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Home -> Merlin Harold Hunter -> Outlines of public finance -> Chapter 16

Outlines of public finance - Chapter 16

1. Preface

2. Chapter 1

3. Chapter 1 continue

4. Chapter 2

5. Chapter 2 continue

6. Chapter 3

7. Chapter 3 continue

8. Chapter 3 continue

9. Chapter 4

10. Chapter 4 continue

11. Chapter 4 continue

12. Chapter 5

13. Chapter 5 continue

14. Chapter 5 continue

15. Chapter 6

16. Chapter 6 continue

17. Chapter 7

18. Chapter 7 continue

19. Chapter 7

20. Chapter 7 continue

21. Chapter 9

22. Chapter 9 continue

23. Chapter 10

24. Chapter 10 continue

25. Chapter 10 continue

26. Chapter 11

27. Chapter 11 continue

28. Chapter 11 continue

29. Chapter 12

30. Chapter 12 continue

31. Chapter 13

32. Chapter 13 continue

33. Chapter 13 continue

34. Chapter 14

35. Chapter 14 continue

36. Chapter 14 continue

37. Chapter 15

38. Chapter 15 continue

39. Chapter 15 continue

40. Chapter 16

41. Chapter 16 continue

42. Chapter 17

43. Chapter 17 continue

44. Chapter 17 continue

45. Chapter 18

46. Chapter 18 continue

47. Chapter 18 continue

48. Chapter 19

49. Chapter 19 continue

50. Chapter 19 continue

51. Chapter 19 continue

52. Chapter 20

53. Chapter 20 continue

54. Chapter 20 continue

55. Chapter 20 continue



1 88. The Proposal for a Single Tax Is Not a New One.
The expression " Single Tax" is familiar to everyone
who has the least interest in fiscal reform. Because of the
extensive propaganda which has developed in recent years,
the single tax movement is often considered as a new pro-
posal and as having distinct application to the taxation
of land values. While the expression, in general, has come
to have such an interpretation, the fact must not be over-
looked that many different proposals have been made
for a single tax, and at various stages in the development
of economic history.

The Impdt Unique. One of the most interesting pro-
posals for a single tax was the impot unique, proposed and
championed in France about the middle of the eighteenth
century by the Physiocratic School, of which Turgot,
Quesnay, and Mirabeau were leaders. This school rea-
soned that the net product (produit net) of agriculture was
the basis of all progress, and in the final analysis the place
where the burden of all taxes rested. The basis of all
industry and commerce raw materials, food supplies,
etc. ultimately came from the land, and hence any tax
burden, wherever placed, must be met finally from the
products of land. A tax upon the products of land was
therefore preferred as a direct and open burden to some
other tax that would be shifted, perhaps by an expensive
process, to the same source.

Much was accomplished in putting the system into
effect until glaring inequalities in the tax burdens became


apparent. Citizens with large incomes from stocks, with
unquestioned ability to meet fiscal burdens, were escaping
entirely, while the poor landowners were able to meet
the tax burden only with the greatest difficulty. The in-
justice became so marked, and the dissatisfaction so evi-
dent, that the impot unique was abandoned.

Single Tax on Incomes. Not all single tax proposals
have been for land taxes. As a means for social as well as
fiscal reform, the Socialists have proposed a single tax to
be levied upon incomes. The primary purpose of the
proposal is to accomplish a redistribution of wealth
through a steeply progressive rate. As Professor Plehn
has pointed out, such a scheme as an exclusive tax system
would fail because (1) it presupposes for its successful
administration a method of distribution of wealth very
different from that which the world now has; (2) it de-
mands a perfection in the technic of administration as
yet absolutely unattainable; (3) it would need, in order
to be administered fairly, more honesty than men have
yet shown in their dealings with the government. 1 The
income tax, no doubt, will come more and more into use
as a part of fiscal systems as income taxes come to be
looked upon with greater favor. The primary reason for
its use, however, will continue to be fiscal rather than

189. Henry George Was Responsible for the Modern
Single Tax Proposal. The active propaganda for the
modern single tax has been in progress for less than half
a century, yet nearly every principle around which the
theory is formulated was propounded years before, in
various countries, by numerous writers. The exposition
of the nature of rent by Ricardo and Mill gave strength
to the ideas of social wealth and unearned increment.
The principle of the natural right to land was developed
by a number of early philosophical writers. Adam Smith
has many references to the nature of rents, and indicates

1 Carl C. Plehn, Introduction to Public Finance, third ed., p. 135.


their peculiar ability to bear the burden of taxes. Other
writers acquiesced, yet none went so far as to attempt to
make any practical application of their teachings.

Progress and Poverty. The first attempt to put these
teachings to practical use was made by Henry George,
in the publication of his well-known work, Progress and
Poverty, in 1879. Nor did he stop with the publication of
the principles in which he so firmly believed, but devoted
the rest of his life to securing their application to actual
economic conditions. For a number of years before the
publication of his work, George had lived in California,
where he had a chance to witness in a few years develop-
ments in land ownership which ordinarily occur only after
decades. The situation was caused by the phenomenal
development which followed the discovery of gold. While
most of the principles enunciated in Progress and Poverty
are not new, George did not know that they had been
stated previously, and they were formulated by him out
of his own thinking and experiences. While much other
literature has been written on the single tax, Progress and
Poverty still holds first rank as exponent of the doctrine.

190. The Single Tax Program Has a Broad Social as
Well as Fiscal Significance. The usual inference from the^
mention of taxes is that something of a fiscal significance
is intended. The fiscal aspects of the single tax are over-
shadowed to some extent by the contemplated social re-
sults of its adoption. A study of the underlying principles
will elucidate this feature of the program. The fiscal part
of the scheme ends by declaring for the abolition of all
taxes except those on land values.

Social Vision of George. The reasoning upon which
George based his conclusion was somewhat as follows:
Land is a gift of nature, and not the product of man's
labor. Man has a right to possess only the products of
his labor, and therefore private ownership in land cannot
be justified. Man is not responsible for differences in
land values, nor for increases in values, consequently


these differences and increases should go to society in the
form of taxes. The abolition of all other taxes naturally
follows, since they are a burden upon the product of labor,
and everyone has a natural right to the product of his
labor. George believed that more revenue would be
secured than under the existing system, which surplus
could be applied to the common benefit. He said:

We could establish public baths, museums, libraries, gardens, lecture
rooms, music and dancing halls, theaters, universities, technical schools,
shooting galleries, playgrounds, gymnasiums, etc. Heat, light, and
motive power, as well as water, might be conducted through our streets
at public expense; our roads be lined with fruit trees; discoverers and
inventors rewarded, scientific investigations supported; and in a
thousand ways the public revenues made to foster efforts for the pub-
lic benefit. 1

Platform of Single Tax League. That the advocates of
the single tax claim that it is much more than a mere
revenue system in fact, that it approaches a panacea
for all social miseries is evidenced by the platform
adopted by the National Conference of the Single Tax
League of 1890. The part which sets forth the anticipated
results of its adoption reads:

It would make the holding of land unprofitable to the mere owner,
and profitable only to the user. It would thus make it impossible for
speculators and monopolists to hold natural opportunities unused or
only half used, and would throw open to labor the illimitable field of
employment which the earth offers to man. It would thus solve the
labor problem, do away with involuntary poverty, raise wages in all
occupations to the full earnings of labor, make overproduction impos-
sible until all human wants are satisfied, render labor-saving inventions
a blessing to all, and cause such an enormous production and such an
equitable distribution of wealth as would give to all comfort, leisure,
and participation in the advantages of an advancing civilization.

Quasi Single Taxers. If the principles upon which the
single tax is based were recognized, generally, as sound,
and if it were believed that such an economic Utopia as

1 Progress and Poverty, bk. ix, chap. iv.


the one pictured in the above paragraph would result from
its adoption, a much wider use of the scheme would be
found, doubtless, than exists at present, and a much
larger number of ardent disciples would be seeking its
universal adoption. As it is, many of the present followers
have ceased to place emphasis upon the "Single" of the
scheme, and are content to secure the adoption of fiscal
principles which partake of the nature of the George pro-
posal as a part of a tax system. These might be called
quasi single taxers, and their proposals have been termed
by some as the single tax limited. Because the single
tax has been so extensively advocated, every citizen
should know something of the proposal, the tactics of
propaganda, and some of the economic effects of its adop-
tion. A brief study of some of the outstanding features
of the single tax principle will be undertaken in the fol-
lowing pages.

191. The Principle of Natural Rights Is Not Generally
Indorsed. That land is a gift of nature is accepted as a
matter of course; but the principle of natural rights, as
propounded by Henry George, has not been indorsed to
any great extent. It is for philosophers to decide when a
natural right exists, whether there ever was or will be such
a thing, or whether the same natural right will continue
to exist throughout all tune. As far as the single tax
proposal is concerned, an individual has a natural property
right to the fruits of his labor, but not to the gifts of
nature. The conclusion follows that property rights may
be had in the improvements on land, but not hi the land

A little consideration will show such a distinction to be
one without a difference or, at best, only a difference of
degree. Here is a farm, a gift of nature, and on it a
dwelling house, a product of man's labor. But when a
little closer consideration is given to the house, nature
appears to have played a considerable part in making
provision for it. The clay in the brick was taken from



the hillside; the oak in the floors was taken from the
forest; the glass in the windows was accumulated from
various places. The entire building was a gift of nature-
man has no more power to create houses than to create
land. He simply changed the materials of nature to make
them more serviceable, the difference being that he
exerted more effort on some than on others.

Man also changes the nature of land, in a different way,
perhaps, to make it more useful. He plows under vege-
tation to make it more fertile; he plants the corn in rows
around the hillside to prevent erosion; he surrounds the
land with a fence to prevent destruction from the tres-
pass of animals. All this is work upon the land to make
it more useful, just as work was done upon the materials
in the house to make them more serviceable. Either
private ownership is justified in land or it is justified in
no material thing, for every material thing is based upon
some gift of nature.

192. Social Values and Unearned Increments Are Not
Confined to Land. It is quite true that man is not re-
sponsible for many of the differences in land values.
Nature is responsible for differences of fertility and loca-
tion, and society has been responsible, no doubt, for many
increases in value. The present owners of these better
farms or sites frequently have paid the capitalized rental
for the privilege of such ownership, and evidently would
take unkindly to the following proposition of Mr. George:

I do not propose to purchase or to confiscate private property in
land. The first would be unjust; the second, needless. Let the indi-
viduals who now hold it still retain, if they want to, possession of
what they are pleased to call their land. Let them continue to call it
their land. Let them buy and sell, and bequeath and devise it. We
may safely leave them the shell if we take the kernel. It is not neces-
sary to confiscate land; it is only necessary to confiscate rent. 1

Not All Land Values Unearned. The institution of
private property has been too firmly established, and the

1 Progress and Poverty, bk. viii, chap. ii.


principles of transfer and priority too deeply rooted, for
landowners to submit passively to any such proposition
as the above. A substitute proposal, which will be dis-
cussed later, that all future social values be taken in taxes,
has been made by some quasi disciples of Henry George.
It is interesting to speculate, moreover, as to what would
have been the nature of the development in the United
States had the single tax principles been active. The
government was interested in developing the West, and
either gave the lands to settlers or sold them at a few
dollars per acre. In successive years, transportation lines
would be built, cities would develop, and the lands would
increase in value, due to factors other than the efforts of
the owner. Under the single tax regime this increased
value would go to the state. Had this been the situation
there would have been no Western pioneer, and develop-
ment would have come only as the pressure of population
forced expansion. The expected increase in land values
was but the remuneration for the hardships of pioneering.
Likewise, expected increases in land values are often
figured as essential parts of industrial enterprises. The
establishment of such cities as Gary and Pullman are
examples of this.

Society Responsible for Other Values. If socially created
land values should be turned over to the state, then other
socially created values, if they be found to exist, should
be treated in a similar manner. A little consideration
will reveal the fact that values of every description are
more or less the product of society. Industrial stocks, for
example, are valuable because society demands the prod-
ucts of industry. One individual invests $10,000 in land,
and another $10,000 in sugar stock. Society increases its
demand for the product of the land and it becomes worth
$15,000 an unearned increment of $5,000. The demand
likewise increases for sugar, and this stock becomes worth
$15,000. One $5,000 is just as much an unearned incre-
ment as the other.


A janitor in the Woolworth Building receives $75 per
month. He receives it because the desires of society have
demanded such a building, and his job therefore is a social
product. The demand for brick may so increase, or the
clay become so scarce, that the value of the house on the
farm will increase materially over its initial one. This is
a social product as much as the increased land value. So
it might be shown that the unearned increment element is
coextensive with industry, and that society has as just a
claim upon it in one branch as in any other.

Unearned Decrement. An increment, moreover, does
not always exist, but the change in value often takes the
form of a decrement. If a socially created value should
go to society, then the converse should be true, and so-
cially created losses should be given by society to the loser.
Little has been said of this aspect, yet when the broad
influence of society upon values is considered, its impor-
tance becomes one of no little magnitude. Farm values
have soared because of the high prices society has been
willing to pay for farm products, yet society may readjust
the monetary system, lower prices, and destroy values.
Legislation may repress an industry, and by so doing
destroy the value of its stocks. A new transportation
system may develop, thereby lowering the former value
of sites. The abandoned New England farm is a monu-
ment to a socially created loss. Such social losses are
continually being created just as much as social values,
and are simply opposite aspects of the same phenomenon.

193. The Social Claims for the Single Tax Have Not
Been Proved. The contention that the adoption of the
single tax would bring about a social millennium is opti-
mistic in the extreme. The basis for the optimism, how-
ever, is difficult to discover. One claim for its adoption is
the relief which will be afforded to urban congestion. It
is in the large cities where the agitation for the single tax
is most aggressive. It is here, because a large landless
class exists, that the land appears scarce. The adoption


of the proposed measure, however, would neither increase
the amount of land nor decrease numbers. It could only
hope to force into use lands which are now idle, which in
the congested districts of our large cities are so small in
amount as to be negligible. The claim cannot be made
that there is a scarcity of land in fact, there is abundance
of land in the outskirts of the cities, or in the undeveloped
West. The people in the cities, however, do not want
this land they prefer to stay in the congested dis-
tricts, endure the hardships, and pay the landlord, rather
than accept the responsibilities of freedom where land
may be had. It is largely a case of preference of the in-
dividual, and the confiscation of land values would not
change the preference.

Low rents, high wages, increased production, and other
such desirable conditions depend upon factors which have
a far greater significance than the taking of land values
by the state. It is contended that the exemption of build-
ings from tax will cause a large increase in construction,
and rents will automatically fall. A capital fund must
first be secured, however, and this is not idly waiting for
buildings to be untaxed. Neither is there a fund waiting
to go into increased production or higher wages. When
the fundamental principles of rents and production are
considered, it is difficult to see how the single tax program
could materially affect social conditions.

194. The Use of the Single Tax Would Reveal Undesir-
able Features and Difficulties. The adoption of the single
tax proposal in toto would mean the abolition of all other
forms of taxes, whether they be primarily sumptuary or
for revenue purposes. It would mean the abolition of
customs duties and excise taxes, as well as the numerous
regulatory taxes and licenses imposed under the police
power. By securing all revenues from land values, and
by taking the whole of these, elasticity, that necessary
element to every effective revenue system, would be
totally destroyed. The city, the commonwealth, and the


nation must rely year after year upon the rental value of
land, whether it produce a surplus or a deficit. There
would be no way of increasing the tax rate or of taxing
new bases in order to increase the income to meet an
emergency such as a war.

Effect on Public Activities. The nature of the state's
business under the proposed scheme would be materially
changed. Its expenditures would now have to be gov-
erned by its income, rather than its income be governed
by its expenditures. This income, too, would be subject
to wide and unforeseen fluctuations, so that officials could
map out no definite program. In years of prosperity the
income would be large, while it might be seriously reduced
during periods of industrial depression. The support of
all public enterprises, furthermore, would be coming from
a very small percentage of the public those who held
title to land. It has always been considered an unwise
political expedient to give one class of individuals the
power to vote the expenditure of funds which another
class has contributed. Under such circumstances little
consideration is given to the relative importance of public
needs, while waste and extravagance are fostered. The
plan, moreover, seeks to overthrow the established prin-
ciple of ability to pay as the just basis for taxes and reverts
to the inadequate basis of benefits received.

Administrative Difficulties. The problem of adminis-
tration appears to be practically insurmountable. It is
the problem of separating the value of the bare land from
the value of the improvements on, or in, that land. The
problem applies both to urban and rural communities,
but in a somewhat different way. Most city improve-
ments are on the land in the form of buildings; improve-
ments in the country consist not only of buildings on the
land, but of labor and capital invested irrevocably in the

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