Chapter III Of the Effect upon Individuals and Classes

When it is first proposed to put all taxes upon the value of land, and thus confiscate rent, all land holders are likely to take the alarm, and 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 land holders do not largely exceed their interests as laborers or capitalists, or both. And further consideration will show that though the large land holders may lose relatively, yet even in their case there will be an absolute gain. For, the increase in production will be so great that labor and capital will gain very much more than will be lost to private land ownership, while in these gains, and in the greater ones involved in a more healthy social condition, the whole community, including the land owners themselves, will share.

When it is first proposed to put all taxes on the value of land and so confiscate rent, land holders will likely take alarm. There will be appeals to the fears of owners of small farms and homesteads, who will be told this is a plan to rob them of their hard-earned property. A moment's reflection shows that the proposal should appeal to everyone whose interests as land holders do not far exceed their interests as laborers or capitalists, or both. Further thought shows that large land holders may lose relatively but will still gain absolutely. Production will grow so much that labor and capital will gain far more than private land ownership loses. And the whole community, land owners included, will share in these gains and in the greater ones of a healthier social condition.

In a preceding chapter I have gone over the question of what is due to the present land holders, and have shown that they have no claim to compensation. But there is still another ground on which we may dismiss all idea of compensation. They will not really be injured.

In an earlier chapter I went over what is due to the present land holders and showed that they have no claim to compensation. There is still another ground for dismissing any idea of compensation. They will not really be injured.

It is manifest, of course, that the change I propose will greatly benefit all those who live by wages, whether of hand or of head—laborers, operatives, mechanics, clerks, professional men of all sorts. It is manifest, also, that it will benefit all those who live partly by wages446 and partly by the earnings of their capital—storekeepers, merchants, manufacturers, employing or undertaking producers and exchangers of all sorts—from the peddler or drayman to the railroad or steamship owner—and it is likewise manifest that it will increase the incomes of those whose incomes are drawn from the earnings of capital, or from investments other than in lands, save perhaps the holders of government bonds or other securities bearing fixed rates of interest, which will probably depreciate in selling value, owing to the rise in the general rate of interest, though the income from them will remain the same.

Plainly the change I propose will greatly benefit everyone who lives by wages, whether of hand or head: laborers, operatives, mechanics, clerks and professional men of every sort. It will also benefit everyone who lives partly by wages446 and partly by the earnings of capital: storekeepers, merchants, manufacturers, and employing or undertaking producers and exchangers of all sorts, from the peddler or drayman to the railroad or steamship owner. It will likewise raise the incomes of those who draw them from the earnings of capital, or from investments other than in land. The exception is perhaps the holders of government bonds or other securities with fixed rates of interest. Their selling value will probably fall because the general rate of interest rises, though the income from them will stay the same.

Take, now, the case of the homestead owner—the mechanic, storekeeper, or professional man who has secured himself a house and lot, where he lives, and which he contemplates with satisfaction as a place from which his family cannot be ejected in case of his death. He will not be injured; on the contrary, he will be the gainer. The selling value of his lot will diminish—theoretically it will entirely disappear. But its usefulness to him will not disappear. It will serve his purpose as well as ever. While, as the value of all other lots will diminish or disappear in the same ratio, he retains the same security of always having a lot that he had before. That is to say, he is a loser only as the man who has bought himself a pair of boots may be said to be a loser by a subsequent fall in the price of boots. His boots will be just as useful to him, and the next pair of boots he can get cheaper. So, to the homestead owner, his lot will be as useful, and should he look forward to getting a larger lot, or having his children, as they grow up, get homesteads of their own, he will, even in the matter of lots, be the gainer. And in the present, other things considered, he will be much the gainer. For though he will have more taxes to pay upon his land, he will be released from taxes upon his house and improvements,447 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. His only loss will be, if he wants to sell his lot without getting another, and this will be a small loss compared with the great gain.

Take the homestead owner: the mechanic, storekeeper or professional man who has secured himself a house and lot where he lives. He looks on it with satisfaction as a place his family cannot be put out of if he dies. He will not be injured. On the contrary, he will gain. The selling value of his lot will fall, and in theory it will disappear entirely. But its usefulness to him will not disappear. It will serve his purpose as well as ever. The value of all other lots will fall or disappear in the same ratio, so he keeps the same security of always having a lot that he had before. He loses only as a man who has bought a pair of boots may be said to lose when the price of boots later falls. His boots are just as useful to him, and he can get the next pair cheaper. So his lot will be as useful to him. If he looks ahead to getting a larger lot, or to his children getting homesteads of their own as they grow up, he will gain even in lots. In the present, other things considered, he will gain a great deal. He will pay more tax on his land. But he will be released from taxes on his house and improvements,447 on his furniture and personal property, and on all that he and his family eat, drink and wear. His earnings will rise greatly with the rise of wages, constant employment and brisker trade. His only loss will come if he wants to sell his lot without getting another, and that will be small beside the great gain.

And so with the farmer. I speak not now of the farmers who never touch the handles of a plow, who cultivate thousands of acres and enjoy incomes like those of the rich Southern planters before the war; but of the working farmers who constitute such a large class in the United States—men who own small farms, which they cultivate with the aid of their boys, and perhaps some hired help, and who in Europe would be called peasant proprietors. Paradoxical as it may appear to these men until they understand the full bearings of the proposition, of all classes above that of the mere laborer they have most to gain by placing all taxes upon the value of land. That they do not now get as good a living as their hard work ought to give them, they generally feel, though they may not be able to trace the cause. The fact is that taxation, as now levied, falls on them with peculiar severity. They are taxed on all their improvements—houses, barns, fences, crops, stock. The personal property which they have cannot be as readily concealed or undervalued as can the more valuable kinds which are concentrated in the cities. They are not only taxed on personal property and improvements, which the owners of unused land escape, but their land is generally taxed at a higher rate than land held on speculation, simply because it is improved. But further than this, all taxes imposed on commodities, and especially the taxes which, like our protective duties, are imposed with a view of raising the prices of commodities, fall on the farmer without mitigation. For in a country like the448 United States, which exports agricultural produce, the farmer cannot be protected. Whoever gains, he must lose. Some years ago the Free Trade League of New York published a broadside containing cuts of various articles of necessity marked with the duties imposed by the tariff, and which read something in this wise: “The farmer rises in the morning and draws on his pantaloons taxed 40 per cent. and his boots taxed 30 per cent., striking a light with a match taxed 200 per cent.,” and so on, following him through the day and through life, until, killed by taxation, he is lowered into the grave with a rope taxed 45 per cent. This is but a graphic illustration of the manner in which such taxes ultimately fall. The farmer would be a great gainer by the substitution of a single tax upon the value of land for all these taxes, for the taxation of land values would fall with greatest weight, not upon the agricultural districts, where land values are comparatively small, but upon the towns and cities where land values are high; whereas taxes upon personal property and improvements fall as heavily in the country as in the city. And in sparsely settled districts there would be hardly any taxes at all for the farmer to pay. For taxes, being levied upon the value of the bare land, would fall as heavily upon unimproved as upon improved land. Acre for acre, the improved and cultivated farm, with its buildings, fences, orchard, crops, and stock could be taxed no more than unused land of equal quality. The result would be that speculative values would be kept down, and that cultivated and improved farms would have no taxes to pay until the country around them had been well settled. In fact, paradoxical as it may at first seem to them, the effect of putting all taxation upon the value of land would be to relieve the harder working farmers of all taxation.

So it is with the farmer. I am not speaking now of farmers who never touch the handles of a plow, who cultivate thousands of acres and enjoy incomes like those of the rich Southern planters before the war. I mean the working farmers, a large class in the United States, who own small farms and cultivate them with the help of their boys and perhaps some hired help. In Europe they would be called peasant proprietors. It may seem a paradox to them until they understand the whole proposition, but of all classes above the mere laborer they have the most to gain from placing all taxes on the value of land. They generally feel that they do not get as good a living as their hard work ought to give them, though they may not be able to trace the cause. The fact is that taxation as now levied falls on them with peculiar severity. They are taxed on all their improvements: houses, barns, fences, crops and stock. Their personal property cannot be concealed or undervalued as readily as the more valuable kinds concentrated in the cities. They are taxed on personal property and improvements, which owners of unused land escape. Their land is also generally taxed at a higher rate than land held for speculation, simply because it is improved. Beyond this, all taxes on commodities fall on the farmer without relief. That is especially true of taxes like our protective duties, which are imposed to raise the prices of commodities. In a country like the448 United States, which exports agricultural produce, the farmer cannot be protected. Whoever gains, he must lose. Some years ago the Free Trade League of New York published a broadside with pictures of various necessities marked with the duties the tariff put on them. It read something like this: “The farmer rises in the morning and draws on his pantaloons taxed 40 per cent. and his boots taxed 30 per cent., striking a light with a match taxed 200 per cent.” It followed him through the day and through life. At the end, killed by taxation, he is lowered into the grave with a rope taxed 45 per cent. That is a graphic picture of where such taxes finally fall. The farmer would gain greatly by replacing all these taxes with a single tax on the value of land. A tax on land values would fall with greatest weight not on the agricultural districts, where land values are comparatively small, but on the towns and cities, where land values are high. Taxes on personal property and improvements fall as heavily in the country as in the city. And in sparsely settled districts the farmer would have hardly any taxes to pay. The taxes would be levied on the value of the bare land, so they would fall as heavily on unimproved land as on improved. Acre for acre, an improved and cultivated farm, with its buildings, fences, orchard, crops and stock, could be taxed no more than unused land of equal quality. The result would be that speculative values would be kept down, and cultivated and improved farms would pay no taxes until the country around them was well settled. However paradoxical it may seem at first, putting all taxation on the value of land would in effect relieve the harder working farmers of all taxation.

But the great gain of the working farmer can be seen only when the effect upon the distribution of population449 is considered. The destruction of speculative land values would tend to diffuse population where it is too dense and to concentrate it where it is too sparse; to substitute for the tenement house, homes surrounded by gardens, and fully to settle agricultural districts before people were driven far from neighbors to look for land. The people of the cities would thus get more of the pure air and sunshine of the country, the people of the country more of the economies and social life of the city. If, as is doubtless the case, the application of machinery tends to large fields, agricultural population will assume the primitive form and cluster in villages. The life of the average farmer is now unnecessarily dreary. He is not only compelled to work early and late, but he is cut off by the sparseness of population from the conveniences, the amusements, the educational facilities, and the social and intellectual opportunities that come with the closer contact of man with man. He would be far better off in all these respects, and his labor would be far more productive, if he and those around him held no more land than they wanted to use.56 While his children, as they grew up, would neither be so impelled to seek the excitement of a city nor would they be driven so far away to seek farms of their own. Their means of living would be in their own hands, and at home.

But the working farmer's great gain shows only when we consider the effect on the distribution of population.449 Destroying speculative land values would tend to spread population out where it is too dense. It would gather it where it is too sparse. Homes surrounded by gardens would replace the tenement house, and agricultural districts would be fully settled before people were driven far from their neighbors to look for land. City people would get more of the pure air and sunshine of the country, and country people more of the economies and social life of the city. If, as is doubtless the case, machinery tends toward large fields, the farming population will take the primitive form and cluster in villages. The average farmer's life is now needlessly dreary. He must work early and late, and the sparseness of population cuts him off from the conveniences, amusements, schools, and social and intellectual opportunities that come when people live closer together. He would be far better off in all these respects, and his labor far more productive, if he and those around him held no more land than they wanted to use.56 His children would not feel so driven to seek the excitement of a city as they grew up. Nor would they have to go so far away to find farms of their own. Their means of living would be in their own hands, and at home.

In short, the working farmer is both a laborer and a capitalist, as well as a land owner, and it is by his labor450 and capital that his living is made. His loss would be nominal; his gain would be real and great.

In short, the working farmer is a laborer and a capitalist as well as a land owner, and his living is made by his labor450 and capital. His loss would be nominal. His gain would be real and great.

In varying degrees is this true of all land holders. Many land holders are laborers of one sort or another. And it would be hard to find a land owner not a laborer, who is not also a capitalist—while the general rule is, that the larger the land owner the greater the capitalist. So true is this that in common thought the characters are confounded. Thus to put all taxes on the value of land, while it would be largely to reduce all great fortunes, would in no case leave the rich man penniless. The Duke of Westminster, who owns a considerable part of the site of London, is probably the richest land owner in the world. To take all his ground rents by taxation would largely reduce his enormous income, but would still leave him his buildings and all the income from them, and doubtless much personal property in various other shapes. He would still have all he could by any possibility enjoy, and a much better state of society in which to enjoy it.

This is true in varying degrees of all land holders. Many land holders are laborers of one sort or another. It would be hard to find a land owner who is not a laborer and is also not a capitalist, and the general rule is that the larger the land owner, the greater the capitalist. This is so true that in common thought the two are confused. So putting all taxes on the value of land would greatly reduce all great fortunes, but would in no case leave a rich man penniless. The Duke of Westminster, who owns a considerable part of the site of London, is probably the richest land owner in the world. Taking all his ground rents by taxation would greatly reduce his enormous income. It would still leave him his buildings and all the income from them, and doubtless much personal property in various other forms. He would still have all he could possibly enjoy, and a much better state of society in which to enjoy it.

So would the Astors of New York remain very rich. And so, I think, it will be seen throughout—this measure would make no one poorer but such as could be made a great deal poorer without being really hurt. It would cut down great fortunes, but it would impoverish no one.

The Astors of New York would likewise remain very rich. And so, I think, it will be seen throughout. This measure would make no one poorer except those who could be made a great deal poorer without being really hurt. It would cut down great fortunes, but it would impoverish no one.

Wealth would not only be enormously increased; it would be equally distributed. I do not mean that each individual would get the same amount of wealth. That would not be equal distribution, so long as different individuals have different powers and different desires. But I mean that wealth would be distributed in accordance with the degree in which the industry, skill, knowledge, or prudence of each contributed to the common stock. The great cause which concentrates wealth in the hands of those who do not produce, and takes it from the hands of those who do, would be gone. The451 inequalities that continued to exist would be those of nature, not the artificial inequalities produced by the denial of natural law. The non-producer would no longer roll in luxury while the producer got but the barest necessities of animal existence.

Wealth would be not only enormously increased but equally distributed. I do not mean that each individual would get the same amount of wealth. That would not be equal distribution, so long as individuals have different powers and different desires. I mean that wealth would be distributed according to how much each person's industry, skill, knowledge or prudence contributed to the common stock. The great cause that concentrates wealth in the hands of those who do not produce, and takes it from those who do, would be gone. The451 inequalities that remained would be those of nature, not the artificial inequalities produced by denying natural law. The non-producer would no longer roll in luxury while the producer got only the barest necessities of animal existence.

The monopoly of the land gone, there need be no fear of large fortunes. For then the riches of any individual must consist of wealth, properly so-called—of wealth, which is the product of labor, and which constantly tends to dissipation, for national debts, I imagine, would not long survive the abolition of the system from which they spring. All fear of great fortunes might be dismissed, for when every one gets what he fairly earns, no one can get more than he fairly earns. How many men are there who fairly earn a million dollars?

With the monopoly of land gone, there need be no fear of large fortunes. Any individual's riches would then have to consist of wealth, properly so called, which is the product of labor and constantly tends to dissipate. National debts, I imagine, would not long outlive the abolition of the system they spring from. All fear of great fortunes might be dismissed, for when everyone gets what he fairly earns, no one can get more than he fairly earns. How many men are there who fairly earn a million dollars?