Spencer Heath Archive

Item 1173

Two letters to Charles G. Baldwin, 520 Munsey Bldg, Baltimore MD, with the latter’s article, “Paying Taxes for Profit,” as revised by Heath.

January 25 and 28, 1935

 

 

January 24, 1935

Hail!  CONVERT NUMBER ONE to the SINGLE TAX as a creative agency in the hands of landowners for financing and administering the public services and having as compensation for this the amount by which their rents exceed their investments (now called taxes) in the public services.

Your proposed letter about paying taxes for profit is a good and catchy setting out of the above principle. I want to go over it more carefully and see how much (if any) I can improve it and send you a revised copy. I think I would leave out all about the ether lanes and put that in some other letter; I’m afraid it tends to confuse the main theme.

Yes, I did read “Unto This Last,” but was disappointed in it. The author is awfully pontifical and his ideas seem almost entirely emotional, confused and lacking in any semblance of precision.

I have been writing further to Adam Schantz. He seems to have become considerably interested.

Best wishes,

 

 

January 28, 1935

 

Dear Mr. Baldwin:

Here it is at last. I have pounded it out myself with the carbon sheet in backwards and all the other mistakes that are possible.

I suggest you make up other letters on the ether lanes and on the exemptions of churches and cemeteries. Please remember that if taxes could take the full rent then the spending would fall to alien interests adverse to the public welfare and what were not stolen outright would be spent in many ways that would hamper production and the free use of such public services as might be had under corrupt administration and all this would put rents down and keep them down and thus give excuse for putting taxes on production again. The difference between rent and taxes is the natural profit of landowners upon their taxes as investments in the public services and their pay for acting as governors and administrators of these services.

If you use my version you may sign it any way you like, either your name or mine or both or neither.

Sincerely,

 

PAYING TAXES FOR PROFIT

If a merchant sells goods at a profit he gladly buys new stocks and pays promptly. Paying is no burden because he sells them at a profit. Advancing them to the consumer is his job. The profit he gets is his wages for his work.

The Government, State and Federal, provides public services just as a manufacturer provides goods. It delivers these services to the owners of valuable locations, whether improved or unimproved. The owner has these public services for sale or rent. He calls it selling or leasing land or lots. Large owners of unimproved lands that have public improvements and services supplied to them are wholesalers of public services. They sell to consumers — land users — the services that government manufactures and like any other merchants, wholesale or retail, they would gladly pay for these goods if they could sell them at a profit. Under this arrangement the taxes would be no burden. There would be a profit in paying them and no tax collector would be required.

But something is the matter with the customers; they are not buying well. There are plenty of public improvements and services but they are not selling well. There is lack of demand; land values have fallen; rent has declined. Our jumbled taxing arrangement puts most of the costs of public services exclusively on the users of land. The users, having paid for the services to the tax collector, are in no position to purchase them from the land owner. It is as though the manufacturer of goods should have the power to make the consumers pay his costs before the goods go to the merchant. This method of taxation destroys the market of the wholesaler and makes him unwilling to pay in taxes even a small part of the cost of the public services which he has, so to speak, on his shelves for his retail customers. Of course, the consumers pay unwillingly for the public services they cannot get and so it transpires that taxes become a burden to all concerned.

The ownership of land, apart from improvements, is indeed a high calling. The owners must see that the public services are adequately financed and efficiently manufactured and at the peril of their rents and values, they must protect the prospective users of their lands from every kind of tax and imposition that reduces their profits and productiveness and thus keeps them out of the market for public services. They must be vigilant and valorous against taxes on incomes, on sales, on purchases, especially on imports, on gasoline and automobiles, on private improvements, on all kinds of personal property, all licenses on occupations and other charges and restrictions that hamper and diminish the production of wealth and hence the need for and the ability to pay for public services.

If they would prosper, the lords of the land must be lords indeed. They must protect the users of land, the producers of rents and of every form of wealth and revenue, from official racketeering in the guise of necessary taxes and restraints and, by maintaining and directing the public services, become “the greatest among you” through being the servants of all.

Your Mr. James F. King, in a recent article on “Sources of Tax Revenue,” points to the need of basic change. He says:

Probably the solution lies only in changes in the tax system as a whole. It is the share of the total taken from him by all the taxes to which he is subject that is important.

It might be well if all the State tax laws could be repealed and new ones enacted in the light of today’s conditions.

Perhaps it might be well for Maryland authorities to call a general tax convention. Such a convention might evolve a true tax system so obviously fair as to be wholly effective.

Such a fair and effective system will be found when landowners are recognized as the necessary recipients and purveyors of all the services and public values that government creates. It is for these services that rent, either annual or capitalized, is paid. But rent must be paid out of production; it rises and falls with the advance or decline of production.

It is the proper office of landowners, as such, to unbind production from all restraint. They will then have an open market for what they have to sell and they can then finance the public services at less cost than what they receive in rent. If they administer the services wisely and well this difference will be a very great and honorable reward. And their administration of the public funds and services cannot be corrupt because corruption would be reflected in lower rents and values, but honesty and efficiency will yield them pecuniary reward