Single Tax and Rent

John Salmon

[Reprinted (with omission of an sample case) from the Single Tax Review, 1921]

Editor Single Tax Review: On page 643 of the Public, July 3d edition, occur these words:

"Every advantage civilization gives is reflected in the value of land."

What shape does this reflection take? I take it that the reflection is shown in the rent. In other words, rent is the product of advantage. The more and higher advantages are the higher rent will be. This high rent is not an evil, although on page 632 of the same issue occurs these words:

"Rent returns nothing to society. It is pure graft, ancient and venerated, but still graft none the less. Rent is the bottomless sinkhole into which the wealth of the world is poured in ever increasing volume."

The better civilization is the higher rent will be. If the Single Tax had been in operation from the beginning of time, we would have rent. John Orr, in his book, Taxation of Land Values, says:

"A hermit living alone will have the full total produce that he makes. His wages will be very small as his labor will not be near as effective as when he joins in co- operation in a settled community where he has the advantages of civilization, such as the use of roads and streets and railways, post office, telephones, water supply, etc. His wages may be 50% of his total produce now but more than the 100% formerly. The remaining 60% is rent, the product of civilization's advantages, and the trouble lies in this rent being diverted by an unwise system of taxation into private pockets instead of into the public treasury, where it belongs, as it is the result of community effort. In the first place the hermit's rent is at zero. In the second instance it is 50% of his total produce. It does not follow that he is worse off in the second instance than he was in the first. The increase in the proportion of rent to wages is not an evil."

What effect will the introduction of the Single Tax have on rent? It will act the same as the introduction of any labor saving machine. It will relieve capital and labor from a burden and will tend to bring other land into the available area, thus tending to raise absolute rent, because where land is brought within the circle of better public service, as in cities, rent is bound to increase. The product of public service, or as is said in the first place, the advantages of civilization is rent, land values reflecting the same. As far as productive purposes are concerned, a graveyard might as well be in the moon. There is a lot of land in the same class; where none of the advantages of civilization are capable of being availed of. Land can be bought here in Maryland for $6. an acre, but it pays better to pay $300 or $400 an acre nearer the centre of population where all the advantages of civilization can be availed of.

The most important effect of the Single Tax will be the equalization of taxation; that is, it will make each person pay according to the service he receives from government -- the only just basis of any tax, because location values reflect the worth of government. No other value does and each one determines for himself what it is worth by the price or rent he pay^ for a given location. All tax administrators are agreed that our present system produces the grossest inequalities and in every State we find them resorting to various schemes to remedy the evil. Our State Boards of Equalization and Review are all formed with this object in view. Their labors will be useless until they adopt the Single Tax. There is only one way and that the right way. The Single Tax way.

Real estate is always held in one of three ways.

• 1st, where improvement value exceeds the site value.
  
• 2nd, where improvement value and site value are equal.
  
• 3rd, where undeveloped and underdeveloped land is held for a rise.

Rent always being at top notch, and rent and taxes are one and the same thing, taxes in the last analysis come out of rent.