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Improvements in Land
Not every improvement to land is a building or a
structure. The labor involved in clearing a site of
trees and rocks to make it possible to farm it
constitutes an improvement, and that improvement is
rightly the property of the landholder in the same way
that a building is. He may sell that product of his
labor to the next holder, and neither of them should be
taxed on it. Similarly, one who takes sterile
barren land and transforms it into something fertile,
through his own labor and his legitimate share of the
planet's natural resources, is entitled to consider
private the value he has added, at least for some period
of time. This might have some useful applications when we
consider brownfields.
But the natural fertility of a plot of land is
different. That is our common property.
I live in a 75-year-old house on a hillside. When it
was built, it was sited on a property that might have
been 6 or 8 acres, and the architect doubtless chose what
he felt was the best location on the property available
to him. During construction, some grading was done to
create a level building site. Initially, that improvement
of the site would have been treated as similar to the
building. As time goes on, and as more sites around it
were developed, and perhaps as one owner gives way to
another, that "improvement" to the land becomes part of
the site. Perhaps the same thing could be said of the
ubiquitous stone walls and the clearing of the stumps
that gave way to lawn.
H.G. Brown: Significant Paragraphs
from Henry George's Progress &
Poverty: Chapter 9. Alleged Difficulty of
Distinguishing Land From Improvements (in the
unabridged P&P:
Part VIII — Application of the Remedy: Chapter 4
— Indorsements and objections
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?
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 hill
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. ...
read the
whole chapter
The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of
Meath (Ireland): Back to
the Land (1881)
Individuals May Rightfully Collect
Payment for Improvements in Land.
The tracts of country known in England as the
Bedford Level, and in Flanders as the Pays des waes, were, not so very long ago,
as sterile, as barren, and even more useless than the
bogs of our own country at this moment. By an enormous
expenditure, however, of capital and labour they have
been drained, reclaimed and fertilised, till they have at
last become among the most productive lands in Europe.
That productiveness is entirely the result of human
labour and industry, for nature did hardly anything for
these lands.
If the question, then, was asked: Who
has a right to charge or demand a rent for the use of the
soil of these lands for agricultural or industrial uses?
the answer undoubtedly would be, the person who by his
labour and capital had created all their productiveness,
who had imparted to them all the value they possess. In
charging, therefore, a rent for the use of what he had
produced he is only demanding a most just and equitable
return for his capital -- a fair and honest remuneration
for his labour. His right to demand this could not possibly
be disputed.
Now, the artificial productiveness of
these tracts of country hardly equals, and certainly does
not surpass, the natural fertility of large districts of
rich, luxuriant, arable and pasture lands in the County of
Meath, in this Diocese. If it were asked, then, who has a
right to charge a rent for the use of the soil of these
highly favoured districts in Meath for agricultural or
industrial purposes, the answer should be that if human
industry or labour had imparted to these lands a real and
substantial amount of artificial productiveness, by the
cultivation and permanent improvement of the soil, then the
person who had created that productiveness had a perfect
right to demand a rent for the use of it.
Exaction by Individuals of Rent for
Land is Wanton Injustice.
But who, it may be further asked, has a right to
demand a rent for the natural fertility of these lands
"which no man made," and which, in fact, is not the
result of human industry and labour at all? The answer
here, also, should be, he who had produced it.
But who produced it? God. If God,
then, demanded a rent for the use of these lands, He would
undoubtedly be entitled to it. But God does not sell His
gifts or charge a rent for the use of anything He has
produced. He does not sell; but He gives or bestows, and in
bestowing His gifts He shows no respect of
persons.
If, then, all God's creatures are in
a condition of perfect equality relatively to this gift of
the land, no one can have an exceptional right to claim
more than a fair share of what was intended equally for
all, and what is, indeed, directly or indirectly, a
necessary of life for each of them.
When all, therefore, relatively to
this gift, are perfectly equal, and nobody has any real
claim to it; when all equally need the liberality and
generosity of God in it, and no one can afford, or is
willing, to part with his share in it -- to alienate it
from any or all of them would be to do them a wanton
injustice and grievous wrong, and would be a direct
disappointment to the intentions of the Donor
besides.
The Whole People the True Owners of the
Land.
When, therefore, a privileged
class arrogantly claims a right of private property in
the land of a country, that claim is simply
unintelligible, except in the broad principle that the
land of a country is not a free gift at all, but solely a
family inheritance; that it is not a free gift which God
has bestowed on His creatures, but an inheritance which
he has left to His children; that they, therefore, being
God's eldest sons, inherit this property by right of
succession; that the rest of the world have no share or
claim to it, on the ground that origin is tainted with
the stain of illegitimacy. The world, however,
will hardly submit to this shameful imputation of its own
degradation, especially when it is not sustained by even
a shadow of reason.
I infer, therefore, that no
individual or class of individuals can hold a right of
private property in the land of a country; that the people
of that country, in their public corporate capacity, are,
and always must be, the real owners of the land of their
country -- holding an indisputable title to it, in the fact
that they received it as a free gift from its Creator, and
as a necessary means for preserving and enjoying the life
He has bestowed upon them. ...
Public and Private
Interests.
An usufructuary or farmer
who labours might and main for his own self-interests,
labours with the same amount of earnestness and zeal for
the interests of the public as well. But it is the
consideration of the public interests that will determine
the continuity of his occupancy. The continuity of his
occupancy entirely depends on the continuity of its real,
practical effectiveness for the advancement of the
interests of the public. The moment it ceases to be useful
and beneficial to the public welfare, that moment it ceases
to have a right to exist any longer. If individuals could
have a right of Private Property in Land, that right would
not be fettered by these responsibilities; in fact, it
would not be liable to any responsibility at
all.
The ownership of reclaimed tracts
like the Bedford Level approximates closely, without,
however, fully realising, to a right of private property in
land. The Bedford Level owner is not responsible to society
for the management of that property, nor is he bound to
have any regard to its interests in the use he wishes to
make of it. Being master of his own free actions, he was
not bound to create that property for the benefit of
society, but for his own, and he may now make whatever use
he pleases of it. If through mismanagement it produces less
than it is capable of yielding, that is his own affair
altogether. If he allowed it to return to its original
sterility society might regret that it suffered a great
bas, but it could not complain that he did it an injustice
or a wrong.
The distinction, therefore, between
the two rights of property in land is essential and
fundamental, and it is absolutely necessary to apprehend it
clearly and to bear it distinctly in mind.
...
Land Monopoly Usurps God's Gifts to
All.
Thus, on the highest and most unquestionable
authority, are we forced to conclude that, owing to the
monopoly which the landlords have usurped in the land of
the nation, they sell out the "use of the original and
indestructible powers of the soil"; of "the natural and
inherent powers of the soil"; of "the natural powers of
the soil"; that is to say, they sell the use of God's
gifts like so many articles of private property, and as
if they were purely the result of their own toil and
labour.
If the "Bedford Level," and the rich
tract of land in Meath with which I have compared it, were
to be leased out to tenant farmers for a given term of
years, the one would fetch quite as high a rent as the
other. The farmer would not concern himself much in
inquiring into the source from which the fertility of the
land was derived; all his solicitude and inquiries would be
directed to the existence of the fact that the fertility
was there, and which of them possessed it in the higher
degree. The rent which the owner of the "Bedford Level"
would receive for the use of his land would be the just and
equitable remuneration to which he was entitled for the
expenditure of his labour and capital, while the Meath
proprietor would receive as high a reward for having done
nothing at all. Only that his income is so woefully wanting
in justice, the condition of the Meath proprietor would
certainly be enviable.
Read the whole letter
HG, Science of Political Economy, Book IV? Chap
VI? Bedford Level
Henry George: The Condition of Labor
— An Open Letter to Pope Leo XIII in response to
Rerum Novarum (1891)
Your use, in so many passages of your Encyclical, of
the inclusive term “property” or
“private” property, of which in morals
nothing can be either affirmed or denied, makes your
meaning, if we take isolated sentences, in many places
ambiguous. But reading it as a whole, there can be no
doubt of your intention that private property in land
shall be understood when you speak merely of private
property. With this interpretation, I find that the
reasons you urge for private property in land are eight.
Let us consider them in order of presentation. You
urge:
1. That what is bought with rightful property is
rightful property. (RN, paragraph 5) ...
2. That private property in land proceeds from
man’s gift of reason. (RN, paragraphs 6-7.)
...
3. That private property in land deprives no one of the
use of land. (RN, paragraph 8.) ...
4. That Industry expended on land gives ownership in the
land itself. (RN, paragraphs 9-10.) ...
5. That private property in land has the support of the
common opinion of mankind, and has conduced to peace and
tranquillity, and that it is sanctioned by Divine Law.
(RN, paragraph 11.) ...
6. That fathers should provide for their children and
that private property in land is necessary to enable them
to do so. (RN, paragraphs 14-17.) ...
7. That the private ownership of land stimulates
industry, increases wealth, and attaches men to the soil
and to their country. (RN, paragraph 51.) ...
8. That the right to possess private property in land is
from nature, not from man; that the state has no right to
abolish it, and that to take the value of landownership
in taxation would be unjust and cruel to the private
owner. (RN, paragraph 51.) ...
4. That Industry expended on land gives
ownership in the land itself. (9-10.)
Your Holiness next contends that industry expended on
land gives a right to ownership of the land, and that the
improvement of land creates benefits indistinguishable
and inseparable from the land itself.
This contention, if valid, could only justify the
ownership of land by those who expend industry on it. It
would not justify private property in land as it exists.
On the contrary, it would justify a gigantic no-rent
declaration that would take land from those who now
legally own it, the landlords, and turn it over to the
tenants and laborers. And if it also be that improvements
cannot be distinguished and separated from the land
itself, how could the landlords claim consideration even
for improvements they had made?
But your Holiness cannot mean what your words imply.
What you really mean, I take it, is that the original
justification and title of landownership is in the
expenditure of labor on it. But neither can this justify
private property in land as it exists. For is it not all
but universally true that existing land titles do not
come from use, but from force or fraud?
Take Italy! Is it not true that the greater part of
the land of Italy is held by those who so far from ever
having expended industry on it have been mere
appropriators of the industry of those who have? Is this
not also true of Great Britain and of other countries?
Even in the United States, where the forces of
concentration have not yet had time fully to operate and
there has been some attempt to give land to users, it is
probably true today that the greater part of the land is
held by those who neither use it nor propose to use it
themselves, but merely hold it to compel others to pay
them for permission to use it.
And if industry give ownership to land what are the
limits of this ownership? If a man may acquire the
ownership of several square miles of land by grazing
sheep on it, does this give to him and his heirs the
ownership of the same land when it is found to contain
rich mines, or when by the growth of population and the
progress of society it is needed for farming, for
gardening, for the close occupation of a great city? Is
it on the rights given by the industry of those who first
used it for grazing cows or growing potatoes that you
would found the title to the land now covered by the city
of New York and having a value of thousands of millions
of dollars?
But your contention is not valid. Industry expended on
land gives ownership in the fruits of that industry, but
not in the land itself, just as industry expended on the
ocean would give a right of ownership to the fish taken
by it, but not a right of ownership in the ocean. Nor yet
is it true that private ownership of land is necessary to
secure the fruits of labor on land; nor does the
improvement of land create benefits indistinguishable and
inseparable from the land itself. That secure possession
is necessary to the use and improvement of land I have
already explained, but that ownership is not necessary is
shown by the fact that in all civilized countries land
owned by one person is cultivated and improved by other
persons. Most of the cultivated land in the British
Islands, as in Italy and other countries, is cultivated
not by owners but by tenants. And so the costliest
buildings are erected by those who are not owners of the
land, but who have from the owner a mere right of
possession for a time on condition of certain payments.
Nearly the whole of London has been built in this way,
and in New York, Chicago, Denver, San Francisco, Sydney
and Melbourne, as well as in continental cities, the
owners of many of the largest edifices will be found to
be different persons from the owners of the ground. So
far from the value of improvements being inseparable from
the value of land, it is in individual transactions
constantly separated. For instance, one-half of the land
on which the immense Grand Pacific Hotel in Chicago
stands was recently separately sold, and in Ceylon it is
a not infrequent occurrence for one person to own a
fruit-tree and another to own the ground in which it is
implanted.
There is, indeed, no improvement of land,
whether it be clearing, plowing, manuring, cultivating,
the digging of cellars, the opening of wells or the
building of houses, that so long as its usefulness
continues does not have a value clearly distinguishable
from the value of the land. For land having such
improvements will always sell or rent for more than
similar land without them.
If, therefore, the state levy a tax equal to
what the land irrespective of improvement would bring, it
will take the benefits of mere ownership, but will leave
the full benefits of use and improvement, which the
prevailing system does not do. And since the holder, who
would still in form continue to be the owner, could at
any time give or sell both possession and improvements,
subject to future assessment by the state on the value of
the land alone, he will be perfectly free to retain or
dispose of the full amount of property that the exertion
of his labor or the investment of his capital has
attached to or stored up in the land.
Thus, what we propose would secure, as it is
impossible in any other way to secure, what you properly
say is just and right — "that the results of labor
should belong to him who has labored.” But private
property in land — to allow the holder without
adequate payment to the state to take for himself the
benefit of the value that attaches to land with social
growth and improvement — does take the results of
labor from him who has labored, does turn over the fruits
of one man’s labor to be enjoyed by another. For
labor, as the active factor, is the producer of all
wealth. Mere ownership produces nothing. A man might own
a world, but so sure is the decree that “by the
sweat of thy brow shalt thou eat bread,” that
without labor he could not get a meal or provide himself
a garment. Hence, when the owners of land, by virtue of
their ownership and without laboring themselves, get the
products of labor in abundance, these things must come
from the labor of others, must be the fruits of
others’ sweat, taken from those who have a right to
them and enjoyed by those who have no right to them.
The only utility of private ownership of land as
distinguished from possession is the evil utility of
giving to the owner products of labor he does not earn.
For until land will yield to its owner some return beyond
that of the labor and capital he expends on it —
that is to say, until by sale or rental he can without
expenditure of labor obtain from it products of labor,
ownership amounts to no more than security of possession,
and has no value. Its importance and value begin only
when, either in the present or prospectively, it will
yield a revenue — that is to say, will enable the
owner as owner to obtain products of labor without
exertion on his part, and thus to enjoy the results of
others’ labor.
What largely keeps men from realizing the robbery
involved in private property in land is that in the most
striking cases the robbery is not of individuals, but of
the community. For, as I have before explained, it is
impossible for rent in the economic sense — that
value which attaches to land by reason of social growth
and improvement — to go to the user. It can go only
to the owner or to the community. Thus those who pay
enormous rents for the use of land in such centers as
London or New York are not individually injured.
Individually they get a return for what they pay, and
must feel that they have no better right to the use of
such peculiarly advantageous localities without paying
for it than have thousands of others. And so, not
thinking or not caring for the interests of the
community, they make no objection to the system.
It recently came to light in New York that a man
having no title whatever had been for years collecting
rents on a piece of land that the growth of the city had
made very valuable. Those who paid these rents had never
stopped to ask whether he had any right to them. They
felt that they had no right to land that so many others
would like to have, without paying for it, and did not
think of, or did not care for, the rights of all....
read the whole
letter
Charles B. Fillebrown: A Catechism of Natural
Taxation, from Principles of Natural Taxation
(1917)
Q53. How would the single tax effect the
farmer?
A. It would greatly reduce his taxes. His buildings,
stock, and crops would be exempt. His land is at present
assessed at nearly twice its proper unimproved value,
while town and city land is often valued at less than one
half its actual value, thus subjecting him to a more than
fourfold disadvantage.
Q66. What has the single tax to say about the
taxation of forest lands?
A. Perhaps the majority opinion would be to tax annually
all forests old or new on what would be the value of the
land if denuded of all growth -- a stumpage tax to be
collected upon old growth timber when cut, but not upon
new growth such as may be reasonably classed as a
cultivated crop.... read the whole
article
Nic Tideman:
Private Possession as an Alternative to Rental and Private
Ownership for Agricultural Land
Implementation of a system of private possession of
land requires a procedure for determining the rental
value that land would have in an unimproved condition.
This would be the responsibility of an assessor, whose
job would be somewhat similar to that of property tax
assessors. However, while property tax assessors specify
the sale value of land, the task of the assessor under a
system of private possession would be to specify the
rental value that land would have in an unimproved
condition.
Agricultural land is rarely found in an unimproved
condition, except in places that have never been farmed,
or have not been farmed for decades. Therefore the task
of the assessor of agricultural land would entail making
adjustments for any improvements to land such as
drainage, irrigation, fencing, fertilization, and removal
of stones. From an economic perspective, the return to
these improvements is not rent, but rather interest on
capital that has been invested. Keeping such returns
untaxed ensured that those who possess land will have an
incentive to maintain those improvements and make any new
improvements that yield adequate returns.
To discover the rental value of agricultural land in
an unimproved condition, assessors would monitor land
rentals in the vicinity. From an agreed rental price, the
assessor would subtract amounts for interest and
depreciation on any improvements to the land. What
remained would be the rental value of the land in an
unimproved condition. However, if the assessor believed
that some improvement added less to the rental value of
land than its cost as measured by interest and
depreciation, then for that improvement he would subtract
not its cost, but his estimate of what it added to the
rental value of the land. ...
read the whole article
Charles T. Root — Not a Single Tax! (1925)
Now, what price should he get for it? He did not pay
the government much for his title deed, but he has worked
on this land for fifteen years, and deserves some
compensation when he transfers it. By his labor
and also, in part, by reason of his clearing, draining
and fencing, he has been able to make twelve
dollars an acre from his ground, while his economic rent
had not until now gone above five dollars an acre.
Furthermore, he has built on these parcels a barn and two
storehouses.
The method of computing the proper selling price under
such circumstances would have to be the result of
experience, but that price would certainly include the
present value of the improvements and probably some lump
sum besides, as compensation for loss of farming
opportunity. But just as certainly it would not include,
(as it would do under our present conditions), the
increased location value which the town itself has
created by its own growth and public works, and which in
all justice belongs to the town or community and not to
the individual. ... read
the whole article
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