A Practical Way Out of the Depression
[Reprinted from Land and Freedom,
OF "The Present Mess" of relief, unemployment burdensome
taxation to say nothing of the social problems arising from poverty.
How the collection of rent and the abolition of taxes can be
instituted how it can be done with our existing political machinery
why it would work what it would do.
Natural resources in this country were not exhausted In fact, they
have been merely scratched. Production and the necessary means for
creating, processing and trans porting wealth were, and now are,
adequate to justify the expectation of the advent of an economy of
plenty Despite these favorable conditions, there exists approximately
43 million "ill-fed, ill-clad and ill-housed" persons "One-third
of our population" needing more and better food, clothing and
shelter which distributers have been prepared and anxious to furnish.
But effective demand failed because, as The Wall Street Journal
emphasized repeatedly, in leading editorials a few years ago, product
and potential consumers were "Kept Apart by Price The "unhappy
third" could not, and the more fortune two-thirds would not, pay
the exorbitant prices demand by those who could do no different
because of enormous costs that were, and still are, pyramided by
taxes. A instance: Processing taxes which doubled the price food and
clothing within a few weeks. And next, "payroll taxes"
social-security taxes (so-called) railroad retirement funds, old-age
pensions and the unemployment taxes, all special taxes, levied for a
strictly definite purpose and all passed on and included in the price
of things needed and wanted by everybody and, especially, by the
President's least fortunate "third."
There are many other reasons for excessive costs, most outside the
jurisdiction of legislators to regulate, should have occurred to them
that mis-placed and confiscatory tax levies might be responsible for
the extreme costs and at the bottom of the various obstacles hindering
trade. Instead, legislators messed around with wish-fulfilment devices
which aggravated the economic situation increasing instead of reducing
costs. A new tax, or old tax with a new name, was invariably imposed
on things consumers needed and wanted to buy! The vicious cycle goes
round and round and gets nowhere but worse! And now the President asks
The consumer was and still is "the forgotten man. I beg pardon.
Many were forgotten by the tax-imposed on many who have escaped
taxation heretofore, i.e., those who collect rent. When federal or
state "Solons" made any gesture to relieve trade and/or the "unhappy
third" they forget to tax rent as a replacement for taxes that
have been, and are now, eating the heart out of trade and despite the
fact that a tax on rent can't be "passed on" to the
consumer. They forget that rent is wholly due to the activity and
wants of society and is never the product of individuals or
corporations. They overlooked the fact that the Constitutional
Amendment permitting income taxes applies with equal force to income
from rent that all economic rent ought to be collected by society for
Please "read, mark, learn and inwardly digest" an article
entitled "Taxing Production to Death," by Albert Jay Nock,
in the March, 1938, issue of The American Mercury. Mr. Nock
does not mention rent among the items that "must come finally out
of production" presumably because we have so far neglected our
public business as to expropriate our social earnings, the natural
fund that should be ours, collectively, to use as we now use taxes for
liquidating the expenses of government, federal, state and our local
public services such as schools and highways, courts and the like.
Those who use that part of their body above their ears frequently
become disgusted when observing the naivete and obvious stupidity of
our Solons when in action. Rent also, enters into the entire price
structure. And like taxes must be laid before wages, interest and
upkeep can be met.
Despite the fact that legislators are powerless to do anything but
harm in the economic field, they have everything to do with taxes.
Other than the natural components of price, i.e., rent, wages and
interest, we find some extraneous ingredients affecting it, the chief
of which is the conglomerate mass of taxes. That is because society,
through its legislators, fails, almost entirely, to collect the rent
which itself creates. Society expropriated its own earnings and
lacking that natural fund with which to pay government expenses it
does some more expropriating, and as before, from itself, in the form
of taxes, since everybody pays twice for government service; first,
when paying rent which none can escape in any way; (second), when
buying goods and services with all tax levies, from everywhere,
carefully wrapped up and hidden in the price.
Other extraneous elements in price such as public and private debt,
racketeering, crime, disproportionate salaries and commissions,
charity contributions by business and industry, trade associations and
their price manipulation, stifling of competition, strikes and other
industrial warfare, conspicuous waste, social irregularities,
instalment selling, etc., can be mostly accounted for among the evil
effects incident to expropriation of rent. Some may be expected to
vanish as society and its legislators gradually shift taxes from labor
and industry to society's own and only product rent. Some of the worst
may require political action, but it will be necessary to remove the
impediment of trade-throttling taxes, and set the stage by taxing
rent, before any effective relief can be had or even expected. All
monopoly starts with and in expropriated rent.
Charlemagne formulated the axiom: "The welfare of a nation is
the welfare of its least fortunate." The "unhappy third"
cannot satisfy all their needs nor much that they want because prices
are prohibitive; hence less things are consumed and, consequently,
scanty need for labor to produce things. Consequently, unemployment
and depression supervened, and, relief became necessary to prevent
serious distress. Price, then, is the key to "The Present Mess"
and, also, to "A Practical Way Out." The price of consumers'
wants must come down. We must "Take Taxes Out of Prices."
The diagnosis of "The Present Mess" and its cause having
been found to flow from "price" and the chief contributing
cause ascertained to be taxes that should be abolished, our problem
now is: The recovery of our expropriated rent; the total abatement of
taxes, and, "How it can be done with our existing political
machinery." At "first blush" it might appear that all
trade-throttling taxes could be repealed and a levy made on rent to
replace them, but that would be revolutionary and revolutions are too
costly. It is best to "Take Things by the Smooth Handle."
Neither our economy nor our democratic institutions need be imperiled
while we shift taxes to economic rent. Capitalism has earned its spurs
and, with some little fixing, can be depended on to function in an
economy of plenty much better than in an economy of scarcity.