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Land Value Taxation is not a Tax on Land

Henry George: Justice the Object, Taxation the Means

We used to be confronted constantly by the question: "Well, after you have divided the land up, how do you propose to keep it divided?" We don't meet that question now. The Single Tax has, at least, this great merit: it suggests our method; it shows the way we would travel — the simple way of abolishing all taxes, save one tax upon land values. Now, mark: One tax upon land values.

We do not propose a tax upon land, as people who misapprehend us constantly say. We do not propose a tax upon land; we propose a tax upon land values, or what in the terminology of political economy is termed rent; that is to say, the value which attaches to land irrespective of any improvements — in or on it; that value which attaches to land, not by reason of anything that the user or improver of land does — not by reason of any individual exertion of labour, but by reason of the growth and improvement of the community. A tax that will take up what John Stuart Mill called the unearned increment; that is to say, that increment of wealth which comes to the owner of land, not as a user; that comes whether he be a resident or an absentee; whether he be engaged in the active business of life; whether he be an idiot and whether he be a child; that growth of value that we have seen in our own times so astonishingly great in this city; that has made sand lots, lying in the same condition that they were thousands of years ago, worth enormous sums, without anyone putting any exertion of labour or any expenditure of capital upon them.

Now, the distinction between a tax on land and a tax on land values may at first seem an idle one, but it is a most important one. A tax on land that is to say, a tax upon all land — would ultimately become a condition to the use of land; would therefore fall upon labour, would increase prices, and be borne by the general community. But a tax on land values cannot fall on all land, because all land is not of value; it can only fall on valuable land, and on valuable land in proportion to its value; therefore, it can no more become a tax on labour than can a tax upon the value of special privileges of any kind. It can merely take from the individual, not the earnings of the individual, but that premium which, as society grows and improves, attaches to the use of land of superior quality. ... read the whole speech

Henry George: Why The Landowner Cannot Shift The Tax on Land Values (1887)

A VERY common objection to the proposition to concentrate all taxes on Land Values is that the landowner would add the increased tax on the value of his land to the rent that must be paid by his tenants. It is this notion that increased Taxation of Land Values would fall upon the users, not upon the owners of land, that more perhaps than anything else prevents men from seeing the far-reaching and beneficent effects of doing away with the taxes that now fall upon labor or the products of labor, and taking for public use those values that attach to land by reason of the growth and progress of society.

That taxes levied upon Land Values, or, to use the politico-economic term, taxes levied upon rent, do not fall upon the user of land, and cannot be transferred by the landlord to the tenant is conceded by all economists of reputation. However much they may dispute as to other things, there is no dispute upon this point. Whatever flimsy reasons any of them may have deemed it expedient to give why the tax on rent should not be more resorted to, they all admit that the taxation of rent merely diminishes the profits of the landowner, cannot be shifted on the user of land, cannot add to prices, nor check production. ...

 To put the matter in a form in which it can be easily understood, let us take two cases. The one, a country where the available land is all in use, and the competition of tenants has carried rents to a point at which the tenant pays the landlord all he can possibly earn save just enough to barely live. The other, a country where all the available land is not in use and the rent that the landlord can get from the tenant is limited by the terms on which the tenant can get access to unused land. How, in either case, if the tax were imposed upon Land Values (or rent), could the landlord compel the tenant to pay it?

It may be well to call attention to the fact that a tax on Land Values is not a tax on land. They are very different things, and the difference should be noted, because a confusion of thought as to them may lead to the assumption that a tax on Land Values would fall on the user. Barring such effect as it might have on speculation, a tax on land — that is to say, a tax of so much per acre or so much per foot on all land — would fall on the user. For such a tax, falling equally on all land — on the poorest and least advantageously situated as fully as on the richest and best situated land — would become a condition imposed on the use of any land, from which there could be no escape, and thus the owners of rentable land could add it to their rent. Its operation would be analogous to that of a tax on a producible commodity, and it would in effect reduce the supply of land sufficient to pay the tax. But a tax on economic rent or Land Values would not fall on all land. It would fall only on valuable land, and on that in proportion to its value. It would not have to be paid upon the poorest land in use (which always determines rent), and so would not become a condition of use, or restrict the amount of land that could be profitably used. Thus the landowners on whom it fell could not shift it on the users of land. This distinction, as to nature and effects, between a tax on land and a tax on Land Values, it is necessary to bear in mind.

It is also necessary to bear in mind that the value of land is something totally distinct from the value of improvements.  ... read the whole article



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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper