Nor do we hesitate to say that this way of securing
the equal right to the bounty of the Creator and the
exclusive right to the products of labor is the way
intended by God for raising public revenues. For we are
not atheists, who deny God; nor semi-atheists, who deny
that he has any concern in politics and legislation.
It is true as you say — a salutary truth too
often forgotten — that “man is older than the
state, and he holds the right of providing for the life
of his body prior to the formation of any state.”
Yet, as you too perceive, it is also true that the state
is in the divinely appointed order. For He who foresaw
all things and provided for all things, foresaw and
provided that with the increase of population and the
development of industry the organization of human society
into states or governments would become both expedient
and necessary.
No sooner does the state arise than, as we all know,
it needs revenues. This need for revenues is small at
first, while population is sparse, industry rude and the
functions of the state few and simple. But with growth of
population and advance of civilization the functions of
the state increase and larger and larger revenues are
needed.
Now, He that made the world and placed man in it, He
that pre-ordained civilization as the means whereby man
might rise to higher powers and become more and more
conscious of the works of his Creator, must have foreseen
this increasing need for state revenues and have made
provision for it. That is to say: The increasing need for
public revenues with social advance, being a natural,
God-ordained need, there must be a right way of raising
them — some way that we can truly say is the way
intended by God. It is clear that this right way of
raising public revenues must accord with the moral
law.
Hence:
All these taxes violate the moral law. They take by
force what belongs to the individual alone; they give to
the unscrupulous an advantage over the scrupulous;
they have the effect, nay are largely intended,
to increase the price of what some have to sell and
others must buy; they corrupt government; they
make oaths a mockery; they shackle commerce; they fine
industry and thrift; they lessen the wealth that
men might enjoy, and enrich some by
impoverishing others.
Yet what most strikingly shows how opposed to
Christianity is this system of raising public revenues is
its influence on thought.
Christianity teaches us that all men are brethren;
that their true interests are harmonious, not
antagonistic. It gives us, as the golden rule of life,
that we should do to others as we would have others do to
us. But out of the system of taxing the products
and processes of labor, and out of its effects in
increasing the price of what some have to sell and others
must buy, has grown the theory of
“protection,” which denies this gospel, which
holds Christ ignorant of political economy and proclaims
laws of national well-being utterly at variance with his
teaching. This theory sanctifies national
hatreds; it inculcates a universal war of hostile
tariffs; it teaches peoples that their
prosperity lies in imposing on the productions of other
peoples restrictions they do not wish imposed on their
own; and instead of the Christian doctrine of man’s
brotherhood it makes injury of foreigners a civic
virtue.
“By their fruits ye shall know them.” Can
anything more clearly show that to tax the products and
processes of industry is not the way God intended public
revenues to be raised?
But to consider what we propose — the raising of
public revenues by a single tax on the value of land
irrespective of improvements — is to see that in
all respects this does conform to the moral law.
Let me ask your Holiness to keep in mind that the
value we propose to tax, the value of land irrespective
of improvements, does not come from any exertion of labor
or investment of capital on or in it — the values
produced in this way being values of improvement which we
would exempt. The value of land irrespective of
improvement is the value that attaches to land by reason
of increasing population and social progress. This is a
value that always goes to the owner as owner, and never
does and never can go to the user; for if the user be a
different person from the owner he must always pay the
owner for it in rent or in purchase-money; while if the
user be also the owner, it is as owner, not as user, that
he receives it, and by selling or renting the land he
can, as owner, continue to receive it after he ceases to
be a user.
Thus, taxes on land irrespective of improvement cannot
lessen the rewards of industry, nor add to prices,* nor
in any way take from the individual what belongs to the
individual. They can take only the value that attaches to
land by the growth of the community, and which therefore
belongs to the community as a whole.
* As to this point it may be well to add
that all economists are agreed that taxes on land
values irrespective of improvement or use — or
what in the terminology of political economy is styled
rent, a term distinguished from the ordinary use of the
word rent by being applied solely to payments for the
use of land itself — must be paid by the owner
and cannot be shifted by him on the user. To explain in
another way the reason given in the text: Price is not
determined by the will of the seller or the will of the
buyer, but by the equation of demand and supply, and
therefore as to things constantly demanded and
constantly produced rests at a point determined by the
cost of production — whatever tends to increase
the cost of bringing fresh quantities of such articles
to the consumer increasing price by checking supply,
and whatever tends to reduce such cost decreasing price
by increasing supply. Thus taxes on wheat or tobacco or
cloth add to the price that the consumer must pay, and
thus the cheapening in the cost of producing steel
which improved processes have made in recent years has
greatly reduced the price of steel. But land has no
cost of production, since it is created by God, not
produced by man. Its price therefore is fixed
—
1 (monopoly rent), where land is held
in close monopoly, by what the owners can extract
from the users under penalty of deprivation and
consequently of starvation, and amounts to all that
common labor can earn on it beyond what is necessary
to life;
2 (economic rent proper), where there is no special
monopoly, by what the particular land will yield to
common labor over and above what may be had by like
expenditure and exertion on land having no special
advantage and for which no rent is paid; and,
3 (speculative rent, which is a species of monopoly
rent, telling particularly in selling price), by the
expectation of future increase of value from social
growth and improvement, which expectation causing
landowners to withhold land at present prices has the
same effect as combination.
Taxes on land values or economic rent can
therefore never be shifted by the landowner to the
land-user, since they in no wise increase the demand
for land or enable landowners to check supply by
withholding land from use. Where rent depends on mere
monopolization, a case I mention because rent may in
this way be demanded for the use of land even before
economic or natural rent arises, the taking by taxation
of what the landowners were able to extort from labor
could not enable them to extort any more, since
laborers, if not left enough to live on, will die. So,
in the case of economic rent proper, to take from the
landowners the premiums they receive, would in no way
increase the superiority of their land and the demand
for it. While, so far as price is affected by
speculative rent, to compel the landowners to pay taxes
on the value of land whether they were getting any
income from it or not, would make it more difficult for
them to withhold land from use; and to tax the full
value would not merely destroy the power but the desire
to do so.
To take land values for the state, abolishing all
taxes on the products of labor, would therefore leave to
the laborer the full produce of labor; to the individual
all that rightfully belongs to the individual. It would
impose no burden on industry, no check on commerce, no
punishment on thrift; it would secure the largest
production and the fairest distribution of wealth, by
leaving men free to produce and to exchange as they
please, without any artificial enhancement of prices; and
by taking for public purposes a value that cannot be
carried off, that cannot be hidden, that of all values is
most easily ascertained and most certainly and cheaply
collected, it would enormously lessen the number of
officials, dispense with oaths, do away with temptations
to bribery and evasion, and abolish man-made crimes in
themselves innocent.
But, further: That God has intended the state to
obtain the revenues it needs by the taxation of land
values is shown by the same order and degree of evidence
that shows that God has intended the milk of the mother
for the nourishment of the babe.
See how close is the analogy. In that primitive
condition ere the need for the state arises there are no
land values. The products of labor have value, but in the
sparsity of population no value as yet attaches to land
itself. But as increasing density of population and
increasing elaboration of industry necessitate the
organization of the state, with its need for revenues,
value begins to attach to land. As population still
increases and industry grows more elaborate, so the needs
for public revenues increase. And at the same time and
from the same causes land values increase. The connection
is invariable. The value of things produced by labor
tends to decline with social development, since the
larger scale of production and the improvement of
processes tend steadily to reduce their cost. But the
value of land on which population centers goes up and up.
Take Rome or Paris or London or New York or Melbourne.
Consider the enormous value of land in such cities as
compared with the value of land in sparsely settled parts
of the same countries. To what is this due? Is it not due
to the density and activity of the populations of those
cities — to the very causes that require great
public expenditure for streets, drains, public buildings,
and all the many things needed for the health,
convenience and safety of such great cities? See how with
the growth of such cities the one thing that steadily
increases in value is land; how the opening of roads, the
building of railways, the making of any public
improvement, adds to the value of land. Is it not clear
that here is a natural law — that is to say a
tendency willed by the Creator? Can it mean anything else
than that He who ordained the state with its needs has in
the values which attach to land provided the means to
meet those needs?
That it does mean this and nothing else is confirmed
if we look deeper still, and inquire not merely as to the
intent, but as to the purpose of the intent. If we do so
we may see in this natural law by which land values
increase with the growth of society not only such a
perfectly adapted provision for the needs of society as
gratifies our intellectual perceptions by showing us the
wisdom of the Creator, but a purpose with regard to the
individual that gratifies our moral perceptions by
opening to us a glimpse of his beneficence.
Consider: Here is a natural law by which as society
advances the one thing that increases in value is land
— a natural law by virtue of which all growth of
population, all advance of the arts, all general
improvements of whatever kind, add to a fund that both
the commands of justice and the dictates of expediency
prompt us to take for the common uses of society. Now,
since increase in the fund available for the common uses
of society is increase in the gain that goes equally to
each member of society, is it not clear that the law by
which land values increase with social advance while the
value of the products of labor does not increase, tends
with the advance of civilization to make the share that
goes equally to each member of society more and more
important as compared with what goes to him from his
individual earnings, and thus to make the advance of
civilization lessen relatively the differences that in a
ruder social state must exist between the strong and the
weak, the fortunate and the unfortunate? Does it not show
the purpose of the Creator to be that the advance of man
in civilization should be an advance not merely to larger
powers but to a greater and greater equality, instead of
what we, by our ignoring of his intent, are making it, an
advance toward a more and more monstrous inequality? ...
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