Spencer Heath Archive

Item 1183

Carbon of letter from New York to the Editor of Land and Freedom.

July 6, 1936

 

My dear Sir:

Mr. Bolton Hall has given us a pretty puzzle, based on trying to tax the untaxable, and you ask for suggestions how we should proceed. Proceed toward what, toward taxation or toward freedom?

Henry George proposed that we proceed by abolishing taxation. Unhappily, he left us to suppose that hopes — capitalizations — could be taxed. Only wealth (more properly services, including those stored up in wealth) can be taxed, for no man or men can take of another anything but his toil or its fruits. Capitalizations are mental phenomena; we cannot take or tax them. Neither can we, properly speaking, tax rent. It is the only kind of wealth that cannot be taxed. Only private wealth can be taxed. Rent is public wealth, for it is not rent until it is taken in exchange for public services by a public person, a proprietor (established in the nature of society with that and other public functions), and it cannot be put into his hand a second time. He may fail to use it for public purposes, but he has already collected it.

Mr. Hall’s fifty dollars per year is not, itself, rent for it is not wealth. It is only the string that measures the quantity of wealth that is the rent. The occupier, the producer, renders up this part of his production voluntarily, even gladly. It is the exchange value, market value, of the services he receives by reason of his location. These are the public services or, rather, such residue of them as is not entirely canceled out by taxation and other dis-services. All public services (net) are paid for in rent. To collect for them otherwise diminishes and destroys them — puts a charge against them — cancels them. Such is taxation.

Public officers collect their pay not by consent and exchange measured in a market, as rent is collected; they take it by direct action. But much private wealth so taken is used as public capital. The earnings of this confiscated capital constitute most of today^’s rent. These earnings belong to despoiled tax-payers but cannot be restored to them by any transfer of present rent from proprietors to politicians (both set up by society and together constituting the State) and calling that taxation. Not to confiscate private wealth is the remedy.

When land-owners themselves furnish public capital its earnings (that part of the rent) will be theirs, and this capital value is what they will sell when they sell “land.” They cannot capitalize and sell any part of the rent that they must pay to maintain public services (there being no taxes), including that part of the rent derived from their own services. Occupiers do not pay rent for the pleasure of being taxed. They pay for services. Public services create rent. Public charges, taxes, cancel these services, destroy rent. All taxes are deductions on rent. Abolishment of taxes is a needed public service, like abolishment of crime. It will create rent to the amount of the taxes abolished, at the least. Not until then can wealth be produced in adequate amount. Not until then can production, being untaxed, make adequate use of the public services and establish a demand for them. Not until then can the now disemployed forces of production occupy well-served locations, use the valuable sites and areas now idle and useless. Not until then will the earnings and wages of public officers be freely and justly paid in rent instead of forcibly collected by taxation. Until then there is no inducement for proprietors to use present rent for public services, only to have these services, the proper source of rent, canceled by taxation, and the rent itself annulled and destroyed.

 

If ever we single taxers discover that rent can be properly and profitably used to pay for public services only as production is so far untaxed that it can use these services, then we can become more faithful to that principle of freedom which is the basis of our philosophy and of ours alone. Then we will seek, with Henry George, to establish freedom by abolishing taxation, instead of thinking how to extend taxation into a field where, by its very nature, it cannot be imposed.

With the abolishment of taxes, whole new rivers of rent will rise out of the public services and flow back again to sustain them as surely as the waters rise out of the sea and seek it again. Under freedom, such is the natural law.

The implications of the Philosophy of Henry George are more profound, its applications more just and precise, than any of us have perceived. It is the Natural Law at the highest expression of its beauty and its divine creativeness: in Society. It is worthy of our love and our worship. Let us try to understand it.

Spencer Heath