imparting power to machinery, or conducted through conduits to centers of population which otherwise could not obtain it, it becomes extremely valuable, and capable of being sold in large or small quantities. Another similar illustration is to be found in the case of atmospheric air, which in its natural and ordinary state has no marketable value, but when compressed by labor embodied in the form of machinery and made capable of transmitting force, it at once becomes endowed with value and can be sold at a high price.
An opinion entertained and strongly advocated by not a few economic writers and teachers of repute (more especially in Europe, but not in the United States) is, that taxes on land do not diffuse themselves, but fall wholly on the landowner, and that there is no way in which he can throw it off and cause any considerable part of them to be paid by anybody else. The concrete argument in support of this opinion has been thus stated: "When land is taxed, the owner can not, as a general rule, escape the tax, for the reason that, to get rid of the tax, the price of the land or of the rent must be raised the full amount of the tax, and the only way in which this can be done is by reducing the supply or quantity offered in market, or else by increasing the demand. The supply of land can not be reduced, and the demand being created by capital and population, both of which are beyond the control of the landowner, he can do nothing to raise the price of land, and hence can not get rid of the tax. It may be stated, then, as a general rule, that a tax on land, or on any commodity the supply of which is limited absolutely, must be paid by the owner. It is possible to suggest cases in which, through combination of owners and the necessities of consumers, a demand may be created strong enough to raise the price to the full amount of such tax, but it is doubted if such cases ever really occur."
The source of the contention on this important economic and social question, and the difficulty in the way of the attainment of harmonious conclusions, is due to a nonrecognition of the fact that land is taxed under two conditions, and can not be taxed otherwise. Thus, if a person holds land for his exclusive use or enjoyment, and consumes all of its product, a tax on such land, which has been characterized by some economists as, its "pure rent," will not diffuse
- "In America, where there has been but little serious study of taxation, the few writers of prominence are, remarkable to relate, almost all abject followers of Thiers," the French economist and statesman, who claimed to have invented the term "diffusion" of taxes.
- "Our conclusion is, that under actual conditions in America to-day the landowner may virtually be declared to pay in the last instance the taxes that are imposed on his land, and that at all events it is absolutely erroneous to assume any general shifting to the consumer. In so far as our land tax is a part of a general property tax, it can not possibly be shifted; in so far as it is more or less an exclusive tax, it is even then apt to remain where it is first put—on the landowner."—Seligman: Incidence of Taxation, p. 99.