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SCI LIBRARY

Henry George's Land Tax

Edward Gordon Clark



[Reprinted from The North American Review,
Volume 144, Issue 362, January 1887]


Reprinted from The North American Review, Volume 144, Issue 362, January 1887 The theory of Henry George, that land should be taxed for all public expenses, and that all other property should be relieved from taxation, has recently come into such prominence that it certainly demands serious attention. Mr. George is acknowledged, on all hands, to be perfectly sincere in his teachings. It is everywhere admitted that he is a man of remarkable intelligence and ability. His bitterest opponents credit him with the best of intentions. Is it not reasonable, therefore, to suppose that his economic doctrine of land taxation, whether right or wrong, is closely allied to some great truth? How else could he have impressed it upon thousands of minds, throughout Europe and America?

Again, if Mr. George is in error, he must be understood before he can be corrected. Neither he nor his followers are men to be cured by throwing adjectives at them in the dark. The wise thing to do, then, is to find out exactly why Mr. George entertains his special economic theory of land taxation, and exactly whence he derived it. By following him closely, we may observe some matters that he has not seen, and new facts may lead to new conclusions.

Mr. George said recently that it was not necessary to hunt in obscure places for the basis of his doctrine, as it was contained in the first chapter of the Bible: In the beginning God made the heavens and the earth. Mr. George meant, of course, that, as God made the heavens and the earth for all mankind, a few men have no right to monopolize the common gift. When the science of political economy was born, Aristotle, the father of it, defined what is called natural wealth the earth, the air, the water as the bounty of nature. This bounty of nature, not being produced by man, but being a general gift equally essential to the very existence of all human beings, the profoundest political economists of the world among them Mill, Spencer and George pronounce it common property. Did my lord Blackstone do the same thing, when he said: I see no reason, in nature or in natural law, why a deed upon parchment should convey the dominion of land?

Now, Henry George, in his Progress and Poverty, defines land as precisely synonymous with Aristotle's bounty of nature. Land, says Mr. George, is the whole material universe outside of man himself. The term embraces all natural materials, forces, and opportunities. It appears to me that Henry George makes no improvement on Aristotle, in calling the whole bounty of nature land. But one thing is certain, and Mr. George cannot escape from it. If land includes all natural wealth all the bounty of nature and if land is to be specially taxed as common property, then a tax on merely the ground is not a land tax at all. To be a land tax it would have to be placed on all natural wealth the whole bounty of nature.

The truth is that land, according to Mr. Georges broad, economic definition, and according to the fact itself, is the universal base and raw material of everything that human beings touch, improve, work up, or in any way produce. Every stone and timber in a house is just as evidently a piece of natural wealth, a segment of the common bounty of nature, as the ground whence it came; only the raw wood or stone has been modified by labor. But Henry George would not tax the natural wealth in the timber or the stone. He would not tax a house, but the plot under it. He would not tax a lump of gold, but the bole out of which it was dug. Thus, to state Mr. Georges own position in regard to land is to overturn his land tax.

But he arrives at his conclusion by two ways. We have followed him through one of them. Let us now take the other.

What gives increasing value to land? he asks. His answer is that population does it all society. In a new country, where land is had for the asking, it has no value. Let some Daniel Boone isolate himself from the world, who will give him a cent for the ground on which he settles? While ho is alone it has no value, though it may have utility, in so far as it supplies his individual wants. But when society comes about him his farm turns into a fortune. It was not Daniel Boone, says Mr. George, who put the value into that property: the whole community did it. And why should they not tax out the unearned increment?

Well, the trouble here, too, is that Mr. George sees only one-half of a great economic fact. It is not merely land the ground that increases in value through the general presence of society, but everything else is subject to precisely the same law. Every piece of land has been made more and more valuable by the presence of population. But so has every house that has been built on the land. As population gathers about the house, and other houses are built up, every brick in the first on eyes, and every stroke of labor that went to make the brick, or put it in position is raised in value. In other words, there is no such thing as value without society two persons, at least one who has something that the other wants. In this respect, therefore, a house, and even the labor that builds a house, is precisely like the land under it. Lands, houses, and the labor put upon them, all depend for their value on population, society, the commonwealth. Thus a house would be common property, by the same right as a piece of land, and the fruits of individual labor would be common property as rightfully as either the land or the house. The bounty of nature is a part of every one of them, and all increments of value depend on supply in proportion to population. In short, the natural and moral tenure to land differs in no way from the natural and moral tenure to any other kind of property.

In 1882, the wealth of the United States was estimated thus:

Land $10,750,000,000
Houses 13,900,000,000
Railways 5,450,000,000
Cattle 1,890,000,000
Sundries 9,205,000,000
Total $41,195,000,000

According to this table, our land value, in this country, is not much more than one-quarter of all values. Yet Mr. George would make this one-quarter of wealth bear all the public burdens of the other three-quarters, in addition to its own. Could a more unjust tax, or a much worse monopoly, be imagined?

And now let us find, if we can, what has caused such a startling gap between Mr. Georges premises and his conclusions. I believe the explanation is easy. With the worlds greatest political economists, and more vividly than all the rest of them, Henry George sees that natural wealth, or rather what Jefferson called the usufruct of it, always belongs to mankind as a birthright to society as a whole. At the same time, he is no socialist, no communist. He sees that individuals are rigidly entitled to the fruits of their labor, their economy, their industry, their capacity. Through his land tax, he honestly and earnestly tries to separate the peoples natural share in wealth from the shares of individuals, according to their work. But when land (the bounty of nature) has been taken out of land (the ground) for thousands of years, and transformed into the varied wealth of all civilization, a land tax, in the sense of a mere ground tax, touches only about one-quarter of the wealth it ought to reach. Yet Mr. Georges Progress and Poverty is so superb a work, so persuasively constructed, and so full of great, needed truth, that he has almost overwhelmed the very elect with one of the most glaring and disjointed non-sequiturs that ever broke itself in two with its own logic.

But is there no way, then, to separate the value of natural wealth the peoples heritage from the value of improvements made on it by individuals giving the whole people their due, and rendering also to every individual the exact compensation for his work, his enterprise, his ability and economy? I think there is a clear way to that end, and that the end can be reached by the collection and public use of a proper tax. In fact, I see very clearly that scientific taxation will yet be, not only the cure of economic wrongs and distresses, but the antidote, also, for socialism, communism, and the many economic poisons that are now held up as remedies.

In the NORTH AMERICAN REVIEW of July last, I attempted to propound and explain such a tax. Something of the kind will come in due time. But let the public never forget that, if Henry George has made one great logical and practical mistake, he has inaugurated the correct tendency of a whole epoch. He has earned all his laurels, and more.