Theodore S. Fettinger,
An Enlightened Public Official

Joseph Dana Miller

[Reprinted from the Single Tax Review, September-October 1921]

HON. THEODORE S. FETTINGER, president of the Newark, N. J. Tax Board, contributes an article to the Newark Evening News, of September 9. In it he outlines a tax programme. It embodies (1) a recommendation for a land value tax to supply the bulk of revenue; (2) a per capita tax on males and females over 21; (3) income taxes very limited in extent and incidence.

Mr. Fettinger says:

"A tax on land alone is stoutly advocated by a growing group of thinking men. Their proposition has the merit of at least being basically sound and, aside from the proposed income tax, the only taxing plan that is worthy the name that is being seriously advocated.

But we may not be ready for a plan so drastic as the Single Tax. At least the plan is not very generally accepted. It is, however, made a basic part of the plan here advanced as feasible and practical and easy of adoption by any State in the Union.

The tax on people is not distinctly new, but the reason for its being levied and the method of apportioning it is perhaps novel.

The income tax is approved by most people and some think it should be the primary tax, but this plan regards it as a secondary tax - one that should be levied at the will of each community, when necessity or conditions warrant, and not used as a penalty for prosperity.

It may be essential in the adoption of such a plan as here outlined, for the State to levy, in addition to the taxes proposed, taxes upon railroads and other public utilities, to raise revenue to defray the cost of extraordinary State enterprises, although a proper application of the land tax should take care of the public utilities' contribution to the State's revenue.

It also may be necessary for municipalities to require license fees for the establishing of certain classes of business, or for their regulation and restriction. Such taxes or licenses would be optional with each community, according to its own requirements, and could be regulated by local ordinances."

Under a sub-heading, "The Primary or Fundamental Tax," Mr. Fettinger well says:

"The tax on land is intended to supplant the tax now generally imposed upon improved realty, including the homes of the people and their contents, the industrial establishments and their machinery and raw materials, the stores and their merchandise and personal possessions generally.

The land tax should be made to yield revenue sufficient to pay the fundamental expense of government, the acquirement of property and the upbuilding of the material side of the State, county and city, such as construction of water works, sewers, canals, highways, docks, bridges; the building of schools, hospitals, asylums, fire houses, police stations, etc.; the payment of interest on bonds and their redemption and the creation of a reserve fund for emergencies.

Land is the one permanent form of property; it is always in evidence - immovable; can be measured and zoned scientifically; its possession is a monopoly of a common heritage, bequeathed by the Creator to all humanity; it is the primary source of all property, all wealth."

Mr. Fettinger condemns the taxation of improvements in the following terms:

"Since all wealth comes from land, private ownership of it should be paid for in proportion as it enriches the holder. Taxing land will tend to bring much waste land into use and encourage improvements of every kind, whereas taxing other forms of real estate and possessions generally tends to discourage improvement and places a fine on the merely thrifty and a penalty on the enterprising home-owner, manufacturer or merchant.

We want factories. We want stores and offices and theaters. We want attractive homes. Why put up a tax barrier against them?

Tax placed upon buildings, be they residential, mercantile or industrial, is a tax upon development, enterprise and progress.

Tax levied upon raw materials, ready for conversion into goods, or upon manufactured goods, or personal possessions, be they furniture, clothing or luxuries; or wealth the result of thrift, is and must of necessity be obnoxious, because it is virtually a fine imposed upon those who practice the virtues classed as essential to a well ordered life and a successful community."

On the personal property tax Mr. Fettinger says:

"It is the opinion of almost all who have studied tax questions that the tax on personality is not a just tax and should be abolished.

Probably seventy per cent. of the cases in dispute before boards of taxation are over personal taxes, notwithstanding the tax imposed by no means begins to cover the value of personal possessions.

It is manifestly impossible to inspect every home, store and factory; and, if this were possible, it would be impossible to get an adequate inventory of their contents. Especially would it be impossible to get at the value of the contents of safe deposit boxes and such other secret storage places as are utilized to keep most costly valuables.

Even if every avenue for inspection were opened and sworn detailed statements made of all personal property they would be impossible of verification annually without enormous expense."

Toward the conclusion of his very admirable article, MrFettinger says:

"It would seem that the land tax is immeasurably superior to the income tax in reaching unearned incomes. Yet the income tax might reasonably be utilized to cover inheritances when they run into large amounts."

The entire article is well worth while. It is good to hear a public official speak in these terms. That a tax official should show a knowledge of the fundamental laws of taxation is unusual, but refreshing.