The Case for the Taxation of Land Values

Harold Sudell

[An exchange of letters between Mr. Sudell and Mr. Thornton Cooke.
Reprinted from Land and Freedom, January-February 1928]

MR. THORNTON COOKE is president of the Columbia National Bank of Kansas City, Mo., and he has had some correspondence with Mr. Harold Sudell, of Brookline, Pa. Under date of November 4, Mr. Cooke writes Brother Sudell:

"I appreciate your writing me about the subject of taxation. I am familiar with the writings of Henry George on the subject of Single Tax, but am not able to reach his conclusions, chiefly for two reasons.

"In the first place, it is not true that a tax on land values does not burden industry. The running expenses of the government are necessarily paid, not in land, but out of current or past production of wealth, that is out of savings or out of capital, and it seems to me essentially untrue to say that savings or capital can be so used with- out burdening industry.

"My second reason is that the system would be impossible of universal, continuous application. The World War, for instance, could not have been fought by calling upon one class alone, the class of land owners, to meet the tremendously increased taxation necessary. Even if that class could, as a physical and financial matter, have met all the taxes, there would have been involved a most terrible injustice. In fact injustice did occur in that taxes on farm lands increased, while income was diminished after the war, and the results here in the Middle West were deplorable."

To this Mr. Sudell replies as follows:

"Permit me to thank you for your very kind and courteous reply to my letter dealing with your Houston address. May I briefly comment on the points you raise.

"Naturally, as a banker, you are primarily concerned with the effect of the Single Tax on the investor in land. If the investor is a land user he will (except in a few cases) be benefited. If a speculator he will be hurt. It is unfortunate that we have by our tax laws, in the past, encouraged land speculation just as it was unfortunate that we ever permitted slavery. We abolished slavery and we will, ultimately, do away with land speculation.

"Our present taxes fall mainly on the use of land and in proportion to its use. The better the use the heavier the tax. The Single Tax changes this, taxing holding instead of use. In considering the effect of this change you must bear in mind that the Single Tax is what is called a natural tax inasmuch as it cannot be avoided. It must be paid to someone. If the state does not take it the individual will. Let me illustrate:

"A man in Kansas City desires a home. He purchases a lot for $5,000 and builds thereon a $15,000 house. He is virtually paying a perpetual ground rent of $300 per year (the interest on $5,000) to the former land owner. This is the economic rent which the Single Tax would take. But now the new home-owner is called upon to pay also a real-estate tax of about $450 per year as well as multifarious taxes levied by state and national governments. Certainly there can be no doubt that the Single Tax imposes no burden here and it is equally true in every use of land.

"While we claim that the full economic rent of land is sufficient to meet all the ordinary normal expenses of government manifestly there is a limit. If a great emergency rose needing vastly increased revenue we would have to resort, as we did in the late world's war, to other taxes. What we want to collect is the economic rent of land all of it and no more.

"The reasons for this are:

One Land values attach themselves to the resources of nature to which all men have an equal right.

Two Land values are a product of population and its activities multiply.

Three Land values are like a looking glass insomuch as they reflect the benefits of government. Good government invariably raises land values. Bad government depresses them.

Four Land values depend for their continued existence on the fructifying effect of the regular expenditure of the public funds. If this issuance suddenly stopped in Kansas City and all governmental functions ceased your Kansas City land values would begin to melt away like snow in August.

In view of these plain facts it is evident that the economic rent of land belongs to the people and should be collected for governmental purposes."