4. CONFORMITY TO GENERAL PRINCIPLES OF
TAXATION
The single tax conforms most closely to the essential
principles of Adam Smith's four classical maxims, which
are stated best by Henry George 19 as follows:
The best tax by which public revenues can be raised is
evidently that which will closest conform to the
following conditions:
- That it bear as lightly as possible upon production
— so as least to check the increase of the
general fund from which taxes must be paid and the
community maintained. 20
- That it be easily and cheaply collected, and fall
as directly as may be upon the ultimate payers —
so as to take from the people as little as possible in
addition to what it yields the government. 21
- That it be certain — so as to give the least
opportunity for tyranny or corruption on the part of
officials, and the least temptation to law-breaking and
evasion on the part of the tax-payers. 22
- That it bear equally — so as to give no
citizen an advantage or put any at a disadvantage, as
compared with others. 23
19. "Progress and Poverty," book viii.
ch.iii.
20. This is the second part of Adam
Smith's fourth maxim. He states it as follows: "Every
tax ought to be so contrived as both to take out and to
keep out of the pockets of the people as little as
possible over and above what it brings into the public
treasury of the state. A tax may either take out or
keep out of the pockets of the people a great deal more
than it brings into the public treasury in the four
following ways: . . . Secondly, it may obstruct the
industry of the people, and discourage them from
applying to certain branches of business which might
give maintenance and employment to great multitudes.
While it obliges the people to pay, it may thus
diminish or perhaps destroy some of the funds which
might enable them more easily to do so."
21. This is the first part of Adam
Smith's fourth maxim, in which he condemns a tax that
takes out of the pockets of the people more than it
brings into the public treasury.
22. This is Adam Smith's second maxim. He
states it as follows: "The tax which each individual is
bound to pay ought to be certain and not arbitrary. The
time of payment, the manner of payment, the quantity to
be paid, ought all to be clear and plain to the
contributor and to every other person. Where it is
otherwise, every person subject to the tax is put more
or less in the power of the tax gatherer."
23. This is Adam Smith's first maxim. He
states it as follows: "The subjects of every state
ought to contribute towards the support of the
government as nearly as possible in proportion to their
respective abilities, that is to say, in proportion to
the revenue which they respectively enjoy under the
protection of the state. The expense of government to
the individuals of a great nation is like the expense
of management to the joint tenants of a great estate,
who are all obliged to contribute in proportion to
their respective interests in the estate. In the
observation or neglect of this maxim consists what is
called the equality or inequality of taxation."
In changing this Mr. George says
("Progress and Poverty," book viii, ch. iii, subd.
4): "Adam Smith speaks of incomes as enjoyed
'under the protection of the state'; and this is the
ground upon which the equal taxation of all species of
property is commonly insisted upon — that it is
equally protected by the state. The basis of this idea
is evidently that the enjoyment of property is made
possible by the state — that there is a value
created and maintained by the community; which is
justly called upon to meet community expenses. Now, of
what values is this true? Only of the value of land.
This is a value that does not arise until a community
is formed, and that, unlike other values, grows with
the growth of the community. It only exists as the
community exists. Scatter again the largest community,
and land, now so valuable, would have no value at all.
With every increase of population the value of land
rises; with every decrease it falls. This is true of
nothing else save of things which, like the ownership
of land, are in their nature monopolies."
Adam Smith's third maxim refers only to
conveniency of payment, and gives countenance to
indirect taxation, which is in conflict with the
principle of his fourth maxim. Mr. George properly
excludes it. ...
c. Certainty
No other tax, direct or indirect, conforms so closely
to the third maxim. "Land lies out of doors." It cannot
be hidden; it cannot be "accidentally" overlooked. Nor
can its value be seriously misstated. Neither
under-appraisement nor over-appraisement to any important
degree is possible without the connivance of the whole
community. 27 The land values of a neighborhood are
matters of common knowledge. Any intelligent resident can
justly appraise them, and every other intelligent
resident can fairly test the appraisement. Therefore, the
tyranny, corruption, fraud, favoritism, and evasions that
are so common in connection with the taxation of imports,
manufactures, incomes, personal property, and buildings
— the values of which, even when the object itself
cannot be hidden, are so distinctly matters of minute
special knowledge that only experts can fairly appraise
them — would be out of the question if the single
tax were substituted for existing fiscal methods. 28
27. The under-appraisements so common at
present, and alluded to in note 25, are possible
because the community, ignorant of the just principles
of taxation, does connive at them. Under-appraisements
are not secret crimes on the part of assessors; they
are distinctly recognized, but thoughtlessly
disregarded when not actually insisted upon, by the
people themselves. And this is due to the dishonest
ideas of taxation that are taught. Let the vicious
doctrine that people ought to pay taxes according to
their ability give way to the honest principle that
they should pay in proportion to the benefits they
receive, which benefits, as we have already seen, are
measured by the land values they own, and
underappraisement of land would cease. No assessor can
befool the community in respect of the value of the
land within his jurisdiction.
And, with the cessation of general
under-appraisement, favoritism in individual
appraisements also would cease. General
under-appraisement fosters unfair individual
appraisements. If land were generally appraised at its
full value, a particular unfair appraisement would
stand out in such relief that the crime of the assessor
would be exposed. But now if a man's land is appraised
at a higher valuation than his neighbor's equally
valuable land, and he complains of the unfairness, he
is promptly and effectually silenced with a warning
that his land is worth much more than it is appraised
at, anyhow, and if he makes a fuss his appraisement
will be increased. To complain further of the deficient
taxation of his neighbor is to invite the imposition of
a higher tax upon himself.
28. If you wish to test the merits in
point of certainty of the single tax as compared with
other taxes, go to a real estate agent in your
community, and, showing him a building lot upon the
map, ask him its value. If he inquires about the
improvements, instruct him to ignore them. He will be
able at once to tell you what the lot is worth. And if
you go to twenty other agents their estimates will not
materially vary from his. Yet none of the agents will
have left his office. Each will have inferred the value
from the size and location of the lot.
But suppose when you show the map to the
first agent you ask him the value of the land and its
improvements. He will tell you that he cannot give an
estimate until he examines the improvements. And if it
is the highly improved property of a rich man he will
engage building experts to assist him. Should you ask
him to include the value of the contents of the
buildings, he would need a corps of selected experts,
including artists and liverymen, dealers in furniture
and bric-a-brac, librarians and jewelers. Should you
propose that he also include the value of the
occupant's income, the agent would throw up his hands
in despair.
If without the aid of an army of experts
the agent should make an estimate of these
miscellaneous values, and twenty others should do the
same, their several estimates would be as wide apart as
ignorant guesses usually are. And the richer the owner
of the property the lower as a proportion would the
guesses probably be.
Now turn the real estate agent into an
assessor, and is it not plain that he would appraise
the land values with much greater certainty and
cheapness than he could appraise the values of all
kinds of property? With a plot map before him he might
fairly make every appraisement without leaving his desk
at the town hall.
And there would be no material difference
if the property in question were a farm instead of a
building lot. A competent farmer or business man in a
farming community can, without leaving his own
door-yard, appraise the value of the land of any farm
there; whereas it would be impossible for him to value
the improvements, stock, produce, etc., without at
least inspecting them.
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