Taxation and Prosperity

J. Frank Colbert

[Reprinted from Land and Freedom, March-April 1930]

The usual comment of those in comfortable conditions, when speaking of the less fortunate class, is that if the masses were more industrious, frugal and intelligent, their lot in life would be vastly improved; would in fact, be quite equal to their own; that they are the makers of their own condition.

This attitude on the part of the more fortunate dulls the sense of responsibility they might otherwise feel did they understand better the real cause producing so much of the poverty to be found everywhere. Also, it is flattering to the well-to-do to imagine that, in a country like ours, where all are politically equal and the humblest rise to high places in government and business, that they forged ahead of their fellows by sheer force of merit; for all of which they have only themselves to praise.

A few years ago there died in New York City a Polish immigrant, who had come to this country penniless and friendless some forty years before, and through investments in land on Manhattan Island, amassed a fortune of many millions. The newspaper all over the country told the story of his career, and much editorial comment was devoted to his achievements, and most of the papers big and little said it was all due to his business sagacity and judgment.

The fact that this Polish immigrant succeeded to such an extent under handicaps which many would consider as insurmountable, furnished a theme for the editorial writers for quite a spell; he was hailed as an example of what thrift and farsightedness might accomplish for other immigrant boys, and poor native boys, as well. They counselled everybody to make investments in land, watch values grow, and reap fortunes as the Polish immigrant had done. It all sounded like good advice, even though it were not.

Had the writers of the articles analyzed the economic conditions that made for this success, they perhaps would not have been quite so certain that just anyone nor very many could do the same, and would have hesitated before stating it as their conclusion that all they had to do was to do it.

The millions of that great city made his wealth for him. As they toiled at the business of making a living, and others come to dwell there, by their presence and industry his wealth grew and grew, though he did no more to make it increase than any other one of the millions. But he got the entire increase. They got nothing. They even paid more rent because he held his land out of use. Was he a public benefactor?

Had the men and women of that city bought land and held it out of use, as the newspaper counseled them to do in emulation of the Polish immigrant, the city could not have grown at all. Then how could value have been created? Questions like this supply their own answers.

We should know how the holding of land out to use affects adversely those who must use it and all must. The quantity of things available fixes the price to the user, and if land be held at a prohibitive price, waiting for a rise, it is, for the time being at least, as though that much land had sunk into the ocean. Others who sell gain an advantage in price by the artificial scarcity created by the one holding his out of use.

If a tax sufficient to compel the bringing of valuable land into use were imposed this would lower ground prices and cause the erection of more buildings, thus benefiting the man who desired to build a home for his own use, as well as those who build to let to others. There would be more houses built in either case.

Reduced ground values and exemption of buildings from taxation increase the number of buildings, thereby lowering rent; so both the owner and the tenant would be benefitted the former by reduction in land prices and exemption from taxation of the building, whether occupied, or not; the latter by the increased number of houses available, for the quantity of things available fixes the price to the user, whether it be land, houses, diamonds, or apples.

Every saving effected in the price of land, means just that much more return to labor for its exertions. And whenever desirable land, through taxation, is forced into use whether in city, town, or country- it means less resort to disadvantageous locations. Take the country for instance: If desirable land that adjacent to cities and towns were not held out of use by fictitious, speculative prices, there would be no necessity for rural dwellers to make their homes in remote sections and compel them to the cultivation of inferior soil, the combined disadvantages preventing them from making a living under even the best conditions otherwise. They are not there by choice; they are forced there by our barbaric taxation system, which allows the few to reap what all have sown.

The only way on earth to bring desirable land into use is to tax it in an amount equal to what users would pay for its annual use. Then land prices would come down to actual value; and not until then will communities develop and be prosperous. A sure foothold security of possession will enable them to dwell in peace and plenty, and by cooperation, have all the modern conveniences denied them individually under present conditions.

Take by taxation the value created by the whole people, and the benefits that would accrue- moral, social, political, economic stagger the imagination in contemplation. No question of charity is involved only justice. Charity! charity! we hear so much about it we come to think it is the only remedy for poverty. But it is not; it is not. Charity cannot usurp the functions of justice, for justice is first. It is the chief cornerstone of the temple. It is the stone the builders rejected.

The Single Tax means Justice in action ; it means equality and freedom for all, oppression of none. It is so simple, we hesitate to believe it can be so potent. We are baffled by its very simplicity, but shall we turn away from it for that reason? Where shall we look?