Problems in American Democracy

by Thames Williamson

104. DEFINITIONS.—The words "single tax" refer to a policy under which all public revenue is to be raised by a single tax on land value. All other taxes are to be abolished. By land value is meant the value of the land itself, irrespective of all improvements, such as ditches, drains, and buildings. Everything done on the land to increase its value would be counted as an improvement, and would thus be exempt from taxation. This would leave only location value and fertility to be taxed. By location value is meant that value which is due to the situation of the land. For example, land in a wilderness has little or no location value, but if, later, schools, stores, railroads, and other elements of community life develop in that region, the land may take on great value because of its location in the community. The fertility value of land is that value which is due to natural endowment in the way of moisture, climate, and soil elements.

105. HENRY GEORGE AND HIS WORK.—The doctrine of single tax is closely associated with the name of Henry George, an American reformer who died in 1897. His theory was best developed in his book, Progress and Poverty, published in 1879. In this book George points out that in spite of the progress of the world, poverty persists. This is due chiefly, he contends, to the fact that land-owners take advantage of the scarcity of good land to exact unduly high prices for its use. According to George, this monopoly of the gifts of Nature allows landowners to profit from the increase in the community's productiveness, but keeps down the wages of the landless laborers. "Thus all the advantages gained by the march of progress", George writes, "go to the land-owner, and wages do not increase."

George proposed to use the single tax as an engine of social reform, that is to say, to apply it with the primary view of leveling the inequalities of wealth. Value due to improvements was to be exempt from taxation, so that land-owners might not be discouraged from making improvements on their land. On the other hand, it was proposed that the single tax take all of the income due to location and fertility. This, according to George, would "render it impossible for any man to exact from others a price for the privilege of using those bounties of Nature to which all men have an equal right."

106. RESULTS CLAIMED FOR THE SINGLE TAX.—George claimed that the application of the single tax was highly desirable. If, through the medium of this tax, the government were to take from the land-owners all the location and fertility value of their land, two great benefits were to result. First, rich landlords would be deprived of much unearned wealth. Second, the wealth so secured, called the unearned increment, could be used to make life easier for the poor. Ultimately, George went so far as to claim, the single tax would "raise wages, increase the earnings of capital, extirpate pauperism, abolish poverty, give remunerative employment to whoever wishes it, afford free scope to human powers, lessen crimes, elevate morals and taste and intelligence, purify government, and carry civilization to yet nobler heights." The steps by which George arrived at this gratifying conclusion are obscure, and practically every modern economist agrees that too much has been claimed for the theory. Nevertheless, there is much to be said on both sides of this interesting question.

107. ARGUMENTS FOR THE SINGLE TAX.—Single taxers claim that it is just to take from land-owners that land value which is not due to their individual efforts. Fertility, on the one hand, is due originally to the bounty of Nature, and as such belongs to all men alike, rather than to particular individuals. Location value, on the other hand, is due to community growth, and should therefore be taken for the benefit of the community at large.

A very strong argument in favor of the single tax is that land cannot be hidden from the tax assessor, as can stocks, bonds, jewels, and other forms of personal property. A single tax on land would, therefore, be relatively easy to apply.

A tax on the location and fertility value of land would not discourage industry. Location value is largely or entirely due to community growth, rather than to the efforts of the individual land-owner. Fertility, of course, is largely a natural endowment, and as such cannot be destroyed by a tax. The land would continue to have all of its location value, and probably much of its fertility value, whether or not the owner were taxed.

Another argument is that a single tax on land would eliminate taxes on live stock, buildings, and all other forms of property except land, and that this would encourage the development of the forms of property so exempted. This would stimulate business.

It has also been said that the single tax would force into productive use land which is now being held for speculative purposes. It is claimed that many city tracts remain idle because the owners are holding them in the hope of getting a higher price in the future. According to the single taxer, a heavy tax would offset this hope of gain, and would force speculators either to put the land to a productive use, or to sell it to someone who would so employ it.

A last important argument in favor of the single tax is that it might force into productive work certain capable individuals who are now supported in idleness by land rents. Professor Carver has pointed out that if the single tax deprived such persons of their incomes, they would be forced to go to work, and thus the community would gain by an increase in the number of its productive workers.