[01] The grounds from which we have drawn
the conclusion that the tax on land values or rent is the best
method of raising public revenues have been admitted expressly
or tacitly by all economists of standing, since the determination
of the nature and law of rent.
[02] Ricardo says (Chap. X): "A tax on
rent would ... fall wholly on landlords, and could not be shifted
to any class of consumers," for it "would leave unaltered the
difference between the produce obtained from the least productive
land in cultivation and that obtained from land of every other
quality.... A tax on rent would not discourage the cultivation
of fresh land, for such land pays no rent and would be untaxed."
[03] McCulloch
(Note XXIV to "Wealth of Nations") declares that "in a practical
point of view taxes on the rent of land are among the most unjust
and impolitic that can be imagined," but he makes this assertion
solely on the ground of his assumption that it is practically
impossible to distinguish in taxation between the sum paid for
the use of the soil and that paid on account of the capital expended
upon it. But, supposing that this separation could be effected,
he admits that the sum paid to landlords for the use of the natural
powers of the soil might be entirely swept away by a tax without
their having it in their power to throw any portion of the burden
upon any one else, and without affecting the price of produce.
[04] John Stuart Mill not only admits all
this, but expressly declares the expediency and justice of a peculiar
tax on rent, asking what right the landlords have to the accession
of riches that comes to them from the general progress of society
without work, risk, or economizing on their part, and although
he expressly disapproves of interfering with their claim to the
present value of land, he proposes to take the whole future increase
as belonging to society by natural right.
[05] Mrs. Fawcett,
in the little compendium of the writings of her husband, entitled
"Political Economy for Beginners," says: "The land tax, whether
small or great in amount, partakes of the nature of a rent paid
by the owner of land to the state. In a great part of India the
land is owned by the government and therefore the land tax is
rent paid direct to the state. The economic perfection of this
system of tenure may be readily perceived."
[06] In fact, that rent should, both on
grounds of expediency and justice, be the peculiar subject of
taxation, is involved in the accepted doctrine of rent, and may
be found in embryo in the works of all economists who have accepted
the law of Ricardo. That these principles have not been pushed
to their necessary conclusions, as I have pushed them, evidently
arises from the indisposition to endanger or offend the enormous
interest involved in private ownership in land, and from the false
theories in regard to wages and the cause of poverty which have
dominated economic thought.
[07] But there has been a school of economists
who plainly perceived, what is clear to the natural perceptions
of men when uninfluenced by habit -- that the revenues of the
common property, land, ought to be appropriated to the common
service. The French Economists of the last century, headed by
Quesnay and Turgot, proposed just what I have proposed, that all
taxation should be abolished save a tax upon the value of land.
As I am acquainted with the doctrines of Quesnay and his disciples
only at second hand through the medium of the English writers,
I am unable to say how far his peculiar ideas as to agriculture
being the only productive avocation, etc., are erroneous apprehensions,
or mere peculiarities of terminology. But of this I am certain
from the proposition in which his theory culminated that he saw
the fundamental relation between land and labor which has since
been lost sight of, and that he arrived at practical truth, though,
it may be, through a course of defectively expressed reasoning.
The causes which leave in the hands of the landlord a "produce
net" were by the Physiocrats no better explained than the suction
of a pump was explained by the assumption that nature abhors a
vacuum, but the fact in its practical relations to social economy
was recognized, and the benefit which would result from the perfect
freedom given to industry and trade by a substitution of a tax
on rent for all the impositions which hamper and distort the application
of labor was doubtless as clearly seen by them as it is by me.
One of the things most to be regretted about the French Revolution
is that it overwhelmed the ideas of the Economists, just as they
were gaining strength among the thinking classes, and were apparently
about to influence fiscal legislation.
[08] Without knowing anything of Quesnay
or his doctrines, I have reached the same practical conclusion
by a route which cannot be disputed, and have based it on grounds
which cannot be questioned by the accepted political economy.
[09] The only objection to the tax on rent
or land values which is to be met with in standard politico-economic
works is one which concedes its advantages -- for it is, that
from the difficulty of separation, we might, in taxing the rent
of land, tax something else. McCulloch,
for instance, declares taxes on the rent of land to be impolitic
and unjust because the return received for the natural and inherent
powers of the soil cannot be clearly distinguished from the return
received from improvements and meliorations, which might thus
be discouraged. Macaulay somewhere says that if the admission
of the attraction of gravitation were inimical to any considerable
pecuniary interest, there would not be wanting arguments against
gravitation -- a truth of which this objection is an illustration.
For admitting that it is impossible invariably to separate the
value of land from the value of improvements, is this necessity
of continuing to tax some improvements any reason why
we should continue to tax all improvements? If it discourage
production to tax values which labor and capital have intimately
combined with that of land, how much greater discouragement is
involved in taxing not only these, but all the clearly distinguishable
values which labor and capital create?
[10] But, as a matter of fact, the value
of land can always be readily distinguished from the value of
improvements. In countries like the United States there is much
valuable land that has never been improved; and in many of the
States the value of the land and the value of improvements are
habitually estimated separately by the assessors, though afterward
reunited under the term real estate. Nor where ground has been
occupied from immemorial times, is there any difficulty in getting
at the value of the bare land, for frequently the land is owned
by one person and the buildings by another, and when a fire occurs
and improvements are destroyed, a clear and definite value remains
in the land. In the oldest country in the world no difficulty
whatever can attend the separation, if all that be attempted is
to separate the value of the clearly distinguishable improvements,
made within a moderate period, from the value of the land, should
they be destroyed. This, manifestly, is all that justice or policy
requires. Absolute accuracy is impossible in any system, and to
attempt to separate all that the human race has done from what
nature originally provided would be as absurd as impracticable.
A swamp drained or a bill terraced by the Romans constitutes now
as much a part of the natural advantages of the British Isles
as though the work had been done by earthquake or glacier. The
fact that after a certain lapse of time the value of such permanent
improvements would be considered as having lapsed into that of
the land, and would be taxed accordingly, could have no deterrent
effect on such improvements, for such works are frequently undertaken
upon leases for years. The fact is, that each generation builds
and improves for itself, and not for the remote future. And the
further fact is, that each generation is heir, not only to the
natural powers of the earth, but to all that remains of the work
of past generations.
[11] An objection of a different kind may
however be made. It may be said that where political power is
diffused, it is highly desirable that taxation should fall not
on one class, such as landowners, but on all; in order that all
who exercise political power may feel a proper interest in economical
government. Taxation and representation, it will be said, cannot
safely be divorced.
[12] But however desirable it may be to
combine with political power the consciousness of public burdens,
the present system certainly does not secure it. Indirect taxes
are largely raised from those who pay little or nothing consciously.
In the United States the class is rapidly growing who not only
feel no interest in taxation, but who have no concern in good
government. In our large cities elections are in great measure
determined not by considerations of public interest, but by such
influences as determined elections in Rome when the masses had
ceased to care for anything but bread and the circus.
[13] The effect of substituting for the
manifold taxes now imposed a single tax on the value of land would
hardly lessen the number of conscious taxpayers, for the division
of land now held on speculation would much increase the number
of landholders. But it would so equalize the distribution of wealth
as to raise even the poorest above that condition of abject poverty
in which public considerations have no weight; while it would
at the same time cut down those overgrown fortunes which raise
their possessors above concern in government. The dangerous classes
politically are the very rich and very poor. It is not the taxes
that he is conscious of paying that gives a man a stake in the
country, an interest in its government; it is the consciousness
of feeling that he is an integral part of the community; that
its prosperity is his prosperity, and its disgrace his shame.
Let but the citizen feel this; let him be surrounded by all the
influences that spring from and cluster round a comfortable home,
and the community may rely upon him, even to limb or to life.
Men do not vote patriotically, any more than they fight patriotically,
because of their payment of taxes. Whatever conduces to the comfortable
and independent material condition of the masses will best foster
public spirit, will make the ultimate governing power more intelligent
and more virtuous.
[14] But it may be asked: If the tax on
land values is so advantageous a mode of raising revenue, how
is it that so many other taxes are resorted to in preference by
all governments?
[15] The answer is obvious: The tax on
land values is the only tax of any importance that does not distribute
itself. It falls upon the owners of land, and there is no way
in which they can shift the burden upon any one else. Hence, a
large and powerful class are directly interested in keeping down
the tax on land values and substituting, as a means for raising
the required revenue, taxes on other things, just as the landowners
of England, two hundred years ago, succeeded in establishing an
excise, which fell on all consumers, for the dues under the feudal
tenures, which fell only on them.
[16] There is, thus, a definite and powerful
interest opposed to the taxation of land values; but to the other
taxes upon which modern governments so largely rely there is no
special opposition. The ingenuity of statesmen has been exercised
in devising schemes of taxation which drain the wages of labor
and the earnings of capital as the vampire bat is said to suck
the lifeblood of its victim. Nearly all of these taxes are ultimately
paid by that indefinable being, the consumer; and he pays them
in a way which does not call his attention to the fact that he
is paying a tax -- pays them in such small amounts and in such
insidious modes that he does not notice it, and is not likely
to take the trouble to remonstrate effectually. Those who pay
the money directly to the tax collector are not only not interested
in opposing a tax which they so easily shift from their own shoulders,
but are very frequently interested in its imposition and maintenance,
as are other powerful interests which profit, or expect to profit,
by the increase of prices which such taxes bring about.
[17] Nearly all of the manifold taxes by
which the people of the United States are now burdened have been
imposed rather with a view to private advantage than to the raising
of revenue, and the great obstacle to the simplification of taxation
is these private interests, whose representatives cluster in the
lobby whenever a reduction of taxation is proposed, to see that
the taxes by which they profit are not reduced. The fastening
of a protective tariff upon the United States has been due to
these influences, and not to the acceptance of absurd theories
of protection upon their own merits. The large revenue which the
civil war rendered necessary was the golden opportunity of these
special interests, and taxes were piled up on every possible thing,
not so much to raise revenue as to enable particular classes to
participate in the advantages of tax-gathering and tax-pocketing.
And, since the war, these interested parties have constituted
the great obstacle to the reduction of taxation; those taxes which
cost the people least having, for this reason, been found easier
to abolish than those taxes which cost the people most. And, thus,
even popular governments, which have for their avowed principle
the securing of the greatest good to the greatest number, are,
in a most important function, used to secure a questionable good
to a small number, at the expense of a great evil to the many.
[18] License taxes are generally favored
by those on whom they are imposed, as they tend to keep others
from entering the business; imposts upon manufactures are frequently
grateful to large manufacturers for similar reasons, as was seen
in the opposition of the distillers to the reduction of the whisky
tax; duties on imports not only tend to give certain producers
special advantages, but accrue to the benefit of importers or
dealers who have large stocks on hand; and so, in the case of
all such taxes, there are particular interests, capable of ready
organization and concerted action, which favor the imposition
of the tax, while, in the case of a tax upon the value of land,
there is a solid and sensitive interest steadily and bitterly
to oppose it.
[19] But if once the truth which I am trying
to make clear is understood by the masses, it is easy to see how
a union of political forces strong enough to carry it into practice
becomes possible.
