Land
And Taxation
Mr. Henry George. By abolishing
all other taxes and concentrating taxation upon land values.
F. Then suppose A to be the
proprietor of a thousand acres of land on the Hudson, chiefly farming
land, but at the same time having on it houses, barns, cattle, horses,
carriages, furniture; how is he to be dealt with under your theory?
G. He would be taxed upon the
value of his land, and not upon the value of his improvements and
stock.
F. Whether the value of his
land has been increased by his cultivation or not?
G. The value of land is not
really increased by cultivation. The value that cultivation adds
is a value of improvement, which I would exempt. I would tax the
land at its present value, excluding improvements; so that such
a proprietor would have no more taxes to pay than the proprietors
of one thousand acres of land, equal in capabilities, situation,
etc., that remained in a state of nature.
F. But suppose the proprietor
of such land to have let it lie waste for many years while the fanner
that I speak of has devoted his time and money to increasing the
value of his thousand acres, would you tax them exactly alike?
G. Exactly.
Top of page
F. Let us suppose B, an adjoining
proprietor, has land that has never yielded a blade of grass, or
any other product than weeds; and that A, a farmer, took his in
the same condition when he purchased, and by his own thrift and
expenditure has improved his land, so that now, without buildings,
furniture, or stock, it is worth five times as much as B's thousand
acres; B is taxed at the rate of a dime an acre; would you tax A
at the rate of a dime an acre?
G. I would certainly tax him
no more than B, for by the additional value that A has created he
has added that much to the common stock of wealth, and he ought
to profit by it. The effect of our present system, which taxes a
man for values created by his labour and capital, is to put a fine
upon industry, and repress improvement The more houses, the more
crops, the more buildings in the country, the better for us all,
and we are doing ourselves an injury by imposing taxes upon the
production of such things.
F. How are you to ascertain
the value of land considered as waste land?
G. By its selling price. The
value of land is more easily and certainly ascertained than any
other value. Land lies out of doors, everybody can see it, and in
every neighbourhood a close idea of its value can be had.
F. Take the case of the owner
of a thousand acres in the Adirondack wilderness that have been
denuded of trees, and an adjoining thousand acres that have a fine
growth of timber. How would you value them?
G. Natural timber is a part
of the land; when it has value it adds to the value of the land.
F. The land denuded of timber
would then be taxed less than land that has timber?
G. On general principles it
would, where the value of the land was therefore lessened. But where,
as in the Adirondacks, public policy forbids anything that would
hasten the cutting of timber, natural timber might be considered
an improvement, like planted timber, which should not add to taxable
value.
F. Then suppose a man to have
a thousand acres of wild Umber land, and to have cut off the timber,
and planted the land, and set up buildings, and generally improved
it, would you tax him less than the man that has retained his land
with the timber still on it?
G. I would tax the value of
his land irrespective of the improvements made by him, whether they
consisted in clearing, in ploughing, or in building. In other words,
I would tax that value which is created by the growth of the community,
not that created by individual effort. Land has no value on account
of improvements made upon it, or on account of its natural capabilities.
It is as population increases, and society develops, that land values
appear, and they rise in proportion to the growth of population
and social development For instance, the value of the land upon
which this building stands is now enormously greater than it was
years ago, not because of what its owner has done, but because of
the growth of New York.
F. I am not speaking of New
York City in particular; I am speaking of land generally.
G. The same principle is generally
true. Where a settler takes up a quarter section on a western prairie,
and improves it, his land has no value so long as other land of
the same quality can be had for nothing. The value he creates is
merely the value of improvement. But when population comes, then
arises a value that attaches to the land itself. That is the value
I would tax.
Top of page
F. Suppose the condition of
the surrounding community in the West remained the same; two men
go together and purchase two pieces of land of a thousand acres
each; one leaves his with a valuable growth of Umber, the other
cuts off the Umber, cultivates the land, and makes a well ordered
farm. Would you tax the man that has left the timber upon his land
more than you would tax the other man, provided that the surrounding
country remained the same?
G. I would tax them both upon
the value of the land at the time of taxation. At first, I take
it, the clearing of the land would be a valuable improvement. On
this, as on the value of his other improvements, I would not have
the settler taxed. Thus taxation upon the two would be the same.
In course of time the growth of population might give value to the
uncut timber, which, being included in the value of land, would
make the taxation upon the man that had left his land in a state
of nature heavier than upon the man that had converted his land
into a farm.
F. A man that goes into the
western country and takes up land, paying the government price,
and does nothing to the land; how is he to be taxed?
G. As heavily as the man that
has taken a like amount of land and improved it. Our present system
is unjust and injurious in taxing the improver and letting the mere
proprietor go. Settlers take up land, clear it, build houses, and
cultivate crops, and for thus adding to the general wealth are immediately
punished by taxation upon their improvements. This taxation is escaped
by the man that lets his land lie idle, and, in addition to that,
he is generally taxed less upon the value of his land than are those
who have made their land valuable. All over the country, land in
use is taxed more heavily than unused land. This is wrong. The man
that holds land and neglects to improve it keeps away somebody that
would, and he ought to pay as much for the opportunity he wastes
as the man that improves a like opportunity.
F. Then you would tax the farmer
whose farm is worth $1,000 as heavily as you would tax the adjoining
proprietor, who, with the same quantity of land, has added improvements
worth $100,000; is that your idea?
G. It is. The improvements made
by the capitalist would do no harm to the farmer, and would benefit
the whole community, and I would do nothing to discourage them.
F. In whom would you have the
tide to land vested -- in the State, or in the individuals, as now?
G. I would leave the land titles
as at present.
F. Your theory does not touch
the title to land, nor the mode of transferring the title, nor the
enjoyment of it; but it is a theory confined altogether to the taxing
of it?
G. In form. Its effect, however,
if carried as far as I would like to carry it, would be to make
the community the real owner of land, and the various nominal owners
virtually tenants, paying ground rent in the shape of taxes.
Top of page
F. Before we go to the method
by which you would effect that result, let me ask you this question:
A, a large landlord in New York, owns a hundred houses, each worth
say $25,000 (scattered in different parts of the city); at what
rate of valuation would you tax him?
G. On his houses, nothing. I
would tax him on the value of the lots.
F. As vacant lots?
G. As if each particular lot
were vacant, surrounding improvements remaining the same.
F. If you would have titles
as now, then A, who owns a ten thousand dollar house and lot in
the city, would still continue to be the owner, as he is at present?
G. He would still continue to
be the owner, but as taxes were increased upon land values he would,
while still continuing to enjoy the full ownership of the house,
derive less and less of the pecuniary benefits of the ownership
of the lot, which would go in larger and larger proportions to the
State, until, if the taxation of land values were carried to the
point of appropriating them entirely the State would derive all
those benefits, and, though nominally still the owner, he would
become in reality a tenant with assured possession, so long as he
continued to pay the tax, which might then become in form, as it
would be in essence, a ground rent.
F. Now, suppose A to be the
owner of a city lot and building, valued at $500,000; who would
give a deed to it to B?
G. A would give the deed.
F. Then supposing A to own twenty
lots, with twenty buildings on them, the lots being, as vacant lots,
worth each $1,000, and the buildings being worth $49,000 each; and
B to own twenty lots of the same value, as vacant lots, without
any buildings; would you tax A and B alike?
G. I would.
F. Suppose that B, to buy the
twenty lots, had borrowed the price and mortgaged them for it; would
you have the tax in that case apportioned?
G. I would hold the land for
it. In cases in which it became necessary to consider the relations
of mortgagee and mortgager, I would treat them as joint owners.
F. If A, the owner of a city
lot with a house upon it, should sell it to B, do you suppose that
the price would be graduated by the value of the improvements alone?
G. When the tax upon the land
had reached the point of taking the full annual value, it would.
F. To illustrate: Suppose A
has a city lot, which, as a vacant lot, is worth annually $10,000,
and there is a building upon it worth $100,000, and he sells them
to B; you think the price would be graduated according to the value
of the building; that is to say, $100,000, after the taxation had
reached the annual value of $10,000?
G. Precisely.
Top of page
F. To what purpose do you contemplate
that the money raised by your scheme of taxation should be applied?
G. To the ordinary expenses of government, and such purposes as
the supplying of water, of light, of power, the running of railways,
the maintenance of public parks, libraries, colleges, and kindred
institutions, and such other beneficial objects as may from time
to time suggest themselves; to the care of the sick and needy, the
support of widows and orphans, and, I am inclined to think, to the
payment of a fixed sum to every citizen when he came to a certain
age.
F. Do you contemplate that money
raised by taxation should be expended for the support of the citizen?
G. I see no reason why it should
not be.
F. Would you have him fed and
clothed at the public expense?
G. Not necessarily; but I think
a payment might well be made to the citizen when he came to the
age at which active powers decline that would enable him to feed
and clothe himself for the remainder of his life.
F. Let us come to practical
results. The rate of taxation now in the city of New York, we will
suppose, is 2.30 upon the assessed value. The assessed value is
understood to be about sixty per cent of the real value of property.
Land assessed at $60,000 is really worth $100,000, and being assessed
at 2.30 when valued at $60,000, should be assessed at about 1.40
on the real value; you would increase that amount indefinitely,
if I understand you, up to the annual rental value of the land?
G. I would.
F. Which we will suppose to
be five per cent; is that it?
G. Let us suppose so.
F. Then your scheme contemplates
the raising of five per cent on the true value of all real estate
as vacant land, to be used for the purposes you have mentioned.
Have you thought of the increase in the army of office-holders that
would be required for the collection and disbursement of this enormous
sum of money?
G. I have.
F. What do you say to that?
G. That as to collection, it
would greatly reduce the present army of office-holders. A tax upon
land values can be levied and collected with a much smaller force
than is now required for our multiplicity of taxes; and I am inclined
to think, that, directly and indirectly, the plan I propose would
permit the dismissal of three fifths of the officials needed for
the present purposes of government. This simplification of government
would do very much to purify our politics; and I rely largely upon
the improvement that the change I contemplate would make in social
life, by lessening the intensity of the struggle for wealth, to
permit the growth of such habits of thought and conduct as would
enable us to get for the management of public affairs as much intelligence
and as strict integrity as can now be obtained for the management
of great private affairs.
F. Supposing it to be true that
you would reduce the expense of collection, would you not, for the
disbursement of these vast funds, require a much larger number of
efficient men than are now required?
G. Not necessarily. But, whether
this be so or not, the full scheme I propose can only be attained
gradually. Until, at least, the total amount needed for what are
now considered purely governmental purposes were obtained by taxation
on land values, there would be a large reduction of office-holders,
and no increase.
Top of page
F. How do you propose to divide
the taxation between the State and the municipalities?
G. As taxes are now divided.
As to questions that might arise, there will be time enough to determine
them when the principle has been accepted.
F. Your theory contemplates
the raising of nearly four times as much revenue in the State of
New York as is now raised; how many office- holders would it require
to disburse this enormous sum of money among the various objects
that you have mentioned?
G. My theory does not require
that it should be disbursed among the objects I have mentioned,
but simply that it should be used for public benefit.
F. Do you not think that the
present rate of taxation is more than sufficient for all purposes
of government?
G. Under the state of society
that I believe would ensue, it would be much more than sufficient
for the present purposes of government. We should need far less
for expenses of revenue collection, police, penitentiaries, courts,
almshouses, etc.
F. Then, to bring the matter
down to a point, you propose for the present no change whatever
in anything, except that the amount now raised by all methods of
taxation should be imposed upon real estate considered as vacant?
G. For a beginning, yes.
F. Well, what do you contemplate
as the ending of such a scheme?
G. The taking of the full annual
value of land for the benefit of the whole people. I hold that land
belongs equally to all, that land values arise from the presence
of all, and should be shared among all.
F. And this result you propose
to bring about by a tax upon land values, leaving the title, the
privilege of sale, of rent, of testament, the same as at present?
G. Yes.
F. Your theory appears to be
impracticable. I think that the raising of such an enormous sum
of money, placing it in the coffers of the State, to be disbursed
by the State in the manner you contemplate, would tend to the corruption
of the government beyond all former precedent. The end you contemplate
-- of bettering the condition of the people -- is a worthy one.
I believe that we -- you and I -- who are well to do in the world,
and others in our condition, do neglect and have neglected our duty
to those in a less fortunate condition, and that it is our highest
duty to endeavour to relieve, so far as we can, the burdens of those
who are now suffering from poverty and want. Therefore, far from
deriding or scouting your theory, I examine it with respect and
attention, desirous of getting from it whatever I can that may be
good, while rejecting what I conceive to be erroneous. Taken altogether,
as you have explained it, I do not see that it is a practicable
scheme.
G. But your objections to it
as impracticable only arise at the point, yet a long distance off,
at which the revenues raised from land values would be greater than
those now raised. Is there anything impracticable in substituting
for the present corrupt, demoralising, and repressive methods of
taxation a single tax upon land values?
Top of page
F. I think it possible to concentrate
all taxation upon land, if that should be thought the best method.
Many economists are of opinion that taxes should be raised from
land alone, conceiving that rent is really paid by every consumer,
but they include in land everything placed upon it out of which
rent comes.
G. Then we could go together
for a long while; and when the point was reached at which we would
differ, we might be able to see that a purer government than any
we have yet had might be possible. Certainly here is the gist of
the whole problem. If men are too selfish, too corrupt, to co-operate
for mutual benefit, there must always be poverty and suffering.
F. My theory of government is
that its chief function is to keep the peace between individuals
and allow each to develop his own nature for his own happiness.
I would never raise a dollar from the people except for necessary
purposes of government. I believe that the demoralisation of our
politics comes from the notion that public offices are spoils for
partisans. A large class of men has grown up among us whose living
is obtained from the State -- that is to say, out of the people.
We must get rid of those men, and instead of creating offices we
must lessen their number.
G. I agree with you as to government
in its repressive feature; and in no way could we so lessen the
number of office-holders and take the temptation of private profit
out of public affairs as by raising all public revenues by the tax
upon land values, which, easily assessed and collected, does not
offer opportunities for evasion or add to prices. Though in form
a tax, this would be in reality a rent; not a taking from the people,
but a collecting of their legitimate revenues. The first and most
important function of government is to secure the full and equal
liberty of individuals; but the growing complexity of civilised
life and the growth of great corporations and combinations, before
which the individual is powerless, convince me that government must
undertake more than to keep the peace between man and man -- must
carry on, when it cannot regulate, businesses that involve monopoly,
and in larger and larger degree assume co-operative functions. If
I could see any other means of doing away with the injustice involved
in growing monopolies, of which the railroad is a type, than by
extension of governmental functions, I should not favour that; for
all my earlier thought was in the direction you have indicated-the
position occupied by the democratic party of the last generation.
But I see none. However, if it were to appear that further extension
of the functions of government would involve demoralisation, then
the surplus revenue might be divided per capita. But it seems to
me that there must be in human nature the possibility of a reasonably
pure government, when the ends of that government are felt by all
to be the promotion of the general good.
F. I do not believe in spoliation,
and I conceive that that would be spoliation which would take from
one man his property and give it to another. The scheme of the communists,
as I understand it, appears to me to be not only unsound, but destructive
of society. I do not mean to intimate that you are one of the communists;
on the contrary, I do not believe you are.
Top of page
G. As to the sacredness of property,
I thoroughly agree with you. As you say in your recent article on
industrial co-operation in the "North American Review,"
"To take from one against his will that which he owns and give
it to another, would be a violation of that instinct of justice
which God has implanted in the heart of every human being; a violation,
in short, of the supreme law of the Most High"; and my objection
to the present system is that it does this. I hold that that which
a man produces is rightfully his, and his alone; that it should
not be taken from him for any purpose, even for public uses, so
long as there is any public property that might be employed for
that purpose; and therefore I would exempt from taxation everything
in the nature of capital, personal property, or improvements --
in short, that property which is the result of man's exertion. But
I hold that land is not the rightful property of any individual.
As you say again, "No one can have private property in privilege,"
and if the land belongs, as I hold it does belong, to all the people,
the holding of any part of it is a privilege for which the individual
holder should compensate the general owner according to the pecuniary
value of the privilege. To exact this would not be to despoil any
one of his rightful property, but to put an end to spoliation that
now goes on. Your article in the "Review" shows that you
see the same difficulties I see, and would seek the same end --
the amelioration of the condition of labour, and the formation of
society upon a basis of justice. Does it not seem to you that something
more is required than any such scheme of co-operation as that which
you propose, which at best could be only very limited in its application,
and which is necessarily artificial in its nature?
F. Undoubtedly. The hints that
I have given in the article to which you refer, would affect a certain
number of persons, not by any means the whole body politic. I conceive
that a great deal more is necessary. There should be more sympathy,
more mutual help. I think, as I have said, that we are greatly wanting
in our duty to all the people around us, and I would do everything
in my power to aid them and their children. I do not think that
we have arrived at the true conception of our duty-of the duty of
every American citizen to all other American citizens.
G. I think you are right in
that; but does it not seem as though it were out of the power of
mere sympathy, mere charity, to accomplish any real good? Is it
not evident that there is at the bottom of all social evils an injustice,
and until that injustice is replaced by justice, charity and sympathy
will do their best in vain? The fact that there are among us strong,
willing men unable to find work by which to get an honest living
for their families is a most portentous one. It speaks to us of
an injustice that, if not remedied, must wreck society. It springs,
I believe, from the fact that, while we secure to the citizen equal
political rights, we do not secure to him that natural right more
important still, the equal right to the land on which and from which
he must live. To me it seems clear, as our Declaration of Independence
asserts, that all men are endowed by their Creator with certain
unalienable rights, and that the first of these rights -- that which,
in fact, involves all the rest, that without which none of the others
can be exercised -- is the equal right to land. Here are children
coming into life to-day in New York; are they not endowed with the
right to more than struggle along as they best can in a country
where they can neither eat, sleep, work, nor lie down without buying
the privilege from some of certain human creatures like themselves,
who claim to own, as their private property, this part of the physical
universe, from the earth's centre to the zenith?
F. I was not speaking of charity,
but of sympathy leading to help -- helping one to help himself --
that is the help I mean, and not the charity that humbles him.
G. Then I cordially agree with
you, and I look upon such sympathy as the most powerful agency for
social improvement But sympathy is little better than mockery until
it is willing to do justice, and justice requires that all men shall
be placed upon an equality so far as natural opportunities are concerned.
Top of page
F. How would you secure that
equality? Take the case of a child born to-day in a tenement house,
in one of those rooms that are said to be occupied by several families,
and another child born at the same time in one of the most comfortable
homes in our city. The parents of the first child are wasteful,
intemperate, filthy: the parents of the second are thrifty, temperate,
cleanly; how would you secure equality in opportunities of the first
child with that of the second?
G. Equality in all opportunities
could not be secured; virtuous parents are always an advantage,
vicious parents a disadvantage; but equality of natural opportunities
could be secured in the way I have proposed. And in a civilisation
where the equal rights of all to the bounty of their Creator were
recognised, I do not believe there would be any tenement houses,
and very few, if any, parents such as those of whom you speak. The
vice and crime and degradation that so fester in our great cities
are the effects, rather than the causes, of poverty.
F. The principle announced in
the Declaration of Independence to which you have referred, is one
of the cardinal principles of the American government-the unalienable
right of all men to "life, liberty, and the pursuit of happiness'
That, however, does not mean that all men are equal in opportunities
or in positions. A child born to-day is entitled to the labours
of its parents, or rather to the products of their labour, just
as much as they are entitled to it until he is able to take care
of himself. One of the incentives to labour is to provide for the
children of the labourer. The aim of our American civilisation ought
to be to furnish, so far as can be done rightfully, to every child
born into the world, an equal opportunity with every other child,
to work out his own good. This, however, is the theoretical proposition.
It is impossible in practice to give to every child the same opportunity;
what we should aim at is, to approximate to that state of things:
that is the work of the philanthropist and Christian. In short,
my belief is that the truest statement of political ethics and political
economy is to be found in the doctrines of the Christian religion.
G. In that thoroughly agree
with you. But Christianity that does not assert the natural rights
of man, that has no protest when the earth, which it declares was
created by the Almighty as a dwelling-place for all his children,
is made the exclusive property of some of them, while others are
denied their birthright-seems to me a travesty. A Christian has
something to do as a citizen and lawmaker. We must rest our social
adjustments upon Christian principles if we would have a really
Christian society. But to return to the Declaration of Independence;
the equal right to life, liberty, and the pursuit of happiness,
does it not necessarily involve the equal right to land, without
which neither life, liberty, nor the freedom to pursue happiness
is possible?
Top of page
F. You do not propose to give
to every child a piece of land; you only propose to secure its right,
if I understand you, by taxing land as vacant land in the mode you
propose.
G. That is all, but it is enough.
In the complex civilisation we have now attained it would be impossible
to secure equality by giving to each a separate piece of land, or
to maintain that equality, even if once secured; but by treating
all land as the property of the whole people, we would make the
whole people the landlords, and the individual users the tenants
of all, thus securing to each his equal right.
F. In how long a time, if you
were to have such legislation as you would wish, do you think we
should arrive at the condition that you have mentioned?
G. I think immediately a substantial
equality would be arrived at, such an equality as would do away
with the spectacle of a man unable to find work, and would secure
to all a good and easy living, with a mere modicum of the hard labour
and worriment now undergone by most of us. The great benefit would
not be in the appropriation to public use of the unearned revenues
now going to individuals, but in the opening of opportunities to
labour, and the stimulus that would be given to improvement and
production by the throwing open of unused land and the removal of
taxation that now weighs down productive powers. And with the land
made the property of the whole people, all social progress would
be a progress towards equality. While other values tend to decline
as civilisation progresses, the value of land steadily advances.
Such a great fact bespeaks some creative intent; and what that intent
may be, it seems to me we can see when we reflect that if this value-a
value created not by the individual, but by the whole community-were
appropriated to the common benefit, the progress of society would
constantly tend to make less important the difference between the
strong and the weak, and thus, instead of those monstrous extremes
toward which civilisation is now hastening, bring about conditions
of greater and greater equality.
F. As a conclusion of the whole
matter, if I understand this explanation of your scheme, it is this,
that the State should tax the soil, and the soil only; that in doing
so it should consider the soil as it came from the hands of the
Creator, without anything that man has put upon it; that all other
property -- in short, everything that man has made -- is to be acquired,
enjoyed, and transmitted as at present; that the rate of annual
taxation should equal the rate of annual rental, and that the proceeds
of the tax should be applied, not only to purposes of government,
but to any other purpose that the legislature from time to time
may think desirable, even to dividing them among the people at so
much a head.
G. That is substantially correct.
F. I am glad to hear your explanation,
though I do not agree with you, except as I have expressed myself.
NOTE:
The above “Conversation” has been reprinted from the
1901 edition of The Writings of Henry George, Volume IX
-- Our Land and Land Policy: Speeches, Lectures and Miscellaneous
Writings, Doubleday and McClure Company, New York. A new
edition of this volume was edited by Kenneth C. Wenzer and published
in 1999 by Michigan State University Press, East Lansing, Michigan.
It is available for purchase from the Robert Schalkenbach Foundation
online Bookstore.
|
