The Relevance of his Philosophy Today
[A paper presented to the Fairhope Unitarian
Fellowship, 22 October, 2006]
We all know that Fairhope Alabama is a unique and wonderful
community, and those of us who have been here for any length of time
know that one of the reasons for this is because Fairhope was founded
in 1894 as a utopian community by a group from Des Moines Iowa. This
group wanted to establish a community or colony that would implement,
as best they could, the concept of the single tax that had been
proposed by Henry George.
The effort has been successful, and today the Fairhope Single Tax
Corporation owns about 4,500 acres of land in and around Fairhope.
When you buy a house on this colony land you own the building but have
a 99 year renewable lease on the land.
The story of how Fairhope was founded is an interesting one and
perhaps should be the topic of a Fellowship program some Sunday. What
I want to talk about today, however, is the philosophy of Henry
George, and whether it still has relevance today. As you will see,
there was much more to Henry George than just the single tax.
Although the name of Henry George is not well known today, after the
publication of his book Progress and Poverty in 1879, he
became one of the three most well known Americans; only Mark Twain and
Thomas Edison had greater name recognition.
Progress and Poverty is the most widely sold popular book on
economics, and the only book of any kind to sell more copies than
Progress and Poverty in the 1880's was The Bible. When Henry
George ran for mayor of New York City he received more votes than
Theodore Roosevelt, but just barely lost to the machine candidate.
The reason I asked Ruth Geraci to use this particular picture of
Henry George on the Sunday Bulletin is that it is from a cigar box
from the 1890's. How many people were popular enough in their own time
to be honored with their picture on commercial cigar boxes?
Today there are 30 or 40 organizations around the country that are
dedicated to studying the philosophy of Henry George and promoting his
ideas. People in these groups call themselves "Georgists",
and every year there is a conference of an umbrella organization
called the Council of Georgist Organizations where representatives of
these groups gather to discuss his philosophy and influence.
Henry George was a journalist, economist, and social reformer who
lived 1839 to 1897. He is best known for his 1879 book Progress
and Poverty in which he raised the question: Why is there so much
poverty in the midst of so much economic progress? George's
overwhelming concern was the vast and growing disparity in wealth
between rich and poor. His goal in writing Progress and Poverty
was to seek an explanation for this enigma, and to propose a remedy
that he felt would bring greater equality and fairness.
Writing just a few years ahead of Henry George was Karl Marx. George
and Marx both looked at the three same factors of production: land,
labor, and capital. And they both looked at the same problem of
poverty and the vast disparity in wealth between rich and poor. But
they came to a different conclusion as to the cause of the problem of
poverty, and to a different solution on how to remedy the problem.
Marx determined that the problem was that the capitalist was taking
too large a share, leaving too little for the worker. His solution was
to have government own the means of production, reducing the power of
Henry George, on the other hand, felt that the problem was the
private ownership of land. The landowner did not create the land, and
he contributed nothing to production, but yet he could force others to
pay him for the privilege of working on or living on the land, causing
an increase in the disparity in wealth between those with land and
Most of the increases in productivity will go not to the laborer or
even to the capitalist, but to the landlords.
One possible solution to this situation would be for government to
confiscate land and lease it to those who would use it, with the rents
going to the government to be used for the benefit of all citizens,
instead of to the individual who claimed "ownership" of the
land. But Henry George rejected this approach as being too harsh and
Instead he proposed keeping the land in private ownership, but having
the government tax 100% of the rental value each year. (Henry George
later endorsed taxing just 90% of the rental value each year, leaving
the property owner a 10% bonus or commission.)
Taxing all or most of the rental value of the land would be
justified, he said, because land is a gift of nature (or God), not a
creation of man. The enhancement to land value comes from population
growth and public improvements such as railroads, canals, highways,
and various public works. The owner of the land did not create the
external factors that increased the rental value of the site, so why
should he benefit from the increase in value brought about by those
Remember: we are talking only of land here, not the improvements on
the land. Factories, stores, and houses are the creation of man, and
George believed the owners should receive the economic rent for such
improvements upon the land.
Henry George felt that the land tax would be beneficial because it
would take away all speculation in land, and it would encourage land
owners to use their land in the most efficient manner possible. But
his main concern was that such a tax would, in his opinion, eliminate
unwarranted privilege, bring about greater economic equality.
Henry George believed that such a land tax would raise enough revenue
so that all other taxes could be eliminated, and we would not burden
labor and capital with taxation. This would allow people to keep the
full fruits of their labor, and allow capital and the returns gained
from that capital to be allocated to promoting more economic growth.
It should be noted that Henry George wanted to see the single tax
implemented nation-wide, and opposed efforts to implement it within
individual communities. He was invited to visit Fairhope to see the
colony his philosophy inspired, but declined the opportunity to visit,
and never did endorse the Fairhope experiment.
In Progress and Poverty Henry George did not call his
proposal the "Single Tax", but he does use the word "single"
as an adjective in talking about having a single tax on land rather
than many taxes for people to deal with.
It was one of his followers, lawyer Thomas Shearman, who first called
the land tax movement "Single Tax". Shearman was more
concerned with tax reform and tax reduction than he was with land
reform or the disparity in wealth, but the name single tax stuck, and
even Henry George accepted it and used it in speeches and later
writings, apparently with some reluctance.
Henry George's philosophy influenced the Progressive Movement in the
early 20th Century, and contributed to the restriction of monopoly,
more democratic political machinery, municipal reform, the regulation
of public utilities, and the improvement of labor laws and working
conditions. World War I broke the momentum of the Progressive
Movement, and gave Georgist enemies an opportunity to regroup and work
to discredit the Georgist philosophy. They attempted this by attacking
Georgism as "socialist" or "communist", and by
redefining economic theory to eliminate land as a significant
category, treating it instead as just one element of capital.
In recent years the land tax concept has gone through a major
transformation. Georgists, following the introduction of the income
tax and an increase in the role of government, began to embrace the
concept of "land value taxation" when it became apparent to
some Georgists that relying on a land tax as the sole source of
revenue for all levels of government might be unfeasible.
Land value taxation is merely a variation of the property tax under
which land is assessed at a higher percentage of its market value, and
buildings and other improvements are taxed at a lower percentage of
their market value.
Today one of the major efforts of the various Georgist organizations
is to encourage states to authorize the use of land value taxation,
and to encourage cities, counties, and school districts to implement
land value taxation in their local property tax procedures. The major
success has been in Pennsylvania where 18 units of local government
have implemented land value taxation. At the 2006 annual conference of
the Council of Georgist Organizations in Chicago there was a panel on
"Georgist Perspectives on City Planning". I gave a
presentation on "What Makes Downtown Special". After listing
nine factors that contribute to making the downtown areas of our
cities such interesting, exciting, and vibrant places I explained how
land value taxation, if it were applied, would contribute to enhancing
these values. It would do this by discouraging surface parking lots
and the holding of vacant land (because of high taxes on land), and by
encouraging renovation and construction (because of a lower tax on
The other person on the panel was Paul Justus, a city planner from
Eureka Springs, Arkansas, who talked about how "smart taxes"
(i.e. land value taxation) contributes to "smart growth". He
pointed out that the use of land value taxation would encourage more
dense development, reducing suburban sprawl.
In London and elsewhere land value taxation has been used to finance
the construction of rapid transit lines. Construction of a transit
line increases the value of property near a transit stop, and a
portion of this increased value is taxed each year to fund the
construction of the transit line. In my opinion, even if there were
nothing else to the Georgist philosophy, land value taxation would
make Georgism a worthy and relevant philosophy today. But there is
more to the Georgist philosophy than land value taxation.
To understand how much more, we need to understand how Henry George
defined "land". Land includes not only the surface of the
solid earth, but the water and minerals below the surface, the air
space above the earth, and the lakes, rivers, and oceans.
This opens the Georgist remedy to not only having government tax the
rental value of land, but securing royalties on gas, oil, and all
minerals extracted from the earth. It also suggests that government
should be charging for the use of radio frequencies and satellite
orbits. The proceeds from these royalties and fees belong to the
entire community, according to Georgist philosophy, not merely to the
individual or corporation claiming ownership of the land under which
the minerals are found.
The implications of this would be enormous, if only this concept
could be implemented. It means that part of the profits now going to
the oil companies would be going to the people. The oil companies
would receive a fair return on the capital invested in searching for
and drilling the oil, but the proceeds of the crude oil beyond the
cost of extraction and a reasonable profit would go to the entire
community, i.e. the government. The same with coal, copper, water,
hydro-electric dam opportunities and all other gifts of nature.
Perhaps even more important than the royalty fees from oil and
mineral companies would be the fees that would be charged to those
wanting to dispose of carbon dioxide and other pollutants by dumping
them into the atmosphere or into the water.
The air and water belongs to us all - it is part of the public
commons. Those who want to use it as a dumping ground should pay us,
the citizens, for the right to do this. One example is the proposed "carbon
tax", a tax on the burning of fossil fuels.
Charging corporations and individuals for the right to add pollutants
to our environment would raise funds for community benefit, and it
would also have the impact of encouraging companies to change their
production methods so as to reduce the amount of pollution being
generated. Furthermore, because of consumer demand from those
motorists who want to reduce their carbon tax, auto companies might
increase the production of hybrid cars, and start producing electric
cars once again. Taxing the right to pollute is referred to as "green
taxes" or "environmental taxes". When these taxes are
increased to the point that revenues permit other taxes, such as the
tax on earned income to be reduced, this is referred to as the "green
tax shift". Such a tax shift would bring us closer to what Henry
George had in mind when he said the tax on land (broadly defined)
could eventually replace other taxes, thus becoming the single tax.
Environmentalists who have never heard of Henry George are advocating
this, but it is a Georgist concept.
Within the Georgist movement, as well as within the environmental
movement, there is discussion on how the proceeds from the green taxes
and mineral extraction fees should be distributed. Some say those
revenues should go to federal and state governments to be used for
governmental services or for reducing other taxes. Others advocate a "citizen's
bonus", whereby every citizen in the country (or in the world)
would receive an equal share of the proceeds derived.
There are several examples where these Georgist principles are
actually being implemented. The State of Alaska has the Alaska
Permanent Fund, under which all citizens in the state receive a share
of the royalties received from the extraction of oil within the state.
The windfall profits tax on oil company revenues in the 1970's was an
indirect way to achieve the Georgist concept of collecting for the
public a portion of the bounty of nature that ought to belong to all.
When we look at both land value taxation and the green tax shift we
see that the Georgist philosophy is, or could be, very relevant today.
But there is still more.
In his second book, Social Problems published in 1883, Henry
George repeated his concern about the unfair distribution of wealth.
But in this book he went further and identified other examples of
privilege that he labeled as unfair. He opposed corporate welfare and
the granting of special privileges not available to all. Henry George
felt that monopolies such as railroads, telegraph systems, electric
companies, and other public utilities should not just be regulated by
the government, but should in fact be owned by the government. As
early as 1871 he was advocating that subsidies for railroad
construction be eliminated, and that the railroads be brought under
control of the federal government.
Henry George was opposed to patents, which he felt limited free
trade, and he opposed the tariff and other impediments to
international trade. He also had ideas on monetary policy worth
considering today, was strongly opposed to maintaining a large army
and navy, and he was a firm supporter of fiscal responsibility and
opposed to a large national debt.
In my opinion there are two areas where Henry George fell short of
presenting a strong case for this philosophy. The first is that he
assumed that a tax on land would be able to pay all the costs of
government. He never gave any evidence to prove this; it was just
given as an article of faith. A second problem with the Henry George
philosophy was his obsession with viewing all the problems of the
world, not just poverty, as the result of the private ownership of
land. He was so focused on seeing his single tax implemented that he
did not support other progressive ideas of his time, such as limiting
the number of hours that women and children could be required to work.
He felt that if the single tax were established that these and other
problems would take care of themselves.
It is important to keep in mind that the primary concern of Henry
George was the vast disparity in wealth between rich and poor. The
single tax was not an end in and of itself, but rather a means to the
end of securing greater fairness and equity, and allowing people to
benefit from the fruits of their own labor.
If Henry George were here today he would see the same great disparity
in wealth as he saw in 1879, but his analysis of what causes it and
how to address it would undoubtedly be different. Today I believe he
would look at stocks and bonds as well as at land, and would have to
take into account the expanded responsibilities of government.
I believe he would support taxing a portion of corporate stock
dividends, and that he would also favor a tax on capital gains,
especially on gains received by buying land, holding it for ten years
as population growth and highway construction increased its value,
then selling it at a huge profit. This attitude may make me what the
late Professor Robert Andelson from Auburn University called a "Neo-Georgist",
rather than a Georgist.
Is the 19th Century philosophy of Henry George relevant today?
Although few people outside of Fairhope Alabama or Arden Delaware (the
other single tax colony) have ever heard of Henry George the answer is
yes, his ideas are still relevant.
Land value taxation can contribute to better, more attractive, and
more efficient cities and suburbs, and perhaps to a better
Environmental taxes can lead to a cleaner and safer environment and
perhaps help us prepare for peak oil and the threat of global warming.
Reducing taxes on the earned income of labor is a worthy goal, when
other revenue sources such as a green tax shift permit it.
And his ideas on monetary reform, fair trade, fiscal responsibility,
and the proper role of government and the military are still worth
We should promote the ideas of Henry George, even if we do it without
giving him the credit he deserves for introducing them.