The former contention—apportionment of Taxation according to ability to pay—puts Government in the position of a highwayman whose “loot” corresponds to so much of the proportionate property of his victims as he is able to extort. But how shall taxes be measured in proportion to governmental or social benefits received in financial form by the taxpayer? A sound Economic discrimination might be made by levying upon Rent only, instead of both Rent and Wages as is now customary.
But by what right could Government levy upon Rent only if its claims to an income are as a producer of Wealth functioning in the category of Labor, the natural compensation for which is not Rent but Wages? The answer would seem to be that inasmuch as all Wealth is produced by Labor from and upon Land, and as the Rent allocation of Wealth attaches to Land-ownership—Land itself making no claim to compensation,—Government might with Economic consistency exact its Wages as a factor in Production from the receivers, actual and potential, of Rent, whose ownership of the Land, valueless without Governmental protection, rises in Value with Economic progress and falls in Value with Economic decline.
Such an adjustment would exact no more of Economic science than appropriate alterations of the technical terms respectively for the two fundamental allocations of Wealth in Distribution. Instead of identifying one allocation as Wages and the other as Rent, the two could be identified respectively as Individual Wages and Social Wages. This mode of identification would in no wise disturb the natural characteristics of the two allocations into which the Wealth produced by Labor from and upon Land naturally distributes itself.
In that connection it may be useful to note the fact that Taxes on the Wages allocation of Wealth tend to check the production of Wealth. They interfere with Trade, that gigantic factor of Production, by thrusting the tax upon consumers as part of the Price—not only the tax, but also business profits on the tax. On the other hand, taxes upon Rent tend to check the Economic evil of speculation in Landownership and the consequent monopolization of Natural Resources unproductively.
Related to the problems thus suggested is the policy commonly and widely known as “the Single Tax,” the fiscal method proposed and widely popularized by Henry George for initiating and promoting an evolutionary process in the direction not only of ethical readjustments of fiscal methods but also of ethical readjustments of the Economic relations of mankind to Natural Resources and to Artificial Objects produced from and upon Natural Resources in accordance with natural Economic law.
That policy rests upon three Economic principles. One is the principle that Land (Natural Resources) is not an individual inheritance but is a common inheritance. Since no man or body of men ever has or ever can create Land, it is by edict of natural Economic law the inheritance of all that are living. But inasmuch as Land cannot be well utilized (such Natural Resources as the sea and other open waters excepted) unless subjected to private possession for farming, mining, manufacturing, merchandising and homes, or the like, private possession, control and management of areas of Land are an Economic necessity. To adapt that practical necessity, therefore, to the common right, the Single Tax policy proposes to make private possession secure without prejudice to common ownership, by the assignment annually, through taxation, of the annual Economic Rent or Value of all Natural Resources to Governmental treasuries by way of annual compensation to the community for the annual values which the community gives to that Land. Concurrently the Single Tax policy would exempt Artificial Products and their producers from all taxation, on the principle that Artificial Products (Wealth) are the private property of their producers and purchasers.
The contention of “Single Taxers” is that such a policy would place Taxation upon a sound and ethical basis; that it would secure to utilizers of particular Natural Resources the full value of their use; that it would properly take from them for the benefit of all, the value of their monopoly of possession of common property; that it would stabilize the value of monopolized but unused Natural Resources (Land) at the level of their value for use, thereby abolishing speculation in the future values of Natural Resources; that it would open opportunities for Labor in its broadest and fullest sense to utilize Natural Resources in the production of Wealth (Artificial Objects) from Land (Natural Resources); that it would remove the artificial and lessen the natural barriers to Trade; and that it would bring about conditions of industrial freedom and equality on the basis of which every other needed social or Economic reform could rest securely and function effectively.
As the practical approach to that fundamental Economic reform—that reform of which its principal and distinguished advocate, Henry George, said that it would not accomplish everything in the way of Economic adjustment, but that without it nothing could be accomplished, for without it every Economic improvement instead of raising Wages raises Rent, instead of increasing the compensation of producers of Artificial Objects increases the values of the Natural Resources from which alone Artificial Objects can be produced and on which alone they can be traded, used or enjoyed—as the practical approach to that fundamental Economic reform the Single Tax policy proposes its application gradually. It aims to substitute by stages the Taxation of Land according to its value as a commodity, for the present unrighteous and obstructive taxation of the actual uses of Land.[6]
[6] See “Progress and Poverty,” “Protection or Free Trade,” and “Social Problems,” by Henry George, and “What Is the Single Tax?” by Louis F. Post.
Irrespective, however, of Taxation problems or of private versus common rights, and retaining the long-time technical terms for primary Distribution of Wealth—Wages as to Wealth not allocated to Landownership, and Rent as to Wealth so allocated—we may proceed to our study of Rent for Landownership as the secondary allocation of Wealth in Economic Distribution.