The Debate Over Collection of Rents
in Lieu of Taxes

L.D. Beckwith

[Reprinted from Land and Freedom, May-June, 1932]

What can Stoughton Cooley and George White and Oscar Geiger and Edwin I. S. Hardinge mean by their insistence that rent is no part of price and cannot be passed on in the cost of living? Do they mean to say that, under the Georgist system, no one would contribute to the maintenance of schools, and police and fire service, the post office and other public service except those who hold land? Is that their conception of the system for which George lived and died? Do they think that the justice which inspired him with such devotion? Is that their idea of civic responsibility? Is that an ideal that is likely to fire the souls of men as the soul of Henry George was fired? It is unthinkable.

And yet, if rent cannot be passed on, if rent is no part of price, that is exactly what would result from taking the rent in lieu of taxes as we purpose doing.

What then? Was George wrong? And must we Georgists admit that we have been following a phantom? And is our revenue system that we have so boastfully called scientific a delusion and a snare like all the others? And is the world to be left desolate after all and without even the hope of finding a scientific revenue system?

Or!

Is it possible to reconcile the two statements that rent is passed on and that one's debt to society (which would be paid in rent) cannot be passed on?

If these two statements can be reconciled, this reconciliation will not only clear away the confusion resulting from the debate that has arisen over the "straw man" in this case and which threatens to set these leaders at loggerheads.

We have heard ever since we were children that, while all dogs are quadrupeds, all quadrupeds are not dogs.
What is needed here is more alert observation than we have been exercising, that we may see more clearly than we have in the past that, while rent can be passed on and become a part of price, and that this must be so if justice is to be done, all rent cannot be passed on; that the rent that represents any given man's debt to society cannot be passed on and written into the cost of another man's living.

It is true that Merchant John Doe's rent would be taken in lieu of taxes. All of it would be a debt owing to society. But whether Merchant John Doe himself owes that much to society is quite another question.

It is not clear how any one could seriously believe that John Doe personally owes society that much and that none of his non-land-holding customers owe society anything for the protection they receive from our fire and police departments, for the schools provided them, for the health and sanitation service rendered them, and for the thousand and one other benefits they enjoy at so much cost to society.

To be consistent, Georgists must agree that rent (but not all rent) is passed on, does become a part of price, and is an item in the cost of living of us all. This must be so, or ours is not a democratic system, not a just system.

But saying this is not saying that Merchant John Doe can pass all his rent on to his patrons; for that would be permitting him to evade his own just debt to society. Just as his patrons must pay in their purchases at his store their part of the cost of their protection while in the store shopping, and on the street going and coming, and for the guarding of their cars wbi'" *bey are left parked on the street, so must he pay his ^i.. of the cost of protecting his person while he is in the store and his part of the cost of guarding his store at^ night when he is at home asleep as well as during shopping hours.

Now, the only possible way these separate and distinct obligations can be apportioned is by a division the rent into two parts, one of which he can pass on to his patrons in the cost of a their purchases, and another part which he cannot evade but must pay himself.

It is readily granted that such an apportionment is beyond our human capacity. The man or men do not live who could even divide that rent between John Doe and his patrons, to say nothing of apportioning the patron portion among the hundreds or thousands who shop in his store.

Here is where the efficacy on natural law comes in, and the sublime beauty of the Georgist system; for, in a fair market, all this would be automatically adjusted, accurate and with exact justice.

In his attack upon what he mistakenly supposed Jorgensen to have said, Edwin I. S. Hardinge says very truthfully that the expenditure of labor and capital is the cost of production; and George White, another of Jorgensen's critics, says truthfully that rent measures the advantage which attaches to a location because the cost of production there is less than it would be at an inferior location.

If now these advantages are the result of railways, docks, ship canals, markets, sewers, garbage systems, highways and other things that cost us an expenditure of labor and capital, why is not the added rent we pay because of these things as much an item of cost as our expenses were before the installation of these facilities? Why is not the labor and capital expended in the provision of these facilities a cost?

What, after all, is our rent but our wages and interest in process of collection and transmittal to us in service dividends? And if labor and capital expended constitute a cost item, why are we not to count as a cost the labor and capital expended on river and harbor improvements, railways, docks, highways and the like that give to certain places their advantage over others in the matter of production and so create rent?

And if rent paid on account of these improvements is our wages and interest in process of collection for us and transmittal to us in service dividends on our citizenship, why is not that rent an item of cost and a part of the cost of living of those who pay it, especially as it is paid certain of the processes of that production involved in their livings, notably upon the transportation involved?

How can this rent be anything but a cost and a part of price?

And why should Georgists be disturbed that this is so? Or reluctant to admit it?

Could anything show more clearly and convincingly the true scientific character of our proposed revenue system than this fact that the collection of rent in lieu of taxes would not only provide amply for the public need without taxing either Labor or Capital; but it would also collect for each of us our share of the wages and interest owing to us by reason of our contribution to the public welfare and to public progress, whether these contributions be made commercially, industrially or professionally, and that it could likewise collect promptly and in full from each of us the full amount that each of us owes society for what society has done for us?

Not only so; but all this would be done automatically, with unerring accuracy, so that each would get all he paid for and pay for all he gets.

Read the response by Oscar H. Geiger that appeared in the same issue of Land and Freedom