An Objection to Land Value Taxation
Answered by the Facts
[Reprinted from Land and Freedom, March-April
A comprehensive study of the relation between State and local
expenditures of the forty-eighth States and the economic structure of
the United States the first of its scope made on the basis of American
expenditures, has just been made public.
The research, which throws important light on the problem in public
finance raised by Henry George, whether the yield of land value
taxation would bear some direct relation to needed current public
expenditures, was undertaken during 1934 and 1935 by a seminar in
public finance in the Graduate Faculty of Political and Social Science
in the New School for Social Research in New York, the University in
Prof. Gerhard Colm, late of Kiel University, an expert in public
finance and world economics and a specialist in unearned increment
taxation, conducted the seminal one of the members of which was the
"General expenditures were more closely correlate with income
and wealth than with industralization, it was found, and there were
many indications that "the expansion of governmental services is
not determine solely by the economic necessity of these services."
"Quantity and quality of public services are chiefly determined
by the abundance of (tax) resources. Social expenditures were
relatively higher in the wealthier than in the poorer communities. The
traditional statement that in private finance, expenditures are
determined by the revenue, in public finance revenue is determined by
the expenditures, is not correct. Public expenditure are predominantly
determined by the potential resources.
These quotations are taken from a summary of the results of the
survey, written by four graduate students of the University in Exile,
which is published in the current issue of Social Research, quarterly
publication of the New School for Social Research.
The conclusions are of especial interest to advocates of social land
value taxation, for they disposed of the "first objection to the
Single Tax," best formulated, perhaps, by the late Henry Rogers
Seager in 1904.
Professor Seager, in his Introduction to Economics, asserted
that "the needs of regions in the various parts of the United
States, which have great difference in the size of the aggregate rent
fund, for revenue for courts, jails, roads, common schools, etc., have
little relation to these differences."
Professor Seager thought this illustrated "how largely belief in
the Single Tax rests on faith rather than upon reason." But it is
interesting to note that this impartial and objective study carried on
by students whose attitudes ranged from those of laissez-faire
liberalism to those of extreme radicalism as well as those of humane
and radical liberalism, the Georgest attitude illustrates how largely
the objection has rested upon unconscious bias rather than upon
The bias, in Professor Seager's case, was entirely unconscious, for
he himself martialed the facts by which, he wrote, he was "impressed
with the truth of the contention that rent is a peculiarly fit object
of taxation" and despite the temper of the times he was a
noteworthy advocate of the municipal application of the principle of
complete socialization of rent.
He did not go beyond what he dubbed the "municipalization of
rent," he explained, precisely because of this objection. It is
regrettable that Professor Seager, who brought to his field a keen,
inquiring mind that early placed him in the front rank of American
economic scholars, should have met this stumbling block to the
development of his thought.
Had he not accepted this rationalization and had he investigated the
case for it, he would undoubtedly have rendered even greater service
in the development of Georgist social theory in America.
The authors of the Social Research article mention Arnold Brecht's
comparison of the expenditures of different countries and those of
German states and municipalities. This study, "Internationaler
Vergleich der Offentlichen Ausgaben," published in Leipzig in
1932, was one of two important surveys in this field, the other being
Adolph Wagner's, published in 1892. It is interesting to recall that
this study of Professor Brecht also contributed a factual test of
premises of the theory of social land value taxation.
Professor Brecht derived, analogous to Wagner's result, a "law
of progressive parallelism between expenditures and the massive
accumulation of population." His data indicated, it is pointed
out, that governmental expenditures increase in greater proportion
than the density of population wherever massive accumulation takes
It is amusing to note that this point has been cited to the present
writer as evidence that, assuming the size of governmental
expenditures arising from non-economic causes would remain the same,
the yield of social land value taxation would at some point in urban
growth prove insufficient.
It had not occurred to the writer's friend that the economic
advantages of the accumulation of masses of the population might
increase in greater proportion to the density of population, a
consideration well established theoretically.
The data and the results of the Colm survey are on file in the
library of the New School for Social Research, of which institution
Dr. Alvin S. Johnson, author of important critical studies of the
Single Tax and Ricardian rent theory, is director. It was through Dr.
Johnson's efforts that the University in Exile's faculty of noted
German and Italian scholars, which includes Professor Brecht, was
brought to America and established in the New School.