with compounding effect. It is due to the
confusion created by this multiplicity of taxes that people do not
understand taxation and the great harm that is being done them, who is
doing it to them or why. These many taxes, however, can in no way
alter the basic economic science analysis that reveals which source is
really being taxed most heavily.
The Vital Issue
Mr. Thompson elected to emphasize the necessity for drawing support
of government from the RENT-of-land; Dr. Lutz chose to draw this
support from the Rewards of human effort, that is, from incomes
personally earned. Dr. Lutz would allow title-holders to retain the
publicly earned RENT-of-land for personal use. Of course, if
such an arrangement were allowed to persist many title-holders of land
of great value, and their descendents, could live forever off the
productions of others, not making one iota of productive contribution
themselves. This is an immoral arrangement, unblessed by human
experience. This is privilege at its worst! This is the original "something
for nothing" economic deal.
The "Cause and Effect" Pattern Involved
The following are well established facts, both of economic science
and of market experience, and can and should be used by people, as
citizens, in determining how best to secure revenue for government.
Which source they will choose, or choose first, will be determined by
their knowledge of economic science, their social and moral concepts,
and the results they wish to secure for themselves and their country.
The market price of land
goes down as more RENT-of-land is diverted by taxes to
government use and less is left for personal use by the
title-holder. On the other hand, the market price of land goes up
as less RENT-of-land is collected by government, and more is left in
the hands of the title-holder.
We further know that, in principle, imposing taxes on products and
services causes products and services to be less plentiful and,
therefore, tends to raise prices. However, if these taxes are
abolished, prices of products and services tend to be lowered, not
only by the amount of taxes removed and their cost of collection, but
still more by the increased production that will result.
We also know that direct taxes, such as taxes on the net income of
individuals, taxes on retail or consumer sales, as well as gasoline,
cigarette and other excise taxes at the retail level, take money
(purchasing power) directly from people. This has the same effect as
hidden taxes which inflate prices and which cause people to buy less.
On the other hand, if we abolish these direct taxes, this purchasing
power remains in the hands of people and the effect is the same as if
prices of products and services were lowered, enabling them to buy
more. This "cause and effect" pattern enables us to
decide which source of Public Revenue we will use, or use first -
RENT-of-land or the Reward of human effort. As we make this decision
we are also deciding whether to make land and products and
services higher or lower priced. It follows as certainly as night
the day that we are deciding whether to make it easier or harder for
1. To produce, save and invest, and keep their savings
for personal use and security.
2. To secure products and services.
3. To secure access to land.
Possible Results of Our Choice of Source of Public Revenue
We can be sure that if we follow the Dr. Lutz doctrine of "taxing
across the board," using more of the Rewards of human effort and
less RENT-of-land, we will make it
harder for people to secure access to land and to obtain
products and services, and also harder for people to provide
for their own security and old age. As a result of such a policy the
following will occur: There will be -
- Less demand for labor, and, therefore, fewer jobs.
- Lower wages (basic depression conditions).
- More slums.
- More blocking of the unique process of control of Free
Enterprise which will tend to increase the abnormal swings of
inflation and deflation and their attendant evils.
- An increase in number and a worsening of the nature of
conflicts between Labor, and Management and Capital-owners; and
There will be - A decided trend toward -
- A Welfare State
(This is the experience of the United States today!)
If, on the other hand, we use more of RENT-of-land and less of the
Rewards of human effort, it will be easier for people to secure access
to land, to obtain products and services, and to save and provide for
their own security and old age. As a result of such a policy the
following will occur:
There will be --
- More demand for labor - more jobs.
- Higher wages (basic prosperity conditions).
- Fewer slums and, possibly, none.
- Less blocking of the unique process of control of Free
Enterprise which will greatly modify the abnormal swings of
inflation and deflation and their attendant evils.
- A decrease in the number of and a betterment in the character
of conflicts between labor, and management and capital-owners; and
There will be - A decided trend toward -
- A State of Welfare- not a Welfare State
- A Free Economy - not Socialism
- A Free Society - not Communism
- Peace-not War.
Politics and Propaganda, Not Land Titles, Fix Assessments and Tax
Title to land, the only property right involved when land is bought
or sold, does not guarantee that the rate of taxation in effect at the
time of purchase will never be increased or decreased. There is not
now and never has been a safe presumption that the legislators, or the
people, will not demand an increased use of the RENT-of-land source to
support government. The very success of those whose primary income, or
a substantial part of it, is in RENT-of-land, in having the tax burden
shifted from this source to the Rewards of Human effort source, is no
reason why it cannot at any time be shifted back. And Dr. Lutz are
aware of this.
Treat Causes, Not Symptoms
All this is suggestive of the potential benefits of the Science of
Economics which need to be better understood, and to be taught with
the same objectivity found in the teaching of other sciences. How
amazingly different it would be if this science were really free -
free from the ruthless and dangerous influences of those who would
warp its teachings so as to preserve great wrongs in which they now
have, unfortunately, an established financial interest; and free of
the influence of those who would pervert the teaching of economics so
as to accelerate the increasing trend toward Socialism. How different
it would be if the direction of economic teaching had been toward
ridding the Free Enterprise system of its wrongs rather than toward
perfecting a system of "built-in" economic stabilizers and
devices designed to help us coexist with them.
What Is a Good Deal?
It is important for more people to realize that we cannot correct
wrongs in our system without, eventually, curtailing and eliminating
the profits based on these wrongs. Surely it is understood that
changes will be made, and in the economics and social field, generally
wrong changes - simply because the people are confused and do not have
the true facts. It is indeed unfortunate that some people in
possession of monopoly and special privilege have ethical standards
which lead them to oppose needed changes even though the changes could
be made gradually without much hardship to anyone. The trouble is they
will not permit any change which they assume will reduce their income
to any degree. If they understood the facts many would see that their
real income would actually increase. Because of their resistance to
any slow evolutionary adjustment of these wrongs, pressures build up
and change takes the form of violent revolution or serious ideological
changes of socialistic nature by use of democratic processes.
Experience has amply shown the truth of the statement in the Bible
that: "Where there is no vision the people perish.
Practical and conservative people, if they are thoughtful at all,
will realize that a good deal is not always one which makes a profit;
it is sometimes one which will prevent or reduce a loss. Consider what
happened in Russia and in China, and in numerous European, Mid-Eastern
and Far Eastern countries. (Of course some people insist on living
under the delusion that "it can't happen here.")
Title-holders of land, because of their ownership of land and their
collection of RENT-of-land and their shifting of the tax burden, owned
most of the Capital in these countries. Who can deny that had they
made a fair and timely adjustment in their land tenure system they
would have avoided the loss of their land title privileges, their
Capital, and, in many cases, their lives as well.
Tolstoy in Russia and Dr. Sun Yat Sen in China sought land reform
before the Communists took over all Land, all Capital, and all Labor
(the people). The platform of the Kuomintang party of Dr. Sun called
for the public collection of RENT-of-land and a reconciliation with
private ownership. However, such absolutely necessary reforms were
blocked by the privileged landed interests in these countries, and
many honest and sincere men, although true agrarian reformers, became
Communists, either voluntarily or under the most severe compulsion.
The Ism That Fathered Communism
Many who fight Communism know little of and ignore the 'Ism that
fathered Communism. It is common thought in many parts of the world
that it was Colonialism, or Landlordism, or Capitalism. Yet, while
these contain the basic elements that cause the trouble, they also
contain powers, which, when properly used, could lift the standards of
living of the so-called downtrodden or backward people all over the
"Earthlordism" best describes the specific and common evil
contained in Colonialism, Landlordism and Capitalism, Earthlordism
refers exclusively to a feature in these systems which relate directly
to the economic factor, Land. Earthlords are people who are in the
business of charging other people for living and working on earth.
They collect such a large share of production as RENT-of-land that
they also make it their business to control the peoples' tax system so
as to bring about conditions which will yield the most net RENT even
though it is at the expense of Labor and capital-owners. They seek to
promote public projects and services paid for by general taxes, and
public services produced by private industry and paid for in the
prices of products and privately rendered public services, and to
attract new industry and greater population to the community; at the
same time they seek to reduce the rate of taxation on their land value
or rental income by resorting to other taxes. Such Earthlords resist
all efforts to restore to people their rightful and natural heritage
in God-given land, even under a method which would preserve for them
and their heirs the exclusive and private use of land, and all they
place in or on the land - untaxed (so far as is possible).
Earthlords, like most American economists and all Socialists and
Communists, have little or no concern with truths of Economic Science
as they apply to the problem of Public Revenue, and the welfare of the
people and of the Nation. They either do not know or they do not care
scientific difference between Land, and Labor and Capital, and
between RENT-of-land, and Wages and Interest and which should and
which should not be taxed. We may be sure that as many as 95 per cent
of the people who either hold land of little actual or potential
income value, or who hold no titles to land at all, would be directly
and quickly benefited by a proper change in our tax system. We may
also be sure that if men to whom actual or potential RENT-of-land
income is of some importance win consider the increased value of their
other forms of income and the increased stability and attractiveness
of the Free Enterprise system which is possible, they will see that
they too will benefit by such changes in the source of Public Revenue
as are so clearly dictated by the Science of Economics.
A system of taxation which benefits only continue in a country where
people are told the truth about taxation. People are too intelligent
to willfully allow a system to continue which injures them and the
future of their children, and endangers their freedom as well. That
changes will be made are certain; that correct changes will not be
made is just as certain unless people get the true facts as to the
cause of their economic and social troubles and of the economic and
moral cause of the growth of Communism.
An Unfortunate Hoax
With civic pride, and progress as a theme, organized land dealers and
land speculators, boost for new and larger public improvements, for
new industries and increased population. They are amazingly successful
in having men and women of outstanding civic spirit, of professional,
church and patriotic groups, and who will not profit - in a monetary
way - one cent personally, take the leadership of such movements.
Success in such public efforts, of course, makes the community a
better place in which to live and work, and to rear a family. For a
while people, at least some people, will get more as Wages and in
Interest but, as all know who are aware of economic forces, this will
be temporary. However, RENT-of-land will rise permanently. All people
will pay out more of their incomes, however secured, in taxes; and the
landless will pay in addition more RENT-of-land to people like
themselves, for what today seems to be for the privilege of living on
earth and in communities.
Only unawareness of this fact could possibly cause homeowners, farm
operators, and that great body of our people who hold no title to land
whatever - and who rent working and living facilities - to believe
that their interest in land and taxes are the same as those who own
valuable tracts of land, whether large or small, and who collect
substantial - often fabulous - amounts of RENT-of-land, or expect to
do so in the future. Continuous propaganda and lack of proper
education are responsible for this unawareness - an unawareness which
results in their support of "good" projects to be paid for
by taxes which unjustly burden, the people and favor title-holders of
land of income value. With proper understanding surely these same
demand that the projects of the type mentioned be paid for out
of the values they create - RENT-of-land, and not out of their
personally earned incomes of Wages and Interest.
Capital-Owners and Labor Have Common Basic Interests in Taxation
Men and women, as Capital-owners and as Labor, should consider,
together, today's tax mess - their greatest common problem, as
citizens. They should consider how they get their income, whether,
basically, from RENT-of-land - charging other people for the use of
the God-given, or Natural, Factor Land - or from their personal
earnings, Rewards of human effort. Will they, as individuals, gain or
money if government is required by the people to use
RENT-of-land rather than the Rewards of human effort to meet its
expenses? Can they afford to risk either the nationalization of Land,
Labor and Capital as the Communists would do it, or the draining away
of personally earned income as the Fascist would do it?
Can citizens afford to ignore the fact that in solving our tax
problems economic SOURCES, as opposed to politically enacted taxes
(pumps), are the vital truths to be considered? Will they continue to
permit the multitude of taxes which conform to the "taxing across
the board" doctrine, and whose real purpose seems to be to
confuse the people, and to prevent them from seeing the cost and
corruption involved in today's tax mess?
It is now later than we think so far as correcting our tax system is
concerned, but it is not too late if people will begin to apply right
ideas to the problems. Right action always follows right thinking and
can follow nothing else.
Whose Proposal Is Best?
Today, as ever, our policy of land tenure and taxation is the
determining element in the success or failure of Free Enterprise and
in its competition with Socialism and Communism. That is why the basic
and determining issue in this struggle is whether government is to be
supported by the source of Public Revenue called RENT-of-land, or by
the source identified here as the Rewards of human effort; in short,
whether the San Francisco manufacturer, Mr. Joseph S. Thompson, or the
college professor, Dr. H. L. Lutz, offers the best tax system for Free
Enterprise, for national strength and defense, and the good of our
people and the people of the world.
 Management is included under the factor Labor and its share of
the rewards of production is included under Wages. Management is a
most important job classification, but is not a factor of production.
Furthermore, attempts to separate management-labor from other labor,
as Dr. Lutz and most American economists do, plays directly and
unnecessarily into the hands of the Socialists and Communists.
Socialists and Communists believe in the doctrine of inevitable "class
struggle" between Labor, and Capital owners and Management; and
they seek to drive them apart. Whereas, the truth is that the basic
economic interests of these groups are mutual Their rewards depend on
the productive results achieved in a naturally free and cooperative
system. This basic truth is not and cannot be disproved by the fact
that bargaining for wages and working conditions, individually or
through organizations - an essential principle in Free Enterprise -
does take place. Bargaining is not and should not be made a symbol of
the "class struggle"; it is only a method for determining
what wages and working conditions can and should be.
 Wages and Interest tend to rise and fall together currently as
indicated. Over a longer period of time, however, should the amount of
Capital be increased in relation to demand, Interest would tend to
fall, thereby taking less of the total product Increased Capital would
add greatly to production with the bulk of this increase going as
Wages to all producers, as it has tended to do in the past. However, a
shortage of good land could seriously retard such a favorable trend.
An artificial shortage of land is often created either by land
speculators or by owners who are unable or unwilling to develop their
land to its highest capacity.
 Title holders to land do not service the land area to which they
hold title as, for instance, newspapers and magazines service the
space they offer for sale with funnies, cartoons, sport and market
news, or as offices and warehouses, hotels and apartment buildings
provide heat, light, fire protection, elevators, sanitation, etc., or
as trains, theaters, and other sellers of space provide theirs. For
such service renters of space are entitled to income and people are
willing to pay for what they get.
The RENT-of-land space charge is a universal application of the old
and long established principle of paying for benefits received, as in
special assessment districts formed for making streets, sidewalks,
sewers and the like. RENT-of-land is a "pay-for-what-you-get"
charge and is specific. It is not properly called a tax.
 Millions of intelligent and highly educated people, many of whom
have studied economics in college, have studied the tax provisions of
the Communist Manifesto. But it is highly doubtful if many readers
were aware of the great contradiction in its tax proposals. It is
this: the first two propositions, if rigidly applied, as the
Communists advocate, would utterly destroy the Free Enterprise
(Capitalist) system. Whereas, the use of the third proposition, alone,
would so greatly increase the production and efficiency of the Free
Enterprise System and bring about such a just distribution of wealth
and services that Communism would be eliminated as a competitor.
 Dr. Lutz, in his memorandum to the Government Finance Section of
the National Association of Manufacturers, has identified this "single
source" of public revenue Mr. Thompson would have government use
with what is known as the "Single Tax." The term "Single
Tax" was used prior to the French Revolution by a group of
Frenchmen known as the French Physiocrats. These men studied
government and the effects of its tax policy on industry and on the
people. They proposed the "impot unique" -- the "one
tax" - on RENT-of-land for support of government, and that other
taxes be abolished. (Among these men was Pierre Samuel Du Pont de
Nemours, father of the founder of the E. I. Du Pont de Nemours &
Their basic idea was observed independently by Henry George, an
American Economist, and was thoroughly developed, so far as economic
science and its pattern of "cause and effect" are concerned,
in his book "Progress and Poverty." Henry George stated his
specific proposal as follows: "To abolish all taxes save those
which fall on the value of land," that is, on RENT-of-land, one
of the two basic sources of Public Revenue.
(NOTE: As long as available, copies of "An Analysis of The
Single Tax (A memorandum by Dr. Harley Lutz)," by Mr. Jos. S.
Thompson will be sent on request. Mr. Thompson quotes Dr. Lutz' entire
memorandum, parenthetically, commenting on each quotation. The Public
Revenue Education Council is primarily interested in exposing the
fallacies in Dr. Lutz' doctrine of "spreading the tax burden
across the board and not concentrating it at any one point")
 We speak in terms of price changes. Technically, monetary
circumstances might prevent price changes. This will not alter the
conclusion that people will get more or less products and services for
their effort as we use proper or improper tax sources to support
 For detailed information concerning this successful shift of the
tax burden see our pamphlet, "The Great American Tax Shift."
Single copies free on request.