On The Land Question
Thomas Fyshe
[Reprinted from The Single Tax Review, with
an introduction by the editor; 1917]
In the Single Tax Year Book Mr. Samuel Milliken contributes
an important article on those who anticipated in part the teachings of
Henry George. It would seem that Mr. Milliken had well nigh exhausted
the subject in his industrious research through library shelves and in
forgotten books, and certainly there will be few important additions
to the forerunners whose testimony the writer has drawn from an
infinite variety of sources. But one name, and his an important one,
remains to be included, and that name is Thomas Fyshe, of Halifax,
Nova Scotia.
One of the forerunners treated in Mr. Milliken's article is Edwin
Burgess, a journeyman tailor of Racine, Wis., whose letters advocating
a tax on land values in lieu of all other taxes were published in the
Racine Advocate. Similarly the letters of Thomas Fyshe were
printed in the [18]70's in the Morning Chronicle of Halifax,
and like those of Burgess are models of clear statement. Mr. Fyshe was
a banker, we believe, and a man of some standing in the community. We
append extracts from these letters which are of more than passing
interest and have lost nothing of their relevancy to conditions that
exist everywhere. Mr. Fyshe advocates the Single Tax purely in its
application to municipalities, saying that "in the wider area the
principle would be more difficult of application." But he says: "I
do not see that any government has the right to take higher ground on
the question of taxation than this, namely, that each citizen shall
contribute toward the general expenses of the community he lives in
only in proportion to what is done for him, in a material sense, by
the community." And he continues:
"It is almost idle to talk of petty economies in the
civil administration when the great source of our difficulties is in
the law itself. What good can be expected of a cheese-paring economy
on the one hand, showing itself in petty savings from policemen's
wages and the salaries of the minor city officials, when, on the
other, tens of thousands of dollars of the city's revenue remain
uncollected and uncollectable?"
***
"As to the third great evil from which we are
suffering, viz., the gross inequality of our city taxation, it is no
less easy to find its source in the assessment law, which provides
six different sets of amateur assessors for the six different wards
of the city, each set no doubt with a standard of its own and with
its own notions of how the law should be carried out. With a
professional assessor, who should make it his first and only duty to
assess all citizens according to the same standard and by one rule,
the inequalities in the valuations of real estate would, no doubt,
disappear. But the difficulties in the way of an equitable
assessment of personal property are altogether insuperable. A West
India merchant may escape altogether if he should happen to have
shipped off all his fish, and his inward cargoes have not arrived,
or have just been sold when the assessors come round; while goods in
transit which have come into the city for shipment abroad, are
liable to be pounced upon by the assessors and forced to pay
tribute. One dry goods merchant pays on about half the value of his
stock, while his wealthier competitor in the next ward, with a
larger stock and finer store, pays only on a third or a quarter of
his. And there is no possibility of bringing about equality by an
appeal, for both are under-taxed.
Then again there is no effort made to reach personal property other
than household furniture, merchandise and ships. Indeed there is no
possibility of doing so in most cases except by putting the parties
under oath and making them declare what investments they hold. Yet
it is well known that hundreds of our well-to-do citizens have large
amounts of money in the banks on deposit receipt, or hold
investments of various kinds which are subject to assessment. But
even if it were possible to carry out to the letter the provisions
of the law, the results would probably be more disastrous than now
follow from its being to a great extent ignored."
***
"The same inequalities are complained of wherever
personal property is assessed, and nothing could be easier than to
pile up evidence on this point. It is clear, therefore, that the
first step towards a rational system must be to abolish the
assessment of personal property.
Some people will immediately say, let us substitute income for
personal property. This proposal has, I believe, many influential
supporters, chiefly on the ground, as the City Auditor puts it, that
'taxation should be in proportion to the ability to pay.' But the
history of the income tax wherever it has been imposed has not been
such as to render its introduction among us desirable. Like the tax
on personal property it would be productive of the most glaring
injustice. Those only would be fully taxed whose incomes were fixed
and known. Those whose incomes were at all uncertain would make
large allowances in their own favor; many would not stop short of
false returns, and so the honest trader would be handicapped and a
premium put upon fraud. As a means of demoralizing a community,
blunting the moral perceptions, and in fact training men to be
dishonest, there is probably none more potent than such a tax. For
the gross inequalities which it could not fail to produce would lend
an air of justice to attempts to evade the law on the part of those
who might think themselves overtaxed."
***
"The imposition of an income tax for local purposes
has been tried in England but is now completely abandoned; so also
has the personal property tax, which has shared the same fate.
"Both taxes work disastrously in practice, because they are
wholly in principle. The one infers that it is just and equitable
that the citizen should contribute in proportion to his income, and
the other that it is equally so in proportion to possessions. In
both, the claims of the city on the taxpayer are carefully
considered, but in neither is any account taken of the proportionate
benefit which each taxpayer is supposed to derive from citizenship,
and for which alone he is willing to pay taxes. Now this is an all
important factor in the problem. People are not willing to pay a
certain sum in taxes for particular services or advantages if they
do not get the value for their money, or if they know, or have
reason to suspect that others receive the same or greater advantages
for a much smaller sum.
"The standard of perfection in municipal taxation I take to be
this, namely, that every citizen should be taxed in proportion to
the value of the advantages which are derivable by him from living
or doing business or owning property within the city. By advantages
I mean all the benefits accruing to the citizen from the city
government from the maintenance of order, the making, repairing and
cleaning of streets and sewers, the supply of water, etc., and above
all that chief advantage which comes from the mere presence of a
large population, giving variety of industry, easy intercourse, a
large market and facilities of co-operation for personal profit or
public benefit, in a word, the total advantages of what kind soever
derivable from city life.
"If this principle were carried out no one could have any
reason to complain on the score of inequality of taxation, for each
would pay at the same rate just for what he received and for nothing
more. No one probably will deny the abstract justice of such a
principle. But the question immediately arises -is it practicable? I
say it is eminently practicable; that no principle can be more
easily put in practice; that in short its superiority over every
other principle of municipal taxation is shown, not more in its
theoretical equity than in the facility with which practical justice
can be attained by it. This I shall endeavor to show in my next
letter."
***
"There is one kind of property which may be said to
reflect in its value the exact sum total of all the different
advantages to which I have already referred as pertaining to city
life. That property, it is, perhaps, needless to say, is not goods,
wares or merchandise, household furniture, ships or vessels,
debentures or deposit receipts; it is not stock of joint stock
companies, banks or insurance companies, all of which our assessment
laws so greedily seize upon; it is not even shops, warehouses or
dwellings, but it is the land which is necessary to all of these.
The area of land within the city limits reflects in its value all
the advantages which are usually derived from living or doing
business within those limits. Not only so, but each particular lot
of ground or water front reflects in its value - in its selling
price - the average net advantage derivable by the individual who
occupies or owns it.
"The advantages usually derivable from city life arise from
two different sources. The greater portion of them come, as I have
already said, from the mere presence of a large population, brought
together, no doubt, by the natural resources of the locality. Others
are the result of city government - in the preservation of order,
and in the other services it renders to the community. The latter
class of advantages are obtained at considerable cost. The former
are what may be called necessary advantages, that is to say, they
arise from the necessity of the case, and by no one's forethought or
provision, and are supposed to cost nothing. What we really do pay,
however, for this class of advantages, is partly shown in the
increased value of real estate over its value for agricultural
purposes. It will be found that this increased value amounts to a
tax on the general community quite commensurate to the benefits
received, although it is a tax paid, not to the city, but to the
owners or former owners of the real estate.
"The direct effect of city government and city improvement is
to still further enhance the value of real estate, for the
beneficial effects which flow from these, like the city's advantages
of whatever kind, can be enjoyed only through real estate."
***
"And this leads me to the consideration of one of
the greatest evils connected with the present mode of assessment,
which has not yet been touched upon, namely, the large extent of
land scattered throughout the city, used only as pasturage for
cattle, or left entirely waste, and from which the city derives
little or no revenue. Most of it is owned by well-to-do citizens who
are holding it until they can get a price for it which they deem
satisfactory."
"The cost of collection to the city, both in labor and
expense, would be greatly lightened, because the number of tax
payers to collect from would be reduced probably three-fourths or
more, and the bulk of them would pay on demand. The variations in
the rate of assessment would be reduced to a minimum, and would
depend more on changes in the city's estimates than on fluctuations
in the value of assessable property.
" By means of such a law absolute equality of taxation, in so
far as such a thing is possible, would be secured. Any inequality
that could possibly exist would arise from the unequal assessment of
property visible to every one, and no glaring errors could be made
without attracting attention and calling for instant correction.
Moreover, the assessor's character and position would depend on the
soundness of his judgment and his strict impartiality. There would
not be one standard for the owner and another for the tenant, as at
present, which practically means one law for the rich and another
for the poor.
" It will, doubtless, be objected by the owners of
unproductive real estate that it would not be fair to them to levy
the whole city taxes on ground lots, because their property was
acquired under a different system, which they had reason to believe
would continue. On the other hand it is obviously unjust to levy the
taxes on buildings according to their market value, for, as already
explained, the value of buildings, like all other property not a
monopoly, depends on the cost of producing them; and, apart from the
land, that value is no criterion of the city's advantages for which
alone we should be taxed. A minor objection to taxing buildings as
at present is this, that the public spirited citizen who erects a
cut stone warehouse of tasteful design and beautiful finish is taxed
more heavily than his competitor in business who cares nothing for
the credit or appearance of the city, nothing for public taste or
for anything but his own dollars, and who does his business in the
meanest looking warehouse of wood or brick, while perhaps using more
ground and enjoying more of the city's advantages than his more
cultivated and public-spirited neighbor.
"The cry of vested rights is always raised on the slightest
provocation, and is often very difficult to satisfy. In this case I
believe there would be no good ground for it. The owners of
unproductive real estate have so long evaded their fair share of the
city's taxes that they would have no reason to complain if they were
now called upon to contribute according to a scale which can be so
conclusively shown to be equitable, even if they had to pay a ltttle
more than they had calculated on when purchasing the property."
***
"It would seem, however, that there are still some
who think that we can afford to ignore the general experience of
other communities, and that it is of no account to us whether a
personal property tax ever worked satisfactorily in any other part
of the world. They say that such a tax is just in principle, on the
ground that all property within the limits of the city is equally
benefitted by city government, and should therefore contribute
equally toward the expense of that government and that whatever
failures may have occurred in the past, we must still keep on trying
to devise some means of carrying into successful practice a thing
which is so obviously unassailable in theory. I therefore propose to
consider whether, after all, a tax which has worked so badly and
even disastrously, is as sound in theory as its advocates usually
take for granted."
***
"Now the expenditure of this large sum of money on
such a diversity of objects - ranging as they do from police and
prisons to education, charity, and the beautifying of public places,
is supposed to benefit equally all property within the municipality.
But the question is, how is it done? How does the dry goods merchant
and the grocer, the jeweller or the banker, reap the benefit of this
expenditure? Does it raise the price of dry goods or groceries, or
jewelery, or money; or does it increase the profits arising from the
traffic in these commodities? It could hardly be considered a public
benefit if it raised the price of these articles, the immediate
effect of which would be to drive customers to better markets, and
so lessen the business and importance of the place. No community
would care to become incorporated with such an end in view. But in
truth such a result is impossible unless city government becomes
wretched mis-government. On the contrary, as is well known, all
inventions or improvements of what kind soever connected with the
production or distribution of a commodity, tend directly to reduce
its price. If city government is an improvement on what went before
it - if it is the means of establishing better order, greater
security to life and property, and greater convenience and comfort
to the people, at a not disproportionate expense, the direct effect
of all these will be a general, though no doubt unequal, reduction
in the price of commodities sold within the city. That is to say the
risk and inconvenience of holding valuable stocks having been
largely reduced or removed, the item of expense, which these entail,
ceases to have to be provided for, and the merchant can sell hij
goods at a corresponding reduction without diminishing his profits.
But if efficient city government could not possibly increase the
price of commodities, neither could it raise the rate of profits to
the dealer in them. That individual, finding his expenses reduced,
might be disposed for a time to maintain the old prices with a view
of adding to his profits. But even if his neighbors were of the same
opinion, outside capital would speedily be attracted and the rate of
profits reduced to the general level. This is the evidence of
universal experience. Inventions and improvements are multiplied
without end, but profits instead of rising :end lower and lower as
capital increases. In so far, therefore, as the improvements or
advantages, which are the product of city government, affect
personal property - goods, wares and merchandise, and floating
capital generally, as well as houses - they cause a reduction in the
prices of such property."
"Real estate also will be unequally affected by city
improvements. The erection of fine public buildings, the laying out
of parks and gardens, the building of a new sewer, the opening of a
new street, will all benefit lots in the immediate neighborhood of
such improvements, to a very much greater extent than lots at a
greater distance from them, although the general tendency will be
towards an increase in the value of city lots. In the case of real
estate, however, the benefit which it derives from the improvements
of the city government, together with the advantage due to location
- in being enriched by the labors of others than its owners - are
accurately measured by its market price.
"Seeing that the improvements produced by city government can
thus be shown to have such widely different effects on the various
kinds of visible property, it is obvious that the theory that all
property should be equally taxed because it is equally benefitted,
is quite untenable."
***
"The question lies just here. Is the citizen to be
taxed in proportion to what the city has given him, or on what he
has done' for himself."
***
"We have recently seen how much capital and
enterprise arte valued, in relation to the city's prosperity, in the
agitation and public discussion which preceded the organization of
the Halifax Sugar Refinery. The benefits we are to derive from this
one company have been pictured by sober citizens in the most glowing
colors; and the most sanguine hopes are almost universally
entertained for it. It is expected that this work alone will
materially increase the value of large blocks of real estate in the
city, if it does not appreciably do so over its whole area. In other
words, the creation of such an enterprise is expected to add to the
incomes of many, if not all, of the real estate owners in the city,
and also to add considerably to the city's revenue. Yet we all know
what efforts were required to get the necessary capital subscribed,
notwithstanding the enormous duty on foreign refined sugars and the
great local inducements held out to it. The city has shown, by its
efforts to induce the formation of such companies within its
borders, that it can afford to relieve them from taxes for twenty
years, and offer other inducements besides - such as giving the
sugar refinery free water for ten years - and still be largely
benefitted by them. And this belief is not confined to Halifax, for
nothing is more common than to hear of ambitious towns and cities
not only foregoing taxes for a longer or shorter period, but in many
cases offering a cash bonus for the establishment of industries
among them.
"If the prosperity of any particular locality were alone to be
centered this might be a very wise policy, provided that all
industries were placed on the same footing. But one fails to see
what sense there is in subsidizing one set of capitalists to build
up the city, while ruinously taxing another set so that they are
driven away. It must be a funny notion of justice which actuates our
city fathers when they offer cash bonuses to sugar refineries and
others, while at the same time they claim to tax ships which never
saw the port; to take 37-1/2 per cent, of all the interest earned on
money deposited in the city banks; 25 per cent, of the earnings of
those banks, and 1-1/2 per cent, of every article of commerce in the
city, including unused capital. But, leaving the justice of the
matter aside - for, as I have said before, capital soon takes care
of itself - what must we think of the wisdom of our legislators in
believing that such a policy as this is likely to have any but a
most prejudicial effect on the growth and prosperity of the city? If
one sugar refinery is going to do so much good to the city, would
not twenty other companies do much more? And would not the benefit
to the city be much greater if, instead of strangling existing
industries while bidding for new ones, the old ones could be
extended as well as new ones brought in?"
***
"For the sake of clearness, I shall now briefly
recapitulate the propositions endeavored to be established in the
foregoing letters and the reasons given in support of them.
I. Personal property should not be taxed:
- 1st. Because it cannot be reached.
- 2nd. Because it could not be equitably assessed if it were
reached.
- 3rd. Because it is not increased ;n value by the city's
expenditure, and is no criterion of the benefits or advantages
derivable by its owner from living or doing business within the
city.
- 4th. To tax personal property tends to drive capital away
from the city, and so retard, if not stop, its growth.
- 5th. We have unlimited evidence to show that the experience
of many communities has proved the folly of such a tax, and none
to show that it has ever worked well anywhere.
II. Income should not be taxed:
- 1st. Because it cannot in most cases be ascertained.
- 2nd. Because such a tax tends to develop fraud and to
demoralize the community - a result for which no money value can
be an equivalent.
- 3rd. Because income is not increased in amount by the city's
expenditure, and is no criterion of the benefits or advantages
derivable by its recipient from living or doing business or
owning property within the city, unless it is wholly derived
from the rent of land.
- 4th. Because such a tax would tend to drive away from the
city all wealthy people not directly engaged in business, and
all capitalists who could carry their means and industry to as
good a market elsewhere and escape the tax.
- 5th. The income tax, both in the United States and England,
is a national tax, adopted in State emergencies and never meant
to be permanent; and is strongly condemned in both countries.
III. Houses should not be taxed:
- 1st. Because they are not increased in value by the city's
expenditure, and, apart from the value of the land on which they
stand, are no criterion of the benefits or advantages which are
derivable by their owners from living or doing business or
owning property within the city.
- 2nd. Because to tax houses in proportion to their value would
tend to discourage the building of any but the plainest and
cheapest structures, which would be to discourage architectural
taste and public spirit.
- 3rd. A tax on houses will frequently discourage the owners of
unoccupied lots from building thereon. The holding of such lots
on speculation will be thus stimulated, while the city will
suffer by being built up in a straggling and irregular manner,
covering far more space than is necessary, to the inconvenience
and increased expense of the corporation and the citizens alike.
IV. The only species of property which should be assessed by
municipal purposes is land:
- 1st. Because the net result of all the advantages and
disadvantages connected with the city and the city's expenditure
is exactly reflected in the price of land.
- 2nd. Because its market value is an exact criterion of the
average benefits or advantages derivable by its owner from
living, or doing business, or owning property, within the city.
- 3rd. Because, although the whole tax would be paid to the
city by the owners of land, it would be distributed by means of
rent among the citizens, with the most perfect equality - each
paying only for what he received, but for that fully.
- 4th. Such a tax could not possibly be evaded by any landowner
or by any citizen; for the land is visible to everyone, and
every citizen must own or rent part of it.
- 5th. The cost of collection of this would be less than of any
other tax, if it were made, as it should be, a first lien on the
property.
- 6th. Such a mode of taxation could not fail to keep and
attract capital and enterprise, without great regard for which
civic prosperity or growth is not apt to be great.
- 7th. It would check, if it did not entirely stop, all
speculation in unoccupied lots or waste ground, and so cause the
city to be built up in a compact and regular manner - probably
adding to its architectural improvement, and certainly to the
general economy and convenience.
If there were only one landowner in the city, instead of, perhaps, a
thousand, it would probably be much easier than it now appears to
convince people of the truth of the above propositions."
OF course, whilst
another man has no land, my title to mine, your title to yours,
is at once vitiated. - EMERSON, "Man the Reformer."
THE territory is a part of the common heritage of mankind,
bestowed upon them by the Creator oi the Universe.-WM. HENRY
SEWARD.
UNRESTRICTED private property in land gives to individuals a
large proportion of the wealth created by the community.-ALFRED
RUSSEL WALLACE.
LAND never was property in that personal sense of property in
which we speak of a thing as our own with which we may do as we
please. -J. A. FRONDE
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