In the first place it is not only the rates which the occupier takes into consideration when he decides that he can afford to rent a certain property. He considers "rates and taxes." The Inhabited House Duty is taken into consideration fully as much as the poor rate. If it did not exist the tenant could afford to pay a higher rent.
Let us carry this a little further. What is the Inhabited House Duty? It is an Income Tax roughly proportioned to the size of a man's income by the size of the house which he inhabits. But there is another Income Tax, the Income Tax commonly so-called, levied at so much in the £ on incomes over £160 per annum. Is the Income Tax taken into consideration by a family man looking out for a house? Not directly, perhaps, in the same way that he adds the "rates and taxes" to the rent before deciding that he can afford a certain eligible residence, but indirectly there can be no question whatever that the Income Tax has great influence in deciding a man's rental. Indeed, the raising of the Income Tax from 6d. to 1s. may directly cause a man to leave a £60 house for a £50 house. We see, then, that if the landowner pays the local rates, he most certainly pays the Inhabited House Duty, and further that if he pays the form of Income Tax called the House Duty, it is at least arguable that he pays the Income Tax proper.
But that is not all. There is another determinant of the rent which a man can afford, and that is the price of gas. In and around London the variation in price is considerable, and the careful householder does not forget the fact when deciding whether to live North, South, East, or West. South of the Thames gas is cheaper than in the North. According to the doctrine under examination, therefore, the landowners North of the Thames must at least "pay" the difference between the two rates.
Again, on the same lines it might be argued that, as a rise in the price of building materials checks building and therefore makes a landowner ready to accept a lower rent for his land, the landowner actually pays the increased cost of building when materials rise.
And so we might proceed from one logical step to another until we arrived at the comfortable conclusion that, if the sole expense of a householder were his rent, he could pay his whole income as rent, and that, therefore, the real "loss" of the landowners is the difference between the entire income of the nation and the land rents which they now actually receive.
The whole truth of the matter is: For long years rates have been levied upon the occupiers of fixed property. Contracts as to the use or sale of land and the property affixed thereto have been made between man and man with full knowledge of the existence of rates. While, therefore, it is perfectly true that, but for the existence of local levies, the owners of the soil would be receiving a higher tribute than is actually the case, it is straining the meaning of language to say that they pay the rates, or that the rates are an actual burden upon them. In so far as present-day landowners have inherited their land from men who were given it by a worthless Sovereign or in any other way came by it without proper consideration, to talk of the burden of rates upon real property can scarcely excite sympathy. In so far as present-day landowners acquired their property for proper consideration or inherited it from those who so acquired it, the rates were taken into account when the price was paid, and no burden can therefore truly be said to exist. If to-day A gives £1000 for a piece of land he does so with full knowledge of local rates, and the seller gets less for his land because of his knowledge. Therefore, when A, in his turn, leases his land and a house built upon it to another person, he cannot allege that he bears the burden of the rates. Yet it remains true that, if the burden did not exist, the land would yield A a higher rent. In a word the rates have become a rent-charge upon the property.
To sum up the conclusions of this chapter, we have seen that while the total income of the nation is £1,840,000,000, the landowners take £106,000,000 as land rent, and that this amount would be much greater but for (1) the untaxed admission of competitive foodstuffs, (2) the very small area occupied by the towns, and (3) the levying of local taxation upon fixed property.
[21] Cf. Marshall, "The fundamental attribute of land is its extension."—"Principles of Economics," Book I, p. 221.
[22] "Great Landowners." John Bateman (Harrison).
[23] These classifications are purely arbitrary.