The Case for the Single Tax having been stated and the Case against the Single Tax, there is reason perhaps for stating the Case of the Single Tax. For notwithstanding these years of disputation it is not quite clear that we are all talking about the same thing when we talk about the Single Tax. Indeed, the term seems sometimes a hardly less slippery one than Socialism. Thus, in the December Atlantic, Mr. Garrison defines the Single Tax as a method of raising money for the necessary expenses of government, and then proceeds to the advocacy of a project not fiscal in its primary purpose but social. It is not a method of raising money related in amount to the necessities of government, that he advocates, but a method of abolishing private property in land, a method whose application would indeed raise money available for the expenses of government, but incidentally, and in amount related to the value of the private property to be abolished, and quite unrelated to the necessities of government.
The abolition of private property in land is one thing. Governmental appropriation of the unearned increments in land-values is another. A third is the taxation of land-values. And there seems not infrequently to be failure to discriminate the one from the other, and the third from the first two. All three were involved in Henry George’s propaganda. The end he sought was the abolition of private property in land. Governmental appropriation of the unearned increment, appropriation in the name of taxation, was the means. He attracted to his standard—
1. Those who, with himself, favored a tax that would take the whole rental value of land and thus abolish private property therein.
2. Those who, not favoring the abolition of private property in land, yet believed with John Stuart Mill that the state should appropriate the future increment in land-values which is aid to be unearned. And
3. Those who, favoring neither the abolition nor the appropriation, yet believed that land independent of improvements thereon or therein should bear a larger burden of taxation.
And thus three things have been confounded, and the term Single-Taxers has come to include those who believe in any of the three.
Toward the first of these, the abolition of private property in land, this world of ours that takes little stock in doctrines of natural rights has made no appreciable progress since George’s time. No advocate of commanding influence has appeared since the desertion of Herbert Spencer, and the interest in the subject remains academic rather than political.
Such progress as has been made under the name of the Single Tax has been toward the second of the three things confounded, — the governmental appropriation of the unearned increment in land-values, a social project for ameliorating the evils of, without abolishing, private property in land; and toward the third, — the increased taxation of land-values, a fiscal project for raising money for the necessary expenses of government.
It was the second that engaged Mill and his Land-Tenure-Reform Association. They sought to ameliorate the evils of private ownership through ‘the interception,’ to use the language of the association’s platform, ‘by taxation of the future unearned increase of the rent of land (so far as the same can be ascertained), or a great part of that increase.’ By the rent of land they meant, of course, economic rent, that rent which is a remuneration for the use of what Ricardo called ‘the original and indestructible powers of the soil.’ They proposed to take the unearned increment by using the taxing machinery. It might be taken otherwise. They proposed to distribute the unearned increment by using it, in lieu of taxes, for the expenses of government. It might be distributed otherwise. These two matters of method should not be allowed to confuse the consideration of the merits of the appropriation of unearned increment.
Confusion has arisen, too, from overlooking the fact that unearned increment does not mean an increment in value unearned by any one. It means an increment not attributable to the owner or his predecessors in the title. That there is in this sense an unearned increment in land-values is not questioned. Indeed, any increment in land-value will be found, as George says, to have ‘social growth as its basis. … A man may work or spend on land to any amount; but no matter how valuable his improvements, the land itself acquires no value except as the community around it grows and improves, or access to larger populations is opened.’ Would it not be right to appropriate this increment to the use of those who have earned it? Would it not be right to appropriate the increment in the Duke of Bedford’s Covent Garden estate, — that estate which was worth some thirty dollars a year when it came to his family and was worth one hundred and twenty thousand dollars a year when, afraid it is said of what Lloyd George might do, he recently sold it for fifteen millions? Undoubtedly, the appropriation of all increments to the use of those who have earned them would be rightful. But many things are rightful enough that are neither practicable nor expedient. And the world seems quite to have made up its mind that the comprehensive and theoretically correct appropriation and distribution of unearned increments is one of these.
It is impracticable because the comprehensive and theoretically correct appropriation of unearned increments would have to be regardful not only of land-values but also of all the other monopolies in which unearned increments are likely to show themselves; and, as others have pointed out, would have to be regardful of unearned decrements as well as of unearned increments.
And the distribution—what of that? Who have earned and are accordingly entitled to these increments which the owners have not earned? What share has the parasite earned and what share the community-builder? To use the appropriated increments in lieu of taxes is not of course to answer the question.
But, while this work-a-day world is not showing much interest in the appropriation and distribution of unearned increments in anything like a comprehensive and theoretically correct way, it is, in its blundering fashion, showing interest in some compromises on the subject. It was with reference to these that I said above that progress had been made, under the name of the Single Tax, toward governmental appropriation of the unearned increment.
The compromises referred to are the British and German increment taxes mentioned by Mr. Garrison, and described in the 1913 edition of Professor Seligman’s Essays in Taxation. The British increment tax is one of the four land-taxes of 1909. A fifth of the increment in the site-value, above a non-taxable increment of ten per centum, is taken by the government when the land changes hands or, in the case of land not changing hands, every fifteen years. This legislation followed interesting increment taxes in the German Colony of Kiauchau in 1898, and in a great many of the German municipalities. The latter were supplanted in 1911 by an imperial increment tax. This tax is levied on the difference between the selling price of real estate and the purchase price plus the cost of improvements. The rate varies in accordance with the ratio of the increment to the purchase price: the minimum being a tenth of increments of not more than ten per centum, and the maximum three tenths of increments of two hundred and ninety per centum and more.
About these increment taxes of the British and the Germans two facts are to be noted: there is no purpose to abolish private property in land, and there is no appropriation beyond a portion of the future increment. In view of these facts one may question the justification for Mr. Garrison’s statement that the Lloyd George budget recognizes the principle of the Single Tax. Neither the increment tax nor any other part of that budget is a recognition of the principle that land should not be held privately, and that is the principle of the Single Tax as advocated by Henry George. Rather, as Professor Seligman has said, the Lloyd George budget is not to be regarded as a triumph for the Single-Taxers. It accepts indeed a small part of the single-tax reasoning, but it refuses to be bound by its narrow limitations.’
What the British increment tax does recognize is the rightfulness of the appropriation of future unearned increments, and both the practicability and the expediency of the appropriation in a limited way, to the end that the evils of private property in land be ameliorated. And to bringing about the use of the taxing machinery for the accomplishment of the social project, the Single-Taxers have contributed largely.
They have contributed largely also to bringing about the third of the three things confounded, the fiscal project of increasing the taxation of land-values. They have done this in two ways: by helping to overcome the prejudices and inertia that have supported our all but universal general-property tax, and by helping to establish he principle on which the increased taxation of land-values rests.
The general-property tax, of which it has been said that ‘a cruder instrumentality of taxation has rarely been devised,’ has been under attack in this country ever since the notable report made in 1871 by David A. Wells as New York Tax Commissioner. During that period there has come to be quite general acceptance by authorities in fiscal science of the ability criterion: acceptance, that is, of the principle that taxes should be levied proportionately to the ability to pay them. Tested by this criterion, the general-property tax is condemned both as to its theory and as to its administration. It is condemned because its theory takes no account of earning ability which in turn obviously measures tax-paying ability. Its theory takes no account of the industrial captain’s earning ability, but takes full account of the teamster’s mule. It is condemned because its administration ‘sins against the cardinal rules of uniformity and universality,’ and because it stimulates the iniquities of tax-dodging.
With the abandonment or modification of this discredited general-property tax, that is, of its personality and land-improvement elements, there should undoubtedly come, as the Single-Taxers urge, increased taxation of land-values. Such taxation rests on the principle that a tax on the monopoly element of the tax-payer’s income, that part of his income which has been paid to him for a monopoly appropriated by him, is to be preferred to a tax on the competitive element of his income. A tax on the monopoly element cannot be shifted; its incidence can be reckoned on; whereas the final incidence of taxes on the competitive element, and the total of their injustice, cannot be reckoned on. Furthermore, a tax on the monopoly element costs the community less, in that it does not interfere with the free action of capital and the increase of the general fund from which taxes must be paid and the community maintained.
In so far as this principle of taxing the monopoly element has been accepted, progress has been made toward the increased taxation of land-values because of all monopolies the most important is land. But the railroads, the street railways, the water-works, the ability to labor more effectively than wage-earners who gain a bare subsistence—these too are monopolies. And the single tax toward which the Single-Taxers have been helping is really a single tax not on monopoly, of which, as I have said, land is the most important part.
It is under this third head, the taxation of land-values, not under the head either of the abolition of private property in land or of the appropriation of unearned increment, that the taxes cited by Mr. Garrison as evidence of single-tax progress in Australia, Western Canada, Pennsylvania, should be assembled. They are evidence of the progress, not of Henry George’s social project or of Mill’s, but of a movement toward better fiscal legislation, toward taxation more regardful of social considerations; and in this movement the Single-Taxers, so-called, — but in large measure inappropriately so-called, — are helping importantly.
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