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.
|