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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. ...
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