Chapter XXII Changes wrought in economic and social life edit
The advantages that would be gained by substituting, for the numerous taxes by which the public revenues are now raised, a single tax levied upon the value of land, will appear more and more important the more they are considered.
To abolish the taxation, which acting and reacting now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. Imbued with fresh energy production would start into new life and trade would receive a stimulus that would be felt to the remotest arteries.
The present method of taxation operates upon exchange like artificial deserts and mountains.
To get goods through a customs house can cost as much as carrying them around the world. Today taxation operates upon energy, and industry, and skill, and thrift, like a fine upon those qualities. If you have worked harder and built yourself a good house while I have been contented to live in a hovel, the tax-gatherer now comes annually to make you pay a penalty for your energy and industry, by taxing you more than me. If you have saved while I have wasted, you are mulct while I am exempt.
We punish with a tax the man who covers barren fields with ripening grain; we fine him who puts up machinery and him who drains a swamp. How heavily these taxes burden production only those realize who have attempted to follow them through their ramifications, for their heaviest part is that which falls in increased prices. Manifestly these taxes are in their nature akin to the Egyptian Pasha's tax upon date trees. If they do not cause the trees to be cut down, they at least discourage the planting.
Taking taxes off industry edit
To abolish these taxes would be to lift the whole enormous weight of taxation from productive industry. The needle of the seamstress and the great manufactory, the horse and the locomotive, the fishing boat and the steamship, the farmer's plough and the merchant's stock, would be alike untaxed. All would be free to make or to save, to buy or to sell, unfined by taxes, unannoyed by the tax-gatherer. Instead of saying to the producer, as it does now, "The more you add to the general wealth the more shall you be taxed!" the Government would say, "Be as industrious, as thrifty, as enterprising as you choose, you shall have your full reward! You shall not be fined for making two blades of grass grow where one grew before; you shall not be taxed for adding to the aggregate wealth."
And will not the community gain by thus refusing to kill the goose that lays the golden eggs; by thus refraining from muzzling the ox that treadeth out the corn; by thus leaning to industry, and thrift, and skill, their natural reward, full and unimpaired? For there is to the community also a natural reward. The law of society is each for all as well as all for each. No one can keep to himself the good he may do, any more than he can keep the bad. Every productive enterprise, besides its return to those who undertake it, yields collateral advantages to others. If a man plant a fruit tree, his gain is that he gathers the fruit in its time and season. But in addition to his gain, there is a gain to the whole community. Others than the owner are benefitted by the increased supply of fruit; the birds that it shelters fly far and wide; the rain that it helps to attract falls not alone on his field; and, even to the eye which rests upon it from a distance, it brings a sense of beauty. And so with everything else. The building of a house, a factory, a ship, or a railway, benefits others besides those who get the direct gains.
Well may the community leave to the individual producer all that prompts him to exertion; well may it let the labourer have the full reward of his labour, and the capitalist the full return of his capital. For the more that labour and capital produce, the greater grows the common wealth in which all may share. And in the value or rent of land this general gain is expressed in a definite and concrete form. Here is a fund which the state may take while leaving to labour and capital their full reward.
Opening new opportunities edit
To shift the burden of taxation from production and exchange to the value or rent of land would be not merely to give new stimulus to the production of wealth; it would be to open new opportunities. For under this system no one would care to hold land unless to use it, and land now withheld from use would everywhere be thrown open to improvement. And it must be remembered that this would apply not merely to agricultural land but to all land. Mineral land would be thrown open to use as would agricultural land; and in the heart of a city no one could afford to keep land from its most profitable use, or on the outskirts to demand more for it than would be warranted by the use to which it could be put at the time.
Whoever planted an orchard, or sowed a field, or built a house, or erected a manufactory, no matter how costly, would have no more to pay in taxes than if he kept so much land idle. The owner of a vacant city lot would have to pay as much for the privilege of keeping other people off it until he wanted to use it as his neighbour who has a fine house upon his lot. It would cost as much to keep a row of tumble-down shanties upon valuable land as it would were the land covered with a grand hotel or a pile of great warehouses filled with costly goods.
The selling price of land would fall; land speculation would receive its death-blow; land monopolization would no longer pay. Thus there would disappear the premium which, wherever labour is most productive, must now be paid before labour can be exerted. The farmer would not have to pay out half his means, or mortgage his labour for years, in order to obtain land to cultivate. The company that proposed to erect a manufactory would not have to expend a great part of its capital for a site. And what would be paid from year to year to the state would be in lieu of all the taxes now levied upon improvements, machinery and stock.
Effect upon the labour market edit
Consider the effect of such a change upon the labour market. Instead of labourers competing with each other for employment, and in their competition cutting down wages to the point of bare subsistence, employers would compete for labourers and wages would rise to the fair earnings of labour. For into the labour market would have entered the greatest of all competitors for the employment of labour, a competitor whose demand cannot be satisfied - the demand of labour itself. The employers of labour would have to bid not merely against other employers, all feeling the stimulus of greater trade, but against the ability of labourers to become their own employers upon the natural opportunities thrown open to them by the tax which prevented monopolization.
With natural opportunities thus set free to labour, with capital and improvements exempt from tax and exchange released from restrictions, the spectacle of willing men unable to turn their labour into the things they want would become impossible; the recurring paroxysms which paralyse industry would cease; every wheel of production would be set in motion; trade would increase in every direction and wealth augment on every hand.
But great as they thus appear, the advantages of a transference of all public burdens to a tax upon the value of land cannot be fully appreciated until we consider the effect upon the distribution of wealth.
Effect upon individuals and classes edit
Who can say to what infinite powers the wealth-producing capacity of labour may not be raised by social adjustments that will give to the producers of wealth their fair proportion of its advantages and enjoyments? Every new power engaged in the service of man would improve the condition of all. And from the general intelligence and mental activity springing from this general improvement of conditions would come new developments of power of which as yet we cannot dream.
When it is first proposed to put all taxes upon the value of land and thus to confiscate rent, there will not be wanting appeals to the fears of small farm and homestead owners, who will be told that this is a proposition to rob them of their hard-earned property.
But a moment's reflection will show that this proposition should commend itself to all whose interests as landholders do not largely exceed their interests as labourers or capitalists, or both.
Take the case of the mechanic, shopkeeper or professional man who has secured himself a house and plot where he lives and which he contemplates with satisfaction as a place from which his family cannot be ejected in case of his death. Although he will have taxes to pay upon his land, he will be released from taxes upon his house and improvements, upon his furniture and personal property, upon all that he and his family eat, drink and wear, while his earnings will be largely increased by the rise of wages, the constant employment, and the increased briskness of trade.
And so with the farmer. I speak not of the farmer who never touches the handles of a plough, but of the working farmer who holds a small farm which he cultivates with the aid of his sons and perhaps some hired help. He would be a great gainer by the substitution of a single tax upon the value of land for all the taxes now imposed on commodities because the taxation of land values rests only on the value of land, which is low in agricultural districts as compared with towns and cities, where it is high. Acre for acre, the improved and cultivated farm, with its buildings, fences, orchard, crops and stock, would be taxed no more than unused land of equal quality. For taxes, being levied upon the value of the land alone, would fall with equal incidence upon unimproved as upon improved land.
Government simplified edit
The great wrong that takes wealth from the hands of those who produce, and concentrates it in the hands of those who do not, would be gone. Whatever disparities continued to exist would be those of nature, not the artificial disparities produced by the denial of equal rights. Wealth would not only be enormously increased; it would be distributed in accordance with the degree in which the industry, skill, knowledge or prudence of each contributed to the common stock.
It is not possible without too much elaboration to notice all the changes that would be wrought, or would become possible, by a change that would readjust the very foundation of society. Among these is the great simplicity that would become possible in government. To collect taxes, to prevent and punish evasions, to check and countercheck revenues drawn from so many distinct sources, now make up a large part of the business of government. An immense and complicated network of governmental machinery would thus be dispensed with. The rise of wages, the opening of opportunities for all to make an easy and comfortable living, would at once lessen and would soon eliminate from society the thieves, swindlers and other classes of criminals who spring from the unequal distribution of wealth. Thus the administration of the criminal law, with all its paraphernalia of policemen, detectives, prisons and penitentiaries, would cease to make such a drain upon the vital force and attention of society. The legislative, judicial and executive functions of government would be vastly simplified. Society would thus approach the ideal of Jeffersonian democracy.