Spencer Heath Archive

Item 1217

Carbon of letter from Heath at 310 Riverside Drive, New York City, to John Lawrence Monroe, Field Director, Henry George School of Social Science, 211 West 79th Street, NYC.

January 21, 1936

 

 

 

Dear Mr. Monroe:

     You have asked me for an explanation of a question upon which you say some Pittsburgh friends of the Henry George School are unable to agree. Here is your question:

How can we tax land values without at the same time conferring equivalent benefits which will be absorbed in the value of the land thus leaving the land-owners undisturbed in the exercise of the same privileges which they have when not taxed at all?

     The first thing to note is that the question has reference merely to the levying of a tax, and not to the application of the remedy that Henry George proposed, which he stated was, in its practical form, “To abolish all taxation save that upon land values.” He sets these nine words alone in a separate paragraph, and, for still further emphasis, he has them printed in italicized form. He further admonished, in his “Standard,” January 21, 1888, “it is not by the mere levying of a tax that we propose to abolish poverty; it is by securing the blessings of liberty.” I make these quotations merely to make it clear that the question stated is not a question involving the application of or any of the merits of the great proposal of Henry George. He proposed to abolish poverty by the abolishment of taxes and, as he wrote, “not by the mere levying of a tax.”

     However, we can take the stated question on its own merits, but to keep out of the fog we must get right down to actualities and see that the only thing that can constitute a tax or any income or revenue of any kind is wealth  —  something that can be touched and taken. Value is an abstraction — a supposed or actual or potential exchange relationship. Such an abstraction cannot constitute taxes and cannot be taxed. When we say, “tax land values,” we mean, touch and take the actual wealth (the economic rent) that land users, through the mechanism of exchange, yield up in payment for the special services and advantages they receive. Every society establishes proprietors (land owners) whose function it is to collect this rent. To require these proprietors to convert the rent to public uses instead of to their own use is the ultimate reality behind what we call taxing land values. Now, so far as this is realized, so far as this revenue of rent is converted to public uses, it will create public services and advantages and all these will enhance rents, for public services and advantages are exactly what economic rent is payment for. And if this rent is converted efficiently into public services and advantages for which there is need and demand they will be worth to land owners in rent at least as much as they have cost in taxes, and rent will be accordingly enhanced.

     But if there is a great desire to prevent land owners from making any advantage out of their conversion of rent into public services, if there is a desire to prevent them from having any reward (or wages) for performing such service, this can be accomplished by taking the rent revenues out of the hands of the proprietors and turning them over to persons who have less interest than land owners, who have no rents to be enhanced by public services, and who may be depended upon to use this revenue as wastefully and destructively as public revenues are now generally employed. In other words, to circumvent the land owner, it is only necessary to turn the rent over from him to the politicians and depend upon them to handle this revenue in ways that will not result in public services. That they may be depended upon in this respect seems rather well assured from the fact that at the present time nearly all political authorities, state, local, and national, seem bent upon diverting not only the current revenues, but the vast resources of the public credit as well, to ends that not only fail to serve, but are highly restrictive and destructive to that free production of wealth and exchange of services in which liberty consists.

     So this partial and one-sided proposal of our Pittsburgh friends merely to tax land values — to tax rent out of the hands of land-owners and into the hands of politicians — impales them on the horns of a dilemma: either they will leave the rent revenues (such as they are) to the private uses of land-owners or by taxation they will forcibly turn them over to our present administrative authorities. If these authorities spend them in ways that create public services and advantages they will go back to the land owners in the form of enhanced rents. But if the politicians use them in ways that are destructive or that yield no public return, then these rent revenues will be going to persons who give no services, just as they did when left with the land owners themselves, and this last state is no better than the first. Perhaps the only sure way to prevent any private advantage arising from this revenue would be to take that portion of the community wealth represented by rent and dump it into the sea — a proposal that has been attributed, unfairly I hope, to Henry George.

     We get all this confusion by degrading Henry George from his high magnificence as emancipator of men and apostle of human liberty to the sordid level and petty dimensions of just another layer-on of taxes, falsely classing him with the devotees of restrictionism and other “do-gooders” so hot for chasing their particular devils out of society by force and violence and more and more laws. What we Single-Taxers need to understand is the Single Tax in its true and full beauty and creativeness. Henry George has led our feet into the sublime path towards freedom and has trusted us to proceed in the light of this eternal principle. For its practical application, he gave us his concise proposal, “To abolish all taxation save that on land values.” Merely taxing land values cannot result in any wealth or any freedom, but every repeal of other taxes casts a burden from the back of unfree labor and manacles of unemployment from its willing hands. To abolish all taxes on production — on labor and its products — is to open not merely resources, but the very floodgates of creation as to wealth and services. Government would be vastly simplified — shorn of its predatory powers and paralyzing restrictions on the economic life. It could then devote itself to public services instead of restraints and repressions, and all of its services would augment and magnify the revenue of rent that would be paid out of the abundance of production, and this rent revenue would be the only fund of wealth — taxes being abolished — out of which all the cost of government, including the wages of all public servants and employees and the interest on the capital used for public purposes, could be paid.

     Can it be supposed that land-owners would suffer from this? Yes, they might, but only in case the public revenues, the taxes, were so poorly collected or the public services so badly supervised and administered — the taxes so badly spent — that rents would be destroyed instead of created. But, the taxes being well spent and administered, the excess of rent received above taxes paid would depend wholly upon adequate collection and the skill and efficiency of the administration of the public services.

     Freedom from economic restriction is a command of nature that must be obeyed. Given this obedience, a single tax on rent — other taxes being abolished — becomes self-enacting and self-executing, for if land-owners should neglect to support the public services there could be no support for rent. And self-interest must drive them to far more than mere financial support. It must compel them, in their organized capacity, to give attention and exercise supervisory authority over governmental enterprises and services, for only in this way, by themselves giving services, can they keep their income from rent above their outgo in taxes, and this difference becomes their automatic compensation strictly in proportion to the value of their public work.

     It requires some concentration of thought and cool reflection to perceive these equable and automatic relationships but, once perceived, it is seen that the full application of the Single Tax in the practical manner that Henry George proposed solves, without stress or strain, three of the gravest problems of the present day: It lifts all restraints and restrictions on employment, thus letting everyone be employed. It opens the way to automatic, abundant and profitable financing of every public service. And it redeems land ownership into its rightful and creative function and service in the honest and efficient administration of public enterprises and affairs.

     Our Pittsburgh friends have shown great enterprise and intelligence in various aspects of their work. I shall be very happy to have them give their serious consideration to the constructive ideas and important relationships I have tried to bring out.

                                 Sincerely yours,

                                    Spencer Heath