Not all forms of taxes impose a burden. But few
Americans realize this; as my mother would have expressed
it, our education has been neglected!
Income taxes are a burden. Sales taxes are a burden.
Building taxes are a burden. So what's left? What is
there that is fundamentally different from wages, sales
and buildings? Land value!
Reassessment is a way of making sure that the burden
of property taxes is distributed in proportion to the
current values of all the properties within a tax
district, so that the owners of faster-appreciating
properties bear their fair share of the tax burden, and
those whose properties are not so favored (perhaps
because they lack attractive views, or access to
infrastructure, jobs or services, or are near noxious
neighbors) are not paying more than their current share.
Georgists will argue that the tax burden should not fall
on the manmade additions to one's property, that
apportioning the tax burden in proportion to the value of
the land itself is more just and provides a more
desirable set of incentives.
"In my opinion the least bad tax is the
property tax on the unimproved value of land, the Henry
George argument of many, many years ago."
-- Milton Friedman, Nobel
laureate in Economics
"Pure ground rent is in the
nature of a 'surplus,' which
can be taxed heavily without distorting production
incentives or reducing efficiency."
-- Paul Samuelson,
Nobel laureate in Economics
The true purposes of government are well stated in the
preamble to the Constitution of the United States, as
they are in the Declaration of Independence. To insure
the general peace, to promote the general welfare, to
secure to each individual the inalienable rights to life,
liberty, and the pursuit of happiness — these are
the proper ends of government, and are therefore the ends
which in every scheme of taxation should be kept in
mind.
As to amount of taxation, there is no principle which
imposes any arbitrary limit. Heavy taxation is better for
any community than light taxation, if the increased
revenue be used in doing by public agencies things which
could not be done, or could not be as well and
economically done, by private agencies. Taxes could be
lightened in the city of New York by dispensing with
street-lamps and disbanding the police force. But would a
reduction in taxation gained in this way be for the
benefit of the people of New York and make New York a
more desirable place to live in? Or if it should be found
that heat and light could be conducted through the
streets at public expense and supplied to each house at
but a small fraction of the cost of supplying them by
individual effort, or that the city railroads could be
run at public expense so as to give every one
transportation at very much less than it now costs the
average resident, the increased taxation necessary for
these purposes would not be increased burden, and in
spite of the larger taxation required, New York would
become a more desirable place to live in. It is a mistake
to condemn taxation as bad merely because it is high; it
is a mistake to impose by constitutional provision, as in
many of our States has been advocated, and in some of our
States has been done, any restriction upon the amount of
taxation. A restriction upon the incurring of public
indebtedness is another matter. In nothing is the
far-reaching statesmanship of Jefferson more clearly
shown than in his proposition that all public obligations
should be deemed void after a certain brief term —
a proposition which he grounds upon the self-evident
truth that the earth belongs in usufruct to the living,
and that the dead have no control over it, and can give
no title to any part of it. But restriction upon public
debts is a very different thing from restriction upon the
power of taxation, and reasons which urge the one do not
apply to the other. Nor is increased taxation necessarily
proof of governmental extravagance. Increase in taxation
is in the order of social development, for the reason
that social development tends to the doing of things
collectively that in a ruder state are done individually,
to the giving to government of new functions and the
imposing of new duties. Our public schools and libraries
and parks, our signal service and fish commissions and
agricultural bureaus and grasshopper investigations, are
evidences of this.
But while no limit can be properly fixed for the
amount of taxation, the method of taxation is of supreme
importance. A horse may be anchored by fastening to his
bridle a weight which he will not feel when carried in a
buggy behind him. The best ship may be made utterly
unseaworthy by the bad stowage of a cargo which properly
placed would make her the stiffer and more weatherly. So
enterprise may be palsied, industry crushed, accumulation
prevented, and a prosperous country turned into a desert,
by taxation which rightly levied would hardly be
felt.
Now discarding all idea that there rests upon us any
obligation to equally tax all kinds of property, and
assuming for our guidance the true rule, that taxation
should be levied with a view to the promotion of the
general prosperity, the securing of substantial equality,
and the recognition of inalienable rights, let us
consider upon what species of property it may be best
laid. ...
To consider the nature of property of this kind is
again to see a clear distinction. That distinction is
not, as the lawyers have it, between movables and
immovables, between personal property and real estate.
The true distinction is between property which is, and
property which is not, the result of human labor; or, to
use the terms of political economy, between land and
wealth. For, in any precise use of the term, land is not
wealth, any more than labor is wealth. Land and labor are
the factors of production. Wealth is such result of their
union as retains the capacity of ministering to human
desire. A lot and the house which stands upon it are
alike property, alike have a tangible value, and are
alike classed as real estate. But there are between them
the most essential differences. The one is the free gift
of Nature, the other the result of human exertion; the
one exists from generation to generation, while men come
and go; the other is constantly tending to decay, and can
only be preserved by continual exertion. To the one, the
right of exclusive possession, which makes it individual
property, can, like the right of property in slaves, be
traced to nothing but municipal law; to the other, the
right of exclusive property springs clearly from those
natural relations which are among the primary perceptions
of the human mind. Nor are these mere abstract
distinctions. They are distinctions of the first
importance in determining what should and what should not
be taxed.
For, keeping in mind the fact that all wealth is the
result of human exertion, it is clearly seen that, having
in view the promotion of the general prosperity, it is
the height of absurdity to tax wealth for purposes of
revenue while there remains, unexhausted by taxation, any
value attaching to land. We may tax land values as much
as we please, without in the slightest degree lessening
the amount of land, or the capabilities of land, or the
inducement to use land. But we cannot tax wealth without
lessening the inducement to the production of wealth, and
decreasing the amount of wealth. We might take the whole
value of land in taxation, so as to make the ownership of
land worth nothing, and the land would still remain, and
be as useful as before. The effect would be to throw land
open to users free of price, and thus to increase its
capabilities, which are brought out by increased
population. But impose anything like such taxation upon
wealth, and the inducement to the production of wealth
would be gone. Movable wealth would be hidden or carried
off, immovable wealth would be suffered to go to decay,
and where was prosperity would soon be the silence of
desolation.
And the reason of this difference is clear. The
possession of wealth is the inducement to the exertion
necessary to the production and maintenance of wealth.
Men do not work for the pleasure of working, but to get
the things their work will give them. And to tax the
things that are produced by exertion is to lessen the
inducement to exertion. But over and above the benefit to
the possessor, which is the stimulating motive to the
production of wealth, there is a benefit to the
community, for no matter how selfish he may be, it is
utterly impossible for any one to entirely keep to
himself the benefit of any desirable thing he may
possess. These diffused benefits when localized give
value to land, and this may be taxed without in any wise
diminishing the incentive to production.
Every consideration of policy and ethics squares with
this conclusion. The tax upon land values is the most
economically perfect of all taxes. It does not raise
prices; it maybe collected at least cost, and with the
utmost ease and certainty; it leaves in full strength all
the springs of production; and, above all, it consorts
with the truest equality and the highest justice. For, to
take for the common purposes of the community that value
which results from the growth of the community, and to
free industry and enterprise and thrift from burden and
restraint, is to leave to each that which he fairly
earns, and to assert the first and most comprehensive of
equal rights — the equal right of all to the land
on which, and from which, all must live.
Thus it is that the scheme of taxation which conduces
to the greatest production is also that which conduces to
the fairest distribution, and that in the proper
adjustment of taxation lies not merely the possibility of
enormously increasing the general wealth, but the
solution of these pressing social and political problems
which spring from unnatural inequality in the
distribution of wealth. ... read the whole
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