I am a single taxer. I do not believe in taxes upon any kind of industry, or upon anything that comes from industry. I believe the whole burden of taxation -- federal, state, and municipal -- should fall upon monopoly. I believe it should fall upon the mother of all monopolies: upon the earth; upon that value which comes to any piece of land not by reason of the toil of its owner --for all improvements should be exempted -- but from the development of the community; from social growth and social improvement.
That part of New York City known as Manhattan Borough, Manhattan Island, comprises land officially valued at more than three thousand million dollars. The island was bought from the Indians by Dutch traders in the seventeenth century for twenty-four dollars worth of calico and glass beads. Yet now that same piece of land stands on the tax books at three thousand millions. That is the official value of the ground alone. It does not include the value of buildings or other improvements of any kind. Who made the increase in value from twenty-four dollars to three thousand million dollars -- who but all the people? The coming of population did part; the birth of babies did part; the laying out of streets, the making of great public improvements, the general toil, the building this island into a great center of production, of manufacturing and trade, made parts. Social growth and social improvement brought the value to that piece of land. Why should it not be taken into the public treasury for social uses? Why not abolish all other taxes and take by taxation this publicly-made value for the uses of government --municipal, state, and federal?
In Progressive Japan
In progressive Japan, for instance, they have just made a substantial advance in this method of taxation. It has come through the simple process of a better valuation of the land. Japan has great need of revenue.
Where get it? The premier, Marshal Marquis Katsura, found the way. He put through the Diet an act for a new valuation of the lands of the cities. The cities had grown enormously in the last four decades. Individuals had made fortunes out of rising land values. The land tax rate was very small and there had been no revaluation in thirty-five years. His act called for a new valuation. It was made; and, the same tax rate being applied, brought a handsome increase in the revenue.
Taxing Land Values In Germany
In Germany the constant cry has been for more revenue. It has been the problem of practical statesmen, such as faces every legislature in the world. How raise enough revenue? It had long been realized that land was valued in Germany following methods of the Middle Ages. The value was determined by the yield of the land, not its market price. The small farmer's land and the small merchant's land yielded a relatively large produce; therefore it was valued high. The great lord's parks and hunting grounds and the speculator's unimproved tracts about a growing city yielded little or no produce; therefore that land was set at a low valuation. Various of the German states had authorized their municipalities to make new valuations, abandoning this yield-of-the-land process and adopting the market-price method. It worked admirably. It brought in revenue and discouraged the holding of idle lands. The Reichstag followed that same line.
But it is when we turn to the people of our own stock and language-to the people in the antipodes, for instance -- that we see how easily this principle of taxation might be applied to our conditions in this country; for in New Zealand they have many taxes, but they raise one-sixth of their revenue by a tax on land values. In determining this value they consider ground alone --what the political economists call the "economic rent of land." It is that value attaching to a given piece of land exclusive of any value of improvements upon it.
In Australia they have what Henry D. Lloyd called the "Australian tax." It is merely a small ground-value tax. It was resorted to to hit the speculators who went in advance of the pioneers, acquiring the land and holding it against use until they got their price. They would not use it themselves; they would allow others to use it only at the price of being bought out. They penalized production.
Up north of us, in Vancouver, British Columbia, they have applied what is called the "single tax." So far as local revenues are concerned, it is a single tax; but it is not the single tax I am advocating, since it is very small in amount -- not sufficient to check the great land "boom" now in progress there in consequence of the exemption of buildings and all other improvements from taxation.
The city began some years ago by exempting twenty-five per cent of the value of improvements from taxation. That worked so well that fifty per cent were exempted. Then they exempted seventy-five per cent; and for two years, I think it is, they have entirely removed improvements from the tax rolls.
As a result, Vancouver has increased in improvements faster than any city in the world. I was informed by Mayor Taylor during a visit there that the increase in Vancouver's improvements during the last year was eighty-seven per cent. There being no tax on buildings or other things a man might put on his land, industry and thrift are encouraged. The idea of exempting improvements from taxation is spreading all through western Canada. wherever tried, it is working most prosperously. And nowhere, in Canada, Australia, or anywhere else, is there the least disposition to go back to the old taxes.
The British Budget Fight
But it is to Great Britain that we must turn for the most extraordinary instance of advancement along this line. The budget fight, of which the world has heard, was nothing but a fight with landlords over a tax upon land values. The Right Hon. Lloyd George, chancellor of the exchequer, framed the budget and led the fight. His budget contained a slight difference. It was a little bit of an item -- a tax to fall on land values. The tax was divided into two parts: A part was to fall upon the value of land at the time of its sale: the other part was to be an annual charge.
When presenting his budget to Parliament, Lloyd George explained that, preceding the laying of the tax, there would have to be a revaluation of the land of the United Kingdom; that some had not been valued since the time the Stuarts were kings; and that some stood valued as it was in the days when the Norman William crossed the channel and took the crown from the Saxon Harold.
The matter of valuing was not to be done by public officials, as is our common practice. Under the budget it was to be done by the land-lords themselves. They were to make out schedules upon which the tax would be imposed. Upon a valuation so derived he proposed in the first instance to lay a tax of one-fifth of one per cent! There was the other part of the budget proposition. The government proposed to take note of the valuation any owner should make for taxation purposes, and again when the land should be sold at any time afterwards. Should the value at the sale show any increase over the value made for taxation purposes, the government was to treat it as an "unearned increment" -- that is, as unearned by the landlord. Of this "unearned increment" the government was to take twenty per cent.
So here we have the way made clear to us. The great people from whom our institutions have come, from whose loins the body of our people originally sprang, have fought down any proposal to return to protectionism; they have reduced income taxation, and in furious political conflict they have laid the foundations for taxing land monopoly.
What of This Country?
Why should we in this country not go to land values for all our revenues? We get part there; why not all? Abolish the tariff and other taxes on production and increase our present taxation on land values. If the older countries find it good, if the newer parts of the world, Australia and Canada, find it good, why should not this country find it good? Is there in any part of the world a greater, more damaging, more damning kind of land monopoly than in this country? Can you find in any part of the world landlords so mighty? Where will you find, among the peerage of Europe, dukes or earls or counts or viscounts so powerful from their landed possessions as are simple citizens of our country? A steel trust has vast possessions. Those possessions form the very core of its monopoly. An oil trust has great landed possessions -- vast possessions, of which it chooses to use only a small part, shutting all the rest off from use by anybody. You will find the roots of most of the trusts in land monopoly. Why not apply the single tax? All the revenue raised in this country -- federal, state, local -- amounts in round numbers to $2,000,000,000 a year. The ground-rent roll of the country probably approximates four thousand millions, so that there is an ample source of revenue for all needs.
The Anthracite Coal Trust
Take the Anthracite Coal Trust in Pennsylvania. It possesses practically all of the hard-coal land of the state. Nature has put into eastern Pennsylvania a great deposit of hard coal. It has been the business of the anthracite railroad companies, beginning with the Reading Railroad years ago, to get possession of these deposits by purchase, by long lease, and by contract for the carriage of the coal. These railroads acting together have in these ways got control of the hard coal of all eastern Pennsylvania. The purpose has not been to mine coal. It has been, rather, not to mine coal. Their purpose has been to limit the output and to force up the price of coal -- to work only part of their land, a small part, and to let the remainder lie idle, as though it did not exist, and to keep others from the use of it. Why could they do that? There was no tax upon it, no penalty on their doing it. The law does not discourage it; nor does even public opinion. People do not realize that it could and should be stopped; that it could he absolutely destroyed by the simple process of taxation. The law of Pennsylvania requires a tax on the market value of that land. The actual practice is not to assess at the market value, which would be as valuable mineral land. The practice is to assess it as inferior agricultural land. Then, the tax upon that preposterously low valuation is very small, so that these great coal barons go practically without taxation upon their holdings.
But if we were to make an absolute market value and put that upon the tax books, and then increase the tax upon that valuation, you would see whether the Anthracite Trust could hold its lands idle or keep the price of its coal high. Its purpose then would not be to make a scarcity in output in order to put up prices and keep down the wages of labor by limiting opportunities for employment. A heavy tax upon the real market value of these lands would compel their use. Their use would mean more demand for labor. The price of labor would go up in the hard-coal regions. Because of the larger output of coal, the price of coal would go down. Consumers in the United States would get cheaper coal. Laborers in the coal regions would have higher wages, shorter hours, and God knows their little boys would not have to work in the breakers or their little girls go into the silk mills to help get the family subsistence.
The Canons of Taxation
I believe that this single tax would meet better than any other form of taxation the four canons of taxation. It is the most equal tax It falls upon men according to the natural bounties they have in their possession. The man who has little pays little. The man who has much pays much, so that it is the most equal kind of a tax. Then it is certain. It is not intermittent and wavering. It falls regularly, so that all dependent matters can be arranged accordingly.
In the next place, it is direct. It can not be shifted. It stays where it falls. There can be no addition of this tax to the value of the land. The landowners are getting as much as they can get now. They are not waiting for taxation to put up the price of their land. On the contrary, any proposal to put a tax on values immediately causes a discouragement on the part of some owners who have idle lands, and the tendency is for the price of land to go down. This tax can be seen. It is not the kind of a tax that falls and no man knoweth how much or where. There lies the land and there lies the value and there falls the tax. And then it is the most economical tax in its incidence. It lays no burden beyond the revenue received from it. It is cheap in the collection. This tax is not like a tariff tax. That falls upon things coming into the country. To the extent of the tax and the volume of the things so imported is the revenue that goes into the public treasury. But the tax on imports enables an increase in the price of similar commodities made in this country. There is not a cent of revenue from this home production. In the case of the tax on land values, the more the tax the less the speculation, and, therefore, the lower the price of land. So that in application, it is the most economical of all taxes.
But what are we doing to rise to these opportunities? We have instituted a condition by which a few own the country. A few here, a few there, practically control villages, towns, cities, counties, and almost whole states. We have a landlordism greater than anything conceived in Great Britain or Germany or in the Orient. We have the greatest landlords that have ever been seen. Should we apply taxation to land values so as to break down land monopoly and throw open the soil of our country to our fast-growing population, a prosperity will come such as will dumfound mankind and give to America the glory of carrying civilization to a point higher than ever reached in the destinies of the race.