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The Single Tax

How to protect free markets and advance social justice at the same time.

by James Leroy Wilson
January 20, 2005

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The one persistent difference between the Left and the Right has been that the Left does not trust the free market. Leftists think it is rigged somehow. No matter what one says about how getting rid of this or that set of taxes, laws, and regulations will make everyone, including the poor, better off, liberals do not believe it. They believe that the market needs checks, oversight, and a safety net. That in a totally free market system, wages will fall, and prices will fall at the benefit of large stores, driving smaller business out. This, in turn, will depress wages further in a downward spiral for the lower classes.

This may be true. But the solutions have not been helpful. The way to reduce poverty and increase wages is to increase demand for workers. Taxing high-income earners to redistribute the wealth only means the wealthy have less money to increase their businesses and provide more jobs. Tax policy today is more a punishment of “greed” - and also of initiative and innovation. Taxing those who can “most afford to pay” is taxing those most able to provide jobs for the poor.

That said, the market is rigged, by law. Just as in feudal times, it is rigged in favor of landowners. Those who own land yet do not use it are robbing the rest of us, including the poor, the opportunity to use it ourselves.

The problem is that land is treated as a commodity with a supply-and-demand price, like a recliner or a can of soup. Yet the recliner and can of soup are the product of human effort. Land, and its natural resources, is not. It existed before we were here, and everyone needs the use of it to survive.

If you pick an apple from a tree to eat, the apple is yours. You’re the one who put in the effort. And if you pick a bunch of apples to save or to sell, they’re still yours. But that doesn’t mean you own the tree, or the ground from which it grows. It doesn’t entitle you to prevent others from picking from the same tree.

It is only the community’s grant to you, a title of ownership, that permits you to own the tree and prevent others from using it. The tree once held in common now is yours, if you compensate the community. The same applies to all ground you occupy and wish to call yours. You have a right to it if you pay “rent” to the community.

The idea that land/natural resource rent should be the only form of tax was popularized by Henry George in the late 19th century. Popularly known as the “Single Tax,” the momentum for it died with George. Although it never caught on permanently, it has been successful to the degree it has been tried. The tax is essentially a property tax, but only on the land itself, not buildings or improvements on it - which belong to the owner.

Land, I believe, is by far the most important factor in the cost of living. The single tax would discourage land speculation and encourage development. On a downtown city block, there are two lots of equal size, each worth $1 million. On lot 1 is a $4 million dollar building with businesses and tenants, so the total value of the property is $5 million. Lot 2 is vacant, as the owner is waiting to sell at a higher price. Let’s say there is a 5% property tax. The owner of Lot 1 pays $250,000, and the owner of Lot 2 pays $50,000, which he’s willing to pay as he anticipates an appreciation of the land value in the near future.

Now, instead of a 5% property tax, what if there was a 15, 20, or 25% tax on just the land itself? The owners of both lots would pay identical amounts, but the owner of Lot 1 is enjoying income from tenants, whereas the owner of Lot 2 would be encouraged to either develop the lot or sell it quickly to someone who will. Holding on to land that provides no income would be increasingly unprofitable over time. The higher the tax, the more this would be true. Landowners would be encouraged to build, and to provide residential and business space. This creates demand for jobs in the construction industry, as well as for jobs for resulting new business. Dirt-cheap land values in blighted areas of the city would be opportunities for redevelopment. Land values throughout the city would, over time, be leveled, as no one would demand land for its own sake but only to use it for development.

Development would create a greater demand for labor, increasing wages, workplace safety, and benefits. Moreover, land speculation would disappear as it would only be a money-losing proposition. With no income, sales, or property taxes, people would be free to pursue their own dreams and would keep all the fruits of their labor. Corporations would pay taxes only on their land, not their profits. They would have no reason to use a foreign country as a tax shelter.

And the public revenue would pay for public services, with any extra funds returned to the people in the form of dividends. Residential homeowners would face a tax on their land, but it would be the only tax they would pay. There would be very little bureaucracy, and no way to cheat or evade the tax.

There would be environmental benefits as well. Vast amounts of space reserved for parking lots would want to be developed for more profitable uses by the owners, which will encourage more environmentally-friendly mass transit. In addition, the government would receive a royalty from oil, lumber, and mining companies who have exclusive privilege to extract non-renewable resources from the earth. Pollutants would also be taxed. This would encourage energy companies to research and develop clean, land-independent energy resources, such as solar power, for which they wouldn’t owe the government anything. And the airwaves would be rented. Instead of being granted free broadcast licenses in exchange for giving up First Amendment freedom, broadcast companies would buy channels and frequencies at market value.

The great “unequalizer” has been the poor’s lack of access to land. With the discouragement of land speculation, and the elimination of all taxes that discourage production and investment, the market would slant more in favor of the labor market. The free market isn’t the problem - it is land speculation that allows the rich to get richer without expanding businesses or hiring workers.

There are many internet resources, as well as several Henry George schools and institutes throughout the country and world. One place to begin learning more about the Single Tax is the School of Cooperative Individualism. When discussing social justice issues, we should be open-minded enough to look beyond the modern Welfare State and investigate more creative and innovative ways to provide the poor more opportunities.

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Carl R. Johnson writes:
March 1, 2005
So glad to see someone in this generation understanding The Single Tax(James Leroy Wilson 1/19/05). I have been convinced for 55 years but had few converts. Recently proposed this overlooked Natural Law - Our planet, the land seas and sea resources, atmosphere, and all oil, minearals and other resources, whatever they might be, belong to all the people of the planet and should be shared as equally as possible. -Carl Johnson

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