Strategy versus Theory on Land-Rent Figures

John C. Weaver

[Reprinted from the Henry George News, February, 1958]

THE article by Selim Tideman in the December HGN was a useful "Contemporary View" of the obstacles we face when introducing land-value taxation to the people of today. His January article offered a still more practical suggestion on "living with the inevitable," though I hope he will clarify its details.

As a dweller in Pittsburgh, one of the two cities in the United States which distinguish, to some extent, between land and buildings in taxation, I often wonder how Georgists elsewhere can make the subject seem politically realistic. The trend of the times is so heavily in other directions that, regardless of our logic, the chief objection raised, even here, is: "You haven't a big enough movement to swing an election,, so why discuss beautiful theories?"

It takes all that our small group can do to keep city officials and the mass of voters from forgetting that we have a unique Graded Tax - and instead of welcoming further applications of its principle, their aim is all for "taxes on other forms of wealth" and "federal aid." From viewpoint of strategy, Mr. Tideman is probably right in calling it burden" to shoulder the responsibility of condemning the income \x or questioning federal expenditures.

Yet there is a conservative "buck-the-trend" movement in this direction, larger and better organized than ours, with which some of us might make a useful alliance. Even government officials who are not outright Socialists know there is a limit to revenue from the income tax, and when space missiles compete with urban renewal and housing projects, there is a chance to suggest that cities could "renew" themselves without aid. H. B. Cowan's forthcoming Graphic Summary of facts from Australia and New Zealand gives ample proof; and Mr. Tideman's proposal to remove the federal tax exemption from sums paid for property taxes could well be coupled with this approach to local housing reformers. It could also be linked with President Eisenhower's desire for gradual return of responsibility to state and local governments.

So, I am all for strategy, and far from urging that all Georgists seek allies in any particular camp. But some can win friends in one direction and some in another. It seems that Mr. Tideman is allying himself with the dominant practical strategy but because he honestly believes in the necessity of the income tax. For me this is impossible.

While we should all learn to emulate the wise old owl ("the more he heard, the less he spoke") and to "simplify our proposals" for local situations, we cannot shut off our powers of reasoning merely because we live in a mad world. In HGN articles at least, and wherever we deal with rational beings who will take time to reason-we should be able to look squarely at all the facts. I have never allowed any of this type to get away with a "barely concealed smirk" - not even when they were professional economists.

Most economists have long ceased to be able to see the woods for the trees, however their statistical studies could be very useful in forecasting the effect of gradual shifts in the tax base, and the ways in which land investors might be compensated during transitions. But I must disagree with the laborious though commendable attempts which some Georgists have made to estimate the total available rent of land, beyond assessors' books.

The law of supply and demand works "imperfectly," as the textbooks say-blocked and obscured by complications - but it works. Whatever authority controls access to a piece of land - whether an innkeeper, an owner of farms or city lots, or a government of town or nation levying taxes on those within its boundaries-that authority charges "as much as the traffic will bear." When demand slackens, charges are reduced. When people move away from a region rents go down and ultimately taxes drop too.

All taxes, whether real estate levies on land, or sales or income taxes to snatch the pennies of commuters and transients as well as residents, are collected for the privilege of living - for a lifetime or a day - and/or holding property within the jurisdiction of a government. If people found these charges unbearable, they would not come within such a jurisdiction. The charges are therefore land-rent, and since they are now being collected, the rent is sufficient for all present functions of government (Q. E. D.), though certainly no revenue will ever satisfy the desires of politicians.

But they are an ungodly nuisance - a constant incentive to fraud and corruption and a deterrent to industry and thrift. The same amounts could far more easily be collected, annually, from the owners of land, who in turn would collect from the builders and merchants and employers who occupy the land; so long as any tenants, customers and employees remained. They would remain, because they are paying all these sums now, and very likely they would remain under even higher charges.

But, Mr. Tideman may ask, could landlords collect enough to pay for national defense? Of course they could. A few movie actors work abroad, to lessen their taxes, but most folks aren't moving out of the U.S.A. They seem to approve of the wars our Presidents get us into. I don't, but even I am not moving to Mexico. You don't get much there in return for your rent.

So now, let's get back to our home towns, and talk about how to cure slums and check land-speculators without help from the FHA. Mr. Tideman has given us excellent advice (though for the wrong reasons.)