The Distinction Between Land Rent
and Land Value

James Snyder

[Reprinted from Land and Freedom, May-June 1941]

[We believe that Mr. Herbert T. Owens' article "Assessing Land on Gross Value," answers Mr. Snyder's objection to land value taxation. ED.]

Mr. Robert Schley's article in the last issue is written from a point of view which must complicate a subject that should be easily intelligible the problem of sufficiency of rent for government expenses. Mr. Schley's article is headed "Rent and the Tax Fund," but he bases his study, not on the collection of rent but on the taxing of land values. These two things are so different that one of them can wreck the best laid plans of Georgeists.

If title holders are the rightful owners of land including the rents, government has no more justification in taxing land values than it has in taxing houses or incomes. All the basis of justice then disappears from our campaign, and it degenerates into a contest between the haves and the have-nots.

If we tax land values 100% the land values disappear, we have neither tax base nor taxes, and government is bankrupt. This, of course, is an absurdity, and the prospective convert who hears this is through with Georgeism. If we tax land values 25% or 75%, the effects on the land values and on the tax base are so unpredictable that the intelligent fixing of a tax rate would be impossible. If the rent of the land belongs to the people, why not take the rent, instead of taxing the loot and going into partnership with the looters? If we base our study on the collection of the rent, the problem of financing the state will be as simple as the financing of an office building, because they are exactly the same problem.

People who receive services, from a state or from a business man, should expect to pay the cost of the services. Every dollar expended by government legitimately is for service, and the only beneficiaries of these services are the title holders. Rent is the measure of these services, and a tenant cannot benefit by these services unless he lives somewhere and pays the title holder the full value of these services.

A bridge which costs a million dollars, and which does not add a million dollars value to the locations which it serves, is a blunder whether it was erected by a state or by an association of title holders. If the state collected the rents of these locations, and if the bridge is worth its cost, citizens would be glad to pay the increased rentals necessary to finance the bridge.

In the same way, the total rents, if collected by the state, would pay for all the expenses incurred by the state, the total of these expenditures being the cost of the total values which have been imparted to the lands by these expenditures.

The public finances 'are now in a state of hopeless complication, but these complications are the result of the present system of taxation, and they would disappear if the state collected its income from its customers as any business man must do. A grocer who should give away his goods to the first comers, as the state gives away its rents, and then hold up the passers-by to collect for his expenses, would develop complications which no expert accountant could untangle.

It is true that rent would be insufficient for all the present expenses of government. Title holders who would compete for valuable sites on the payment of the rent which covered the cost of the improvements, would be unwilling and unable to pay a rental which would cover the cost of boondoggling extravagant public works, and all the rest.

Graft and incompetence in politics will never be eliminated while politicians have the privilege of taxing at their sweet will. If they were limited to accepting the rents which their wise spending had created, and could get their salaries in no other way, they would speedily learn the economy, the intelligence, and the honesty which they must employ in their private enterprises.

If we will bear in mind that "the actual visible chaos of existing conditions" is the necessary result of the unjust and illogical system of finance which gives away its earnings and then picks the pockets of the citizens to replenish its coffers, we will more easily grasp the obvious truth that title holders are the sole recipients of the values created by government expenses, that the rent of land is the measure of these values, and that the collection of rent would automatically equal the cost of the services, that is, the government's budget.