An Objection to Land Value Taxation
Answered by the Facts

Will Lissner

[Reprinted from Land and Freedom, March-April 1936]

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 Exile.

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 present writer.

"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 rational evaluation.

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 place.

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.