mmmm T5he A B C of Taxation With Boston Object Lessons, Private Property in Land, and Other Essays and Addresses By C. B. £ILLEBROWN Fourth Edition Specially Revised \n Garden City New York Doubleday, Page & Company 1916 PREFACE Twelve years of zealous study and discussion of the subject of taxation have brought me at last to what should have been my starting point —what, as it now appears to me, should be the starting point of every student, to wit: the recognition that investments ­ in land are exempt from taxation. The desire to make the path smoother and shorter for those who follow me is the reason for bringing together in a single volume these hitherto scattered miscellanies. Notwithstanding their desultory form, these essays, discussions, and illustrations present what are in my judgment the fundamental issues in the field of taxation, ­ and I am proud to say that most of the specific views herein expressed have had the substantial approval of a majority of the prominent teachers of political economy. Although most ot the matter contained in this volume has previously appeared in print, any value that it ever had is here enhanced by revision of figutes and conclusions to date. When referring to Henry George’s views, I have taken pains to give what I believe to have been his final judgments, making the writer of mature age the interpreter of his own earlier masterpiece. I welcome this opportunity to record my lasting gratitude to all of the many friends who from first to last have helped to steady a wavering hand, and I PREFACE cannot refrain from acknowledging my special obligations ­ to the Hon. Charles Francis Adams; Professor F. Spencer Baldwin, Boston University; Professor Charles J. Bullock, Harvard University; the Rt. Rev. William Byrne, D. D., thirty years Vicar-General of Archbishop Williams, of Boston; Professor Thomas N. Carver, Harvaid University; Professor Henry R. Seager, Columbia University; Professor E. R. A. Seligman, Columbia University; the late Thomas G. Shearman ­ ; Professor George Ray Wicker, Dartmouth College; and John Buckley Willis, A M., for their invaluable criticism^ and encouragement. C. B. Fillebrown. Boston, January, igog. IN FOUR PARTS Part I. The A B C of Taxation. Part II. Three Boston Object Lessons in Taxation. Part III. Private Property in Land, and other Essays and Addresses. Part IV. Appendix. PREFACE TO FOURTH EDITION It is a satisfaction, after six years of exposure to criticism, not to feel constrained to unsay anything that was said in the first edition of these pages. Alterations from previous edition of greater or less importance are to be found on pages 3, 4, 16, 17, 19, 27, 28, 29, 31, 33, 36, 40, 45, 113, 128, 129, 132, and 161. Boston, January, igi6. C. B. F. CONTENTS CHAPTER I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. A. B. C. Preface A. Ground Rent a Social Product B. A Tax Upon Economic Rent Cannot ­ be Shifted C. The Selling Value of Land an Untaxed Value .... First Boston Object Lesson — Winter Street and the Single Tax. (Illustrated) ­ Second Boston Object Lesson — Washington ­ Street and the Single Tax. (Illustrated) Third Boston Object Lesson — Cornhill and the Single Tax. (Illustrated ) Private Property in Land Justice of the Single Tax The Single Tax and the Farmer Public Utilities—Regulation by Taxation ­ Inheritance and Income Taxes The Single Tax APPENDIX Ethics of the Single Tax: Its Breadth and Catholicity Tolstoy and Henry George The Disproportionate Treatment of Agricultural ­ Rents by Economists . PAGE V 3 3i 36 55 66 79 95 108 122 I32 I48 153 167 168 I 7 I I THE A B C OF TAXATION APPENDIX PAGE D. Statement of the Rev. Edward McGlynn 173 E. A Protest Against Unjust Taxation . 184 F. Agreements in Political Economy . . 187 G. Details of One Hundred and Twenty Boston Property Sales . . .190 H. Details of Seven Hundred and Fifty-one Boston Rentals . . , . 193 PART I. The Three Legs of the Tripos. The Threefold Support Upon Which the Single Tax Rests. Chapter I. A. The Social Origin of Ground Rent. Chapter II. B. The Nonshiftability of a Land Tax. Chapter III. C. The Ultimate Burdenlessness of a Land Tax. Chapter I A THE FIRST LEG OF THE SINGLE TAX TRIPOS THE SOCIAL ORIGIN OF GROUND RENT GROUND RENT, WHAT LAND IS WORTH ANNUALLY FOR USE, IS A CREATION OF THE COMMUNITY, A SOCIAL PRODUCT — ALL LOCAL TAXES ARE SPENT UPON THOSE THINGS WHICH MAKE AND MAINTAIN GROUND RENT. I.—Definition of Ground Rent* (i) “Ground rent is what land is worth for use.” (2) Strictly speaking, the “worth for use” attaches not to the land itself, but to scores of things exterior to the land and through it available for use, so that the following is a fuller description: Gross ground rent—economic rent—the annual site value of land—what land is worth annually for use—what the land does or would command for use per annum if offered in open market—the annual value of the exclusive use and control of a given area of land, involving the enjoyment of those “ rights and privileges thereto pertaining” which are stipulated in every title deed, and which, enumerated specifically, are as follows; right and ease of access to water, health inspection sewerage, fire protection, police, schools, libraries, museums, parks, playgrounds, steam and electric railway service, gas and electric lighting.telegraph and telephone service,subways, . ? See Appendix F. 3 4 THE A B C OF TAXATION ferries, churches, public schools, private schools, colleges, universities, ­ public buildings—utilities which depend for their efficiency and economy on the character of the government; which collectively constitute the economic and social advantages ­ of the land independent of any quality or content of the ground or land itself, and which are due to the presence and activity of population, and are inseparable therefrom, including the benefit of proximity to, and command of, facilities ­ for commerce and communication with the world—an artificial value created primarily through public expenditure of taxes. For the sake of brevity, the substance of this definition ­ may be conveniently expressed as the value of “proximity.” ­ It is ordinarily measured by interest on investment plus taxes. II.—The Nature of Ground Rent As defined by Mr. Shearman, ground rent is, in its nature, " a tribute which natural laws levy upon every occupant of land as the market price of all the social as well as natural advantages appertaining to that land, including necessarily his just share of the cost of government.” It is found operative in every civilized country, automatically collecting “from every citizen an amount almost exactly proportionate to the fair and full market value of the benefits which he derives from the government under which he lives and the society which surrounds him.” It is a tribute, “a tax just, equal, full, fair, paid for full value received.” “It is not merely a tax which justice allows; it is one which justice demands. It is not merely one which ought to be collected; it is one which infallibly will be and is collected. It is not merely one which the State ought to see collected; it is one which, in the GROUND RENT A SOCIAL PRODUCT 5 long run, the State cannot prevent being collected. Seldom has there been a more beautiful ­ illustration of the wise yet relentless working of natural law than in the proved impossibility ­ of justly collecting any tax other than upon ground rent. It shows that nature makes it impossible to execute justly a statute which is in its nature unjust.” This definition of Mr. Shearman is offered as one difficult to be improved or condensed. Such, it may be added, is the nature of rent — ground rent — that all the public and private improvements ­ of a community to-day are reflected in the land values of that community. Not only this, but the value of all those ideal public improvements conceived of as being possible under Utopian conditions would be similarly absorbed, as it were, in the ground, would be reflected in its site value. Stand before a big mirror and you will see your image perfectly reflected before you. If you are a man scantily, shabbily clad, so is the image in the glass. The addition of rich and costly attire is imaged in the glass. Load yourself with jewels and fill your hands with gold: in the mirror, true to nature, is the image and likeness of them all. Not more perfectly, nor more literally, is your image reflected in the mirror than are public improvements reflected in the value of the land. One peculiarity in the nature of ground rent to which we urge your attention is the subtle relation existing between this natural income and the artificial outgo °f the public taxes — a relation not unlike that of cause and effect, by which the wise expenditure of the 6 THE A B C OF TAXATION tax contributes, in a manner especially direct, to the element of ground rent. Simple illustrations may help to open the mind to a consideration of whatever may seem novel or strange in the re-statement of a familiar truth. For instance: The cook turns the crank of her coffee mill; the whole coffee that was in the hopper comes out ground coffee, but it is coffee just the same. The Minneapolis miller lets on the water that turns the crank of his flour mill; the wheat that goes into the hopper comes out flour, wheat in a more subtle form. The people turn the crank of a great tax mill; the taxes that go into the hopper come out ground rent, no tax quality lost, no rent ingredient added. Or again: The myriad springs and rivulets of the great Mississippi are continuously delivering themselves ­ in one great river to the sea. Suppose that some day you should read in the weather bulletin that nature had decided to suspend the regular return of these waters in clouds and rain and dew to their point of departure. How long would it be before the Mississippi Valley would be as parched and dry as the Desert of Sahara, or the North End of the city of Boston, or the East Side of the city of New York ? Or, more pertinent still, because more vital; The constant round of taxes and ground rent is the blood circulation of the body politic. When the heart throws out the life blood through the arteries, if that blood does not return through the veins, the patient dies — not of heart failure, but from loss of blood. When the public heart charges the arteries of the land with ground GROUND RENT A SOCIAL PRODUCT 7 rent, if that ground rent does not return, the body politic is prostrated or enervated by loss of blood. The body politic to-day, like a man with a ravenous appetite, is cleaning its plate of all the millions a year that it can earn, and mortgaging the future for nearly as much more, always eating, yet always hungry, and simply because the best part of its millions of dollars' worth of arterial life blood, instead of coming back to the public heart, ebbs rapidly away through severed blood vessels in the private appropriation of ground rent. These illustrations of the miscarriage of a beneficent ­ provision seem to hint strongly at the true theory of ground rent, as waiting to be naturally developed under a natural law, and as a natural social product. III.—The Operation of Ground Rent Critical consideration is invited to Mr. Shearman’s statement that the operation of ground rent is to exact from every user of land the natural tribute which he ought to pay in return for the perpetual public and social advantages secured to him by his location, a part of which natural tribute now goes to the State in the form of a tax, and the remainder to the landlord in the form of rent. Objection to monopolies and special privileges is that they participate ­ in the private appropriation of an undue share of this natural tribute, and while recognising that in the end all quasi-public, as well as all public service, should be at the least practicable cost to the people, it is held that meantime whatever monopoly is enjoyed should be obliged, through taxation, to repay to the * Quoted from the Ford Franchise Tax Act of New York. 8 THE A B C OF TAXATION public a full and fair equivalent for the privilege conceded to it. The monopolies and special privileges which should properly share with land values the burden of taxation, ­ may be partially enumerated as follows: the private appropriation of natural resources such as gold, silver, copper, iron, and coal mines, oil fields, and water powers; all franchises of steam and electric railways; all other public franchises, granted to one or several persons incorporated, from which all other people are excluded, and which include all “rights, authority, or permission to construct, maintain, or operate in, under, above, upon, or through any streets, highways, or public places, mains, pipes, tanks, conduits, ­ or wires, with their appurtenances for conducting water, steam, heat, light, power, gas, oil, or other substance, or electricity for telegraphic, telephonic, or other purposes.”* The reforms contemplated by the single tax would leave the State and the individual to deal together exactly as individuals deal with one another in ordinary business. Persons desiring special privileges would rent them from the State or the municipality, just as they now rent them from individuals and corporations, and on similar terms, fixed from year to year. When paid for in this way, the special privilege feature would be eliminated. Then there really would be no special privileges, and there would be need of no other taxation. Hence, we say, the least the public can do is to tax and collect upon these special privileges, including ground rent, a sum sufficient to defray all public expenses. GROUND RENT A SOCIAL PRODUCT 9 The value of these special privileges is held to be ground rent, which in turn is held to be very largely, if not entirely, a social product. IV.—The Office of Ground Rent The true office of ground rent is that of a board of equalisation—equalisation of taxation, of distribution, ­ and of opportunity. The tendency of an increase in the tax upon ground rent is not only to equalise taxation and distribution, but to equalise the opportunity of access to what is erroneously called the land, which of itself, even in a city, would be of little or no use if it had a perpetual fifty-foot tight board fence around it. In this clear distinction between land and land value, which cannot be too critically noted, may there not be found an explosion of the notion that a man has a right to the private appropriation of ground rent, because his father bought and paid for the land fifty or one hundred years ago? The question is: When he bought the land fifty or one hundred years ago, did he buy and pay for the land value of to-day? In 1686 a company having five shares and five stockholders bought a lot of land in Philadelphia for |j. In 1900 the same company, ­ with its five shares and five stockholders, sold the value of the same land for $1,000,000. Does it sound reasonable to say that for one pound sterling in 1686 these five men bought and paid for the $1,000,000 land value of 1900, with its ground tent of $40,000 a year? Would not such a sale in 1686 of goods to be delivered two hundred and fourteen years later be dealing in futures with a 10 THE A B C OF TAXATION vengeance? True it is that the land sold to-day is the same land bought in 1686. But it is just as true that its value to-day is not the value of the land itself, but is the value of the rights and privileges pertaining thereto, and exterior to the land itself. The demand that enhances land value is not for land itself, but for the command' of these same rights and privileges. Land value being a social creation,* and rent being socially maintained, equal access to the rights and privileges pertaining to the land can be promoted by the taxation of ground rent alone, and by this means only. Ground rent, the natural tax feeder, extracts from the user of land the exact measure of his advantage over other men in his exclusive enjoyment ­ of rights and privileges pertaining to his own location, and the whole tendency of the taxation of ground rent is to equalise participation in these common rights and privileges, by commuting into dollars and cents, which can be divided, those indivisible ­ advantages of location, which can only be enjoyed individually. Whatever of rent goes into the public * Professor J. B. Clark, then of Smith College, now of Columbia University, said, in a discussion at Saratoga, N. Y., in 1890: “The community has created the value that resides in land, and whoever usurps the ownership of it deals a blow at the community. What is more, he strikes at the basis of the civil order, since governments have been evolved in and through the effort to secure to each producer the value that he brings into existence, and it is anarchic in principle to habitually counteract this effort. “Of the wealth that resides in land, the State is certainly the creator and the original and lawful owner. As a sovereign it has a certain ultimate ownership ­ of all property. Treasures of every kind are, in the last analysis, its own. As the creator, not of the substance of the earth, but of the value residing in it, the State has a producer’s immediate right to use and dispose of its product. If any theory depreciates either the State’s reserved right over all wealth or its special producer’s claim to the wealth residing in land, so much the worse for that theory.” GROUND RENT A SOCIAL PRODUCT n treasury tends to a fairer distribution of produce in Wages earned. Whatever of taxation is transferred from other wealth to ground rent leaves so much more Wealth to be distributed in wages. Again, it is submitted that the true office of ground rent is to offer a communal shoulder suited to bear all the burden of common needs, leaving produce — current wealth — to be distributed, as fast as produced, ­ in wages and interest, the total volume of which will always be increased by the amount of rent appropriated through the taxation of whatever of economic rent there is in special privilege. Ground rent being a social product, is not its private appropriation a special privilege? V.—The Cause of Ground Rent The dimensions, as well as the continuous character of the contribution made by the people to the growth and volume of ground rent, are seldom measured — by many persons hardly suspected. Almost anything Use that he owns, except land, a man may appropriate, destroy, tear down, burn down, remove, consume, change in form, wear out. To the land itself he cannot do any of these things. The value of its use is ground rent, an annual value, which is all that the owner of land can consume each year. The land value itself survives, and usually intact. People speak of owning land, because they or their fathers have bought and paid for it. A simple illustration will indicate how a disproportionate ­ reliance may be placed upon this argument, considered in the light of all the causes contributing ­ to the value of land. Suppose, for instance, THE A B C OF TAXATION 12 that a vacant lot was bought fifty years ago for $i,ooo, which to-day is worth 110,000. The chances are that when the purchaser paid his original 11,000, the people, in one capacity or another, paid for the same year $50 to maintain that purchase value, and that for forty-nine years thereafter the people have paid in annual arithmetical progression up to I500 for the present year. The purchaser paid 11,000 in one payment. The people have paid during the fifty years an average of $250 a year to maintain this value. On the part of the people it has been not unlike a continuous purchase in the proportion of I250 a year of the people’s tax money to $50 a year of the purchaser’s interest money. In addition to whatever income the purchaser has received, he possesses to-day 110,000 worth of land, while the people possess nothing except an outgo of 5 per cent in maintenance, offset in small part by an income of per cent in tax. Such an inheritance would usually be counted worse than nothing. Is it not reasonable that the community should derive profit from its part in this transaction, by appropriating ­ to its own use the one-half at least of that ground rent that is manifestly created by the simple expenditure ­ of its taxes? Why should not taxes, all of which are spent upon the land, be taken from the land?* * E. Benjamin Andrews, formerly President of Brown University, said at Saratoga, N. Y., in 1890: “To turn the golden stream of economic rent partly or mostly into the State’s treasury, where it would relieve the public of taxation in burdensome forms, seems to be extraordinarily desirable. I by no means concur in all the reasons which many assign for this; nor should I expect from it, even if carried to Mr. George’s length, more than half the benefits to society which he anticipates. ­ Still the proposition to lay the main tax on land impresses me as just, safe, accordant with the best canons of public finance, and in fact, every way excellent.” GROUND RENT A SOCIAL PRODUCT 13 Ground rent may be said to result from at least three distinct causes, all connected with aggregated social activity: (1) Public expenditure: All wise public expenditures are direct feeders of ground rent. Streets, lights, water, sewerage, fire and police systems, public schools, libraries, museums, parks and playgrounds, ­ all contribute to enhance the value of land, and a corresponding depreciation would follow the abolition of any of these systems. It follows, therefore, ­ that expenditure for maintaining these services constitutes the maintenance of ground rent, if not in a literal sense, at least in an all-sufficient common sense. (2) Quasi-public expenditure; In the same way, the expenditure by the municipality or by private corporations for steam and electric railways, gas and electric lights, telegraph and telephone facilities, subways and ferries, contributes to the value of land, at least to the extent of their actual cost. (3) Private expenditure; Equally, and by parity of reasoning, private or voluntary social expenditure for churches, private schools, colleges and universities, all private buildings, apartment houses, stores, and office buildings, contributes to ground rent, the annual value of land. In an enumeration of the causes of ground rent, population is usually the one first named. But a passive population gives little value to land; it is rather the activities consequent upon the character population that create the value. It is generally conceded that, as a matter of fact, ground rent is what land is worth annually for use; THE A B C OF TAXATION •4 but it is of far greater importance to understand clearly what is the source of ground rent, and especially to what extent it may be regarded as a social product. Inasmuch as all the contributions representing these activities, so far as enumerated, are from the treasuries of the people, it is correct and proper to say that ground rent is chiefly and peculiarly a social product. From one point of view (that of demand) it may be said that the value of all commodities is a social product. But when we come to consider the other side of the value problem, we find that most other commodities, e. g., houses, increase or decrease at man’s will, according to the principle of cost, the value being a resultant of a balancing of social desire against social cost. With land it is more generally true that the quantity either cannot be increased at all or can be increased only at increasing cost; and hence the practical determinant of the value of land is almost entirely in the social and private activities that make the use of land desirable. VI.—The Maintenance of Ground Rent So far as the cost of streets, lights, water, sewerage, fire, police, schools, libraries, museums, parks, play-grounds, steam and electric railways, gas and electric lights, telegraph and telephone companies, subways, ferries, churches, private schools, colleges, universities, public buildings, well appointed houses, stores, and office buildings is what constitutes the cost value of the land, just so far the maintenance of all this public or GROUND RENT A SOCIAL PRODUCT 1 5 social service constitutes the maintenance of ground rent. A simple illustration may help to an appreciation of the absurd absence of a true economy in tax affairs to-day. A landlord owns a factory which requires steam power, and which is useless and worthless without it. Another man owns a steam plant, and furnishes steam to factories at so much per horse power. The man who hires and uses the factory pays factory rent to his landlord, who furnishes the factory, and steam rent to the man who furnishes the steam. He Would smile if you should talk to him about paying his steam rent to the landlord who does not furnish it. In vivid contrast with this sensible performance we may take the case of another landlord who owns a store, requiring public service and convenience, and useless without it. The municipality owns and runs a public service plant, and furnishes public service at a cost of so much per thousand dollars’ worth. The man who hires and uses the store pays store rent to his landlord, who furnishes the store, but, by a strange perversion, he pays his public service rent to the same landlord. Should he not pay his public service rent to the public that furnishes it? Inasmuch as all these contributions to its maintenance, ­ so far as enumerated, are from the treasuries of the people, what can ground rent possibly be, if it is not a social product? VII.—An Illustration: The Ground Rent of Boston A dense skepticism and, indeed, a denser ignorance, seem to obtain even in regard to the simple fact that i6 THE A B C OF TAXATION there is such a thing as ground rent, and yet much more in regard to what is the volume of ground rent. It has been questioned whether the ground rent of the City of Boston, for instance, under the single tax, with the accompanying shrinkage in speculative values, would exceed to-day 5 per cent on the assessed valuation of land, or $32,000,000. Indications are that the net rent of the land itself might not, but our investigations are directed to ascertaining not the net, but the gross ground rent, which is net rent plus the taxes. In a systematic attempt to dispel these clouds of ignorance and skepticism—-now to be found in surprisingly ­ high places—and to demonstrate beyond a reasonable doubt about how much gross ground rent there is in the city of Boston, actual sales for the year 1902 and actual rentals have been collected from official sources. The figures for one hundred and twenty pieces of real estate* in various sections of this city have been collected at no small pains from official sources and are offered in evidence. The following calculation is based on these figures and on the assumption that the buildings sold for one-third more than their assessed valuation, of which assumption the landlords and the real estate men are the best judges. By this process it is demonstrated that in place of a net selling value of four and one-half millions, there is really a capitalized ground rental value of considerably more than five and one-half millions. *An exhibit of these specimen cases in detail will be found in Appendix G. GROUND RENT A SOCIAL PRODUCT 17 Deducting from the total of prices indicated by the footing of the 120 sales .... $7,291,375 Four-thirds of assessed valuation of buildings . 2,772,933 Would give perhaps a fair estimate of what the land sold for ...... $4,518,442 To this it is necessary to add the capitalised tax upon the land for the same year, 1900, $3,758,600 x $14.70 (the number of dollars tax per thousand) x 20 (the number of years’ purchase) ...... $1,105,028 In order to get the gross capitalised ground rental . value of the land ..... $5,623,470 From above it appears that the assessed valuations were only five-sixths of the selling value and twothirds of the gross value. The figures for 751 rentals of estates were also obtained ­ from reliable sources and are exhibited in Appendix ­ H, and from these figures it appears that the assessed valuation of the land ($23,067,800) is five-sixths of the gross value ($31,548,500), as compared with two-thirds obtained from the first set of figures. It is probable, however, ­ that these 751 estates are in the aggregate improved to less than one-half of their normal efficiency, and hence the gross income which the land now yields may be considerably less than the true ground rental. If so, then, the gross value of the land, namely, the ground rental capitalized at 5%, is considerably greater than is shown by the figures, and the assessed valuation, therefore, may well be only two-thirds of this gross value and five-sixths of the selling value as in the former case. In the absence of contradictory or correcting testimony ­ it is fair to ask the reader to accept these lists of 120 sales and 751 estate rentals respectively as an indication that a ratio of five-sixths exists between assessed valuation and selling value. i8 THE A B C OF TAXATION Based upon the foregoing ratio, the following conservative ­ estimate of the gross land value of Boston is submitted for scrutiny and criticism: A CONSERVATIVE CALCULATION OF BOSTON’S GROUND RENT If the assessed valuation* of Boston’s land for 1907, which is in round numbers Is five-sixths of its selling value, then the addition of one-fifth .... Would give us as the net selling value Adding to this the capitalised value of the amount of tax now on the land, $15.90 per thousand on $653,000,000, or $10,382,000 at twenty years’ purchase ** . Would give us as the true capitalised ground rental value...... Add moderate estimate for franchises, say And we should have as a basis of assessment under the single tax a total capitalised ground-rental value of at least. At 5 per cent this would indicate for Boston a ground rent of $653,000,000 130,600,000 $783,600,000 207,600,000 $991,200,000 108,800,000 $1,100,000,000 $55,000,000 or considerably more that double the total taxes of Boston.! *The official figures arc: Valuation Rate Tax Land . $652,995,30x3 $15.90 $10,382,700 Buildings ..... 417,869,400 15.90 6,646,200 Personalty ..... 242,606,857 I 5-9° 3.857,435 $L3i3>47M57 t Boston’s income from taxation for 1907 was: Land values ....... $20,886,335 $10,382,628 Buildings and other improvements 6,644,121 Personal estate 3,857449 Polls 369,966 Corporation taxes 1,087,793 Liquor licences 1,079,585 Boston’s total city tax (including state tax) $*3,4*1.54* **See p. 24, lines 21-24 and p. 32, lines 8-13, and p. 41 (g). \ GROUND RENT A SOCIAL PRODUCT 19 Even if $5,000,000 be deducted from this $55,000,000 for error in estimate, there will still be left $50,000,000, or more than double the amount of present taxes. The fact that ground rent is the combined product of the character, activities, and industries of a people and that its taxation is in no way a burden upon labor or enterprise is ample reason for taking in taxation, ­ at least the one-half of the ground rent necessary to cover all present taxes, instead of taking only about two-tenths as is done to-day. Would it not also suggest the ample sufficiency of rent for meeting any future wise increase in public expenditure. Next to that of the farmer, the province and function of the landlord would seem to be one of the greatest in its importance to his fellow-men. The farmer is the commissary of subsistence; the landlord is quartermaster ­ of the camp. The farmer feeds the world; the landlord houses the world. Besides being the natural housers and the natural tax gatherers, the landlords are also the natural assessors. “Nobody runs after the assessor to tell him what property is Worth. Everybody runs after the landlord to, tell him what his land is worth.” With this triple responsibility ­ and privilege of housing and tax collecting and tax assessing, landlords ought to be, as, if they paid all the taxes, they would be, the natural guardians of the public treasury against wastefulness and misapplication, ­ for the simple reason that ground rent, while increased by every wise outlay, is decreased by every unwise expenditure. There remain to be considered five points of special application to the landlord’s interest, viz.: The taxation of real estate only; the tax imposed by 20 THE A B C OF TAXATION time; corresponding exemptions; the exemption of assessed value; and the single tax as an income tax. VIII.—The Taxation of Real Estate Only Every single taxer, no doubt, may be relied upon to vote for the concentration of ail taxes upon real estate (land and buildings), as a rapid transit measure toward his preferred exemption of buildings also. Such a course would secure a basis for honest assessment and collection, and would eliminate the possibility of evasion, but how much of an advance would this be toward a just equalisation of the burden? The landlord ­ of a new building would still be paying, as he does now, the taxes of an adjoining landlord of old buildings or of none at all. He would be worse off by his disproportionate ­ share of taxes transferred from personal property. If Smith owns land and buildings in equal amount he will pay, for each $1,000 of land, taxes upon . . $2,000 If Jones owns land with worthless buildings, or none at all, he will pay, for each $1,000 of land, taxes upon ........ 1,000 If Brown owns his own house, worth three times as much as his land, he will pay, for each $1,000 of land, taxes upon ...... 4,000 Under the theory that taxes are absorbed in maintaining ­ the value of the land, as indicated by the equal or even greater price that land often commands when practically unimproved rather than improved, it is held that the proportion of advantage afforded by the public outlay is fairly represented by the value of the land. If this theory is sound, then neither Smith, who pays twice as much as Jones, nor Brown, who pays four times as much, has any greater command per GROUND RENT A SOCIAL PRODUCT 21 11,000 than has Jones over the facilities afforded by society for the promotion of private business. IX.—The Tax Imposed by Time A representative real estate man of Boston has said that the lifetime of the best new buildings in the city cannot be figured to exceed two score years, and that with swiftly accelerating changes they will have to give way in forty years to a new and better order. Granting these facts, if during the forty years the new buildings shall yield to the landlord interest upon their cost and 2\ per cent annually for depreciation, he is at no disadvantage from the necessity of tearing down and building greater, while both labour, which builds buildings, and business, which uses buildings, will be greatly benefited by such a process. What a paradise any American city might be made if built over new every forty years! Yet the users of the buildings can well afford to pay 2\ per cent a year for such a luxury. Any sensible readjustment and equalisation of taxation should take this annual depreciation directly into account as a tax imposed by time upon all products ­ of labour, a tax so heavy as to seem an instant excuse for exempting them from all other taxes. On the other hand, while time is engaged in the destruction of the building, it is occupied in the construction ­ of the land value. A conspicuous example of the contrariety of this time agency is found in the biography of a once modern building that in 1870 supplanted a colonial residence which for several years previous to 1809 was the residence of John Quincy Adams. 22 THE A B C OF TAXATION AN OBJECT LESSON Growth of Land Values vs. Decay of Buildings The Hotel Boylston, S. E. corner of Boylston and Tremont Streets, Boston, known also as the Charles Francis Adams Building, on the site of the present Hotel Touraine. < c p rt' o' P Labour 1. Labour constructs the building as a basis of taxation. 2. Labour pays its taxes, insurance, and repairs. 3. Labour,at the end of twenty-five years,builds a new building in place of the old one which has entirely disappeared; that is, it renews the very basis itself of taxation for another twenty-five years. 1. Land starts with a basis made by other people’s labour. 2. Land apparently pays its taxes at same rate as the building, but pays no insurance or repairs. 3. Land, at end of twenty-five years, has increased its basis threefold through other people’s labour, and its income in proportion. Under the present crooked system, the distribution of untaxed wealth is according to special privilege; its taxation, according to ability (i. e., according to production). Under straight single tax it would be the very reverse. The distribution would be according to ability (i. e., according to production) while taxation would be according to special privilege. It is this right-about-face in taxation to which this illustration is addressed. / GROUND RENT A SOCIAL PRODUCT 23 The inequality of the present system of taxation is apparent in the following calculation (based upon the above assumption of 2\ per cent depreciation) regarding the land and buildings of Boston for the last twenty years, bearing in mind, that it is not the rent, either of buildings or land, that is under consideration, but only the effect of taxes and depreciation ­ upon the one, and the opposite effects of taxes and appreciation upon the other. BUILDINGS The valuation of Boston’s buildings in 1887 was ....... If time’s annual tax or depreciation of ai per cent (besides the city’s tax of I i per cent which is paid by the owner only when he is also the tenant) has been for twenty years 5223,000,000 50 per cent or . III ,500,000 I hen the value of same buildings in 1907 is only $111,500,000 LAND The valuation of Boston’s land in 1887 was Time’s average net annual appreciation has been (after paying city’s tax of ij per cent) for each year 5 per cent and for twenty years 5322,000,000 more than 100 per cent or .... 331, 000 ,° 00 And the value of the same land in 1907 is Thus the increase in the valuation of land in twenty years is nearly 50 per cent more than was the valuation of all the buildings twenty years ago. 5653,000,000 Five per cent on this twenty years’ increase of $331,000,000 would he §16,650,000, which, added to the l4>3 0o .ooo assessed upon the land in 1887, would he $20,900,000, as compared with Boston’s taxes of $21,254,000 in 1907. Those who agree with John Stuart Mill that it would be sound public policy and no injustice to land owners 24 THE A B C OF TAXATION to take for public purposes the future increase in ground rent will be interested to note what an opportunity for putting such a plan in operation in Boston is shown by the above figures to have been lost twenty years ago. X. —Corresponding Exemptions In any calculation of the effect of the imposition of all taxes upon ground rent, it must be borne in mind that the landlords, who are the owners of the ground rents, also own buildings and other improvements upon the land, together with a large per cent of the personal property, so that they, as a class, would find the additional tax upon their land offset by the exemption of buildings and personal property. XI. —The Exemption of Assessed Values One reason why, under a just system of taxation, large-hearted landlords would cheerfully offer their necks to the tax yoke is the fact that so far as concerns their investment in land most of them are now privileged to be entirely exempt. In other words, the present tax is not a tax burden upon them, even though this fact is not to their prejudice. But while it is true that the capitalised value of any tax on land is deducted from its selling price, and that any purchaser, after the tax is once imposed, gets his land tax free,* so that the landowners of Boston who have bought their holdings since the present tax rate was reached are practically exempt from taxation, it is also true that *A tax, as a first lien, is practically a first mortgage to which any regular mortgage must be second. The effect of the tax in the first case and the mortgage interest in the second case upon the selling value of land is exactly the same. When the State imposed a tax of $10 upon a lot of land hitherto untaxed and worth $1,000, the effect upon the selling value was the same as though it had taken a first mortgage of $200, leaving to the owner as the selling value an equity of $800. GROUND RENT A SOCIAL PRODUCT 25 the appreciation in the value of their land may be fairly reckoned as an offset to the imposition of any new tax upon it. This present exemption, however, is not offered as a reason for additional taxation, but rather as a justification for taking the opportunity to transfer the present load from the head and the tail to the back and shoulders of the horse. As an anti-single-tax professor of political economy happily puts it: “The beauty, to my mind, of a tax upon land values is that in a few years nobody pays it.” XII The Single Tax as an Income Tax An income tax has always been a favourite form of tax, because it has been regarded as well calculated to bear upon “ each according to his ability.” The taxation ­ of ground rent would surely be the purest possible exemplification and application of the principle of the income tax, because it would fall upon all those incomes ­ which are unearned, which are in their nature perpetual, and which are amply able to bear the whole burden of taxation. Of course, such an income tax should have impartial application. A large unearned ­ income should be taxed at the same rate as a small income of the same nature and derived from the same source. If it is right that corporations or other aggregations of capital should engage in business enterprises for profit upon equal terms with individuals, ­ then it is right that an impartial income tax should impose at least the same rate upon the many million dollar incomes of the railroads and the coal operators, and United States steel companies, as upon smaller unearned incomes of one, five, or ten thousand dollars, derived from the same source. 26 THE A B C OF TAXATION If eight hundred and fifty industrial combinations or trusts have a capital stock of nine billions, of which five billions are represented by common stock — and that common stock, water — it means that every i per cent (150,000,000) or every 5 per cent ($250,000,000) received in dividends on this common stock is, as an income ­ from rent, unearned by the people who receive it. An income from special privilege is usually part and parcel with an income from rent, and, as such, belongs to the class of unearned incomes. As ground rent is a social product, its private appropriation is a special privilege, which affords large private profit at public expense. Why not, then, at least tax such a privilege upon what it is worth? The gross income of the owners of the land of Boston in the form of ground rent is . . $55,000,000 Or $90 per capita. And there is now taken in taxation only . . 10,300,000 Hence the amount that is distributed annually in unearned incomes (if rent is an unearned income) is $44,700,000 This amount is equivalent to $75 per capita for the 600,000 population, or to $375 for each of the 120,000 families of five persons each. Boston’s total taxes for the year 1907 amounted to $40 per capita. If all of this $40 had been taken from the above $90 there would still have been left to the landlords $500! ground rent per capita (equivalent to $250 for each of the 120,000 families), besides the exemption of $660,000,000 of buildings, personal property, and polls. Is it even apparently fair to let so much common wealth escape taxation at the expense of individual wealth? GROUND RENT A SOCIAL PRODUCT 27 The fifty-five millions are, we submit, the “income" in very truth earned by the city and people of Boston — created by their actual labour and actual expenditure. ­ Under the single tax Boston would pay all its current expenses out of this legitimate $55,000,000 income of its own, earned by itself, instead of allowing ­ four-fifths, or $45,000,000, of this amount to be divided, through the channel of special privilege, into unearned incomes, thus aggravating those inequalities in distribution of wealth which people are wont to declaim against as partial and wrong. While that part of the ground rent of Boston that goes to individuals may be said to be unearned by them, rent as a whole can hardly be said to be unearned; ­ having been produced by society, it may truthfully be said to be earned by society, and hence R may go to it as its wages, just as properly as his earnings go to the individual who works for wages, if a railroad has the special privilege of a monopoly m the transportation of coal from the Pennsylvania eoal mines, or in the transportation of people, why n °t tax the railroad in proportion to the value of its franchise? The private monopoly of a natural resource is a special privilege. If the private ownership ­ of the two or three billion tons of unmined anthrac ite coal is a special privilege, why not tax it what others would give for the privilege of mining and marketing it, thus making all the people sharers in What is called a natural bounty? If the private appropriation ­ of a billion dollars’ worth of iron ore is a special privilege, would it not be “proportionate and reasonable” for its owners to pay in taxation onehulf at least of the value of that privilege? It is becoming common to scold about trusts and monopo ­ 28 THE A B C OF TAXATION lies, coal barons, oil magnates, and railroad kings, but many people do not think of the perfectly natural resort of taxing them to the same extent that other people are being taxed. This bugbear of monopoly is the central point at which numberless palliatives are ineffectively aimed. Taxation, it will be found, is the only “power to destroy” what there is of wrong, and the only “power to build up” what is right in these conditions. XIII.—The Opinions of Economists Concerning the first leg of the single tax tripos, the following statements gleaned from some of the world’s greatest thinkers in the field of economics and public finance, who, however, have approached the subject from another point of view, support the contention of this chapter that the value of land is a social product: “ Both ground rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expenses of the State, no discouragement will thereby be given to any sort of industry. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground rents, and the ordinary rent of land, are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them. “ Ground rents seem, in this respect, a more proper subject of peculiar taxation than even the ordinary rent of land. The ordinary rent of land is, in many cases, owing partly at least to the attention and good management of the landlord. A very heavy tax might discourage too much this attention and good management. Ground rents, so far as they exceed the ordinary GROUND RENT A SOCIAL PRODUCT 29 rent of land, are altogether owing to the good government of the sovereign, which, by protecting the industry either of the whole people, or of the inhabitants of some particular place, enables them to pay so much more than its real value for the ground which they build their houses upon; or make to its owner so much more than compensation for the loss which he might sustain by this use of it. Nothing can be more reasonable than that a fund which owes its existence to the good government of the State, should be taxed peculiarly, or should contribute something more than the greater part of other funds, toward the support of that government.”—Adam Smith, “ Wealth of Nations,” Book V., Chapter 11., Part 2, Art. I. “The ordinary progress of a society which increases in Wealth is at all times tending to augment the incomes of landlords ­ ; to give them both a greater amount and a greater proportion ­ of the wealth of the community, independently of any trouble or outlay incurred by themselves. They grow richer, as it were in their sleep, without working, risking, or economising.”-—John Stuart Mill, “Principles of Political Economy,” Book V., Chapter II., Sec. 5, Par. 2. “ Ground rent is the advantage accruing to landowners from the use of certain uncreated or socially created powers and utilities connected with land, including, besides mere fertility °f soil, also mineral wealth, water privileges, location, etc. “ Let a considerable number of human beings settle in a new country: special value instantly attaches to particular localities, and this with no act of creation save the act of the People in coming there. . . . Such dearness, springing though it does from a sort of human agency, is not the product °f conscious doing on the part of any one person. In bringing into being, A, B, and C were instruments, not agents.”— Andrews, “Institutes of Economics,” p. 168, and footnote. o “The utility of a piece of land may be increased by the natural growth of the community, when no labour is exerted directly to increase the usefulness of the particular tract of 3° THE A B C OF TAXATION ground.”-—Bullock, “ Introduction to the Study of Economics,” p. 116. “The growth of the city occasions unusual expenditures; the growth of the city also creates unusual values. Why should not the values which the city creates go to bear the expenses which the city occasions ? “ The volume of traffic on a street railway increases with the increase in municipal population, and the receipts of the company on this account grow more rapidly than do the operating ­ expenditures which the increased traffic occasions. . . . Now it is this income to which a franchise tax should address itself. . . . One might, then, say that by means of the franchise tax the State taxes its social earnings from the capital which it has created, but which for reasons of public policy it assigns to private parties for administration.”—Adams, “Science of Finance,” pp. 504 and 380. XIV.—Conclusion Throughout this chapter the impelling aim has been to invite and promote the understanding of ground rent, an agency clear to few, very obscure to many, but as subtle and powerful in the social organism ­ as is the life-blood in the human organism. Legislatures and Congresses are prevented by inconvenient ­ distance from revising and improving the planetary laws, but they busy themselves with the enactment of statute after statute designed to keep men and women in their natural orbits. Discerning, as we surely do, a natural law in the material world, established by a Law-giver greater than any state or nation, we urge simply a repeal one by one of all artificial tax laws, putting upon the statute book instead a single one — an enacting clause to this natural law — under which every American city may begin at once to administer the single tax remedy. Chapter II B THE SECOND LEG OF THE SINGLE TAX TRIPOS THE NONSHIFTAB1L1TY OF A LAND TAX A tax upon ground rent cannot be shifted upon the tenant by increasing the rent, if it COULD, THE SELLING VALUE OF LAND WOULD NOT BE REDUCED, AS IT NOW IS, BY THE CAPITALISED TAX THAT IS IMPOSED UPON IT T HE question is whether, if a new tax should be put upon land, the owner would not escape by adding it to his tenant’s rent? It is not a sufficient answer to quote the authorities: the query still remains, what are the arguments upon tvhich the authorities rely? Following is an attempt at the clear statement which these arguments deserve. Ground rent, “what land is worth for use,” is determ med, not by taxation, but by demand. Ground re nt is the gross income, what the user pays for the Use of land; a tax is in the nature of a charge upon this income, similar to the incumbrance of mortgage mterest. It is a matter of every-day knowledge that even though land be mortgaged nearly to its full value, no one would think for a moment that the owner could 3* 32 THE A B C OF TAXATION rid himself of the mortgage interest that he has to pay through raising his tenant’s rent by a corresponding amount. Mortgage interest is a lien held by an individual; similarly a tax may be clearly conceived as a lien held by the State. Both affect the relation between the property owner and lien holder; neither has any bearing upon the relations between owner and tenant. “Tax” is simply the name of that part of the gross ground rent which is taken by the State in taxation, ­ the other part going to the owner; the ratio these two parts bear to one another has no effect upon the gross rent figure, which is always the sum of these two parts, viz., net rent plus tax. The greater the tax, the smaller the net rent to the owner, and vice versa. Ground rent is, as a rule, “all the traffic will bear”; that is, the owner gets all he can for use of his land, whether the tax be light or heavy. Putting more tax upon land will not make it worth any more for use, will not increase the desire for it by competitors for its tenancy, will not increase its market value. To illustrate, let us consider the case of a piece of land for which the landowner gets $i ,000 rent from the man who uses it. First: The owner, let us say, pays over to the city in taxes $100 of this $1,000 rent. Is there any indication ­ that this $ 100 tax has any influence in fixing the present rent at $1,000? Second: Fet us suppose that next year the city decides to take another $100 of the $1,000 rent in taxes. Could the owner then add the $200 tax to the tenant’s rent, making it $1,200? Third: Fet us suppose that the following year the tax is increased by another $100 and so on, by an annual RENT TAX CANNOT BE SHIFTED 33 increase, until, for extreme illustration, the tax is 11,000, an amount equal to the entire rent; would such a condition make it possible for the owner to raise his tenant’s land rent to $2,000? These questions would seem to answer themselves in the negative, and thus bring us to a fair conclusion in the matter. What the Authorities Say of The Second Leg of the Single Tax Tripos, viz.: That a Tax upon Ground Rent Cannot Be Shifted. "The weight of authority upon such a question is worthy of attention, although by no means decisive. Now, while a few respectable and sincere students of economic science hold to the doctrine of transferability of the ground-rent tax to the tenants, no one will dispute that an overwhelming weight of authority both in numbers and in reputation, scout that doctrine as absurd. Not only the entire school of Ricardo and Mill, but also nine-tenths or more of other economic writers make it a fundamental doctrine of their science that such a tax never can ke transferred to tenants.” — Thomas G. Shearman, “Natural Taxation” pp. 129-132. “Though the landlord is in all cases the real contributor, the tax is commonly advanced by the tenant, to whom the landlord 18 obliged to allow it in payment of the rent ."—Adam Smith, Wealth of Nations,” Book V., Chapter 11., Part 2, Art I. “A land tax, levied in proportion to the rent of land, and v arymg with every variation of rent, is in effect a tax on rent; and such a tax will not apply to that land which yields no rent, nor to the produce of that capital which is employed on the land with a view to profit merely, and which never pays rent; 11 will not in any way affect the price of raw produce, but will fall wholly on the landlords.”—Ricardo, “Principles of Political Economy and Taxation,” McCulloch’s edition, p. loy. 34 THE A B C OF TAXATION “A taxon rent would affect rent only; it would fall wholly on landlords, and could not be shifted. The landlord could not raise his rent, because he would have unaltered the difference between the produce obtained from the least productive land in cultivation, and that obtained from land of every other quality.” —Ricardo, “Principles of Political Economy and Taxation,” Chapter X., Section 62. “A tax on rents falls wholly on the landlord. There are no means by which he can shift the burden upon any one else. . . . A tax on rent, therefore, has no effect other than its obvious one. It merely takes so much from the landlord and transfers it to the State.”—“John Stuart Mill, “Principles of Political Economy,” Book V., Chapter III., Section 2. “The power of transferring a tax from the person who actually pays it to some other person varies with the object taxed. A tax on rents cannot be transferred. A tax on commodities is always transferred to the consumer.” — Thorold Rogers, “Political Economy,” 2nd edition, Chapter XXI., p. 285. “A land tax levied in proportion to the rent of land, and varying with every variation of rents . . . will fall wholly on the landlords.”—“Walker, “Political Economy,” edition of j88j, p. 41J, quoting Ricardo approvingly. “A tax laid upon rent is borne solely by the owner of land.” —Bascom, Trealise, p. IjQ. “Some of the early German writers on public finance, such as Sartorius, Hoffman, and Murhard, went so far as to declare that, because of this capitalisation, a land tax is no tax at all. Since it acts as a rent charge capitalised in the decreased value of the land, they argue, a land tax involves a confiscation of the property of the original owner. On the other hand, since the future possessors would otherwise go scot free, it becomes necessary to levy some other kind of a tax on them.”—E. R. A. Sehgman, “Incidence of Taxation,” p. Ijg. RENT TAX CANNOT BE SHIFTED 35 “The incidence of the ground tax, in other words, is on the landlord. He has no means of shifting it; for, if the tax were to be suddenly abolished, he would nevertheless be able to e xtort the same rent, since the ground rent is fixed solely by the demand of the occupiers. The tax simply diminishes his Profits.”—E. R. A. Seligrnan, “Incidence of Taxation,” pp. 245. “If land is taxed according to its pure rent, virtually all writers since Ricardo agree that the tax will fall wholly on the landowner, and that it cannot be shifted to any other class, whether tenant-farmer or consumer. . . . The point is so universally accepted as to require no further discussion. . . . A permanent tax on rent is thus not shifted to the consumer, nor does it rest on the landowner who has bought since the tax w as imposed.”—E. R. A. Seltgman, “Incidence of Taxation,” PP- 222, 223. “With these assumptions, it is quite clear that the tax on economic rent cannot be transferred to the consumer of the Produce, owing to the competition of the marginal land that Pays no rent, and therefore no tax, nor to the farmer, since competition leaves him only ordinary profits. The amount of each particular rental depends upon units °f surplus produced (varying to any extent according to the superior natural conditions), and on the marginal price, which ■s independent of these superior conditions, and accordingly, a tax that strikes the surplus only, remains where it first falls.” Nicholson, “Principles of Political Economy,” Book V., Chapter XL, Sections I and 4. Chapter III c THE THIRD LEG OF THE SINGLE TAX TRIPOS THE ULTIMATE BURDENLESSNESS OF A LAND TAX EVERY LANDOWNER IS EXEMPT FROM TAXATION ON HIS INVESTMENT, TO THE EXTENT OF THE TAX TO WHICH HIS LAND WAS SUBJECT AT TIME OF HIS PURCHASE, AND THEREFORE, PRACTICALLY SPEAKING,. NEARLY ALL LAND IS TO-DAY OWNED FREE OF ANY TAX BURDEN The purpose of the following illustration* is to make clear by means of iteration and reiteration two facts, viz.: Fact I. The land ownerf of to-day who has purchased ­ since the present tax was imposed escapes taxation upon his investment. Fact II. The burden of a land tax cannot be made to survive a change of ownership. * The statements and arguments used in this illustration deal only with the general principles of taxation, and assume such conditions as prevail in the United States, including for instance, lack of universality and uniformity in taxation. Single tax terms and arguments are studiously excluded. •j- Care is taken to designate owner and user in their respective capacities, whether they be two persons, or two combined in one. 36 VALUE OF LAND AN UNTAXED VALUE 37 The illustration is intended to show the effect in a normal or advancing community of mortgage interest and taxes upon the market value and cost to the user of a lot of land and a house respectively having equal purchase and rental value., and each subject to the same mortgage interest and taxes. FIRST: THE LAND Proposition 1.—Let it he supposed that you want a piece of urban land that is worth I300 a year to you for use. You can afford to pay I300 a year and no more, a nd it can be had at an annual cost of $300 a year. Let us then proceed to acquire this piece of land, exercising diligence and caution to profit by each step m the transaction. (a) At the very outset the question arises, what is die thing for which you are proposing to pay I300? Surely it is not the soil itself, because it is a question °f a building site, which could be had out in the country l°r little or nothing. It is not merely the area upon Which to dig a hole in the ground, wall it about, and er ect a building, for the same space can be had elsewhere ­ for a song. In short, it is not the earth’s surface; ­ it is not the inherent capabilities of the soil; d is not light and air, or other bounties of nature resident in that lot of land; it is not natural resources of which you are thinking as worth to you $300 a year. (&) But what you are going to pay for is the accompanying ­ and incidental use of a great many expensive things outside of the piece of land, things which you ^11 need and must have, which you cannot afford to 3§ THE A B C OF TAXATION provide at your own expense, but for the use of which you can afford to pay in proportion as you use them. It is these outside things, available by their proximity, for which you are called upon to pay I300 a year. To enumerate some of them specifically, they are, in a town or city lot, right and ease of access to water, health inspection, sewerage, fire protection, police, schools, libraries, museums, parks, play-grounds, steam and electric railway service, gas and electric lighting, telegraph and telephone service, subways, ferries, churches, public schools, private schools, colleges, universities, public buildings — utilities which depend for their efficiency and economy on the character of the government; which collectively constitute the economic and social advantages of the land; and which are due to the presence and activity of population, ­ and are inseparable therefrom, including the benefit of proximity to and command of facilities for commerce and communication with the world — an artificial value created primarily through public expenditure of taxes. In practice, the term “land” is erroneously made to include destructible elements which require constant replenishment; but these form no part of this economic advantage of situation or site value. (c) In other words, you are to pay I300 a year for the value of what the law calls the “ rights and privileges thereto pertaining,” specified in every deed of land conveyance. This I300 is ground rent, “what the land is worth for use.” Proposition 2.— Assuming this piece 0} land to he free from all charges and incumbrances, and assuming the current rate 0} interest to be 5 per cent per annum, VALUE OF LAND AN UNTAXED VALUE 39 you would purchase the lot for $6,000, because interest upon that sum would amount to the stipulated $300 a year. But if, on the contrary, the lot hears a mortgage of $2,000, upon which the annual interest charge is $100, then the lot will cost you $4,000. (a) The mortgage interest charge of $100 reduces the selling price of the land by the amount of the mortgage, ­ $2,000, and you will buy the land, not at $6,000, but at $4,000, the value of the equity remaining after mortgage interest has been paid. (b) By purchasing title you will assume the mortgage ­ and will pay the mortgage interest, |ioo, but that $100 will not come out of your $200. the net income from your investment of $4,000; it will come out of the gross income, the ground rent, $300. It is a part of, and not an addition to, the ground rent. You will pay the interest, but you will not bear it, because you will have bought yourself clear of the burden. (c) The lot will thus cost you annually for use, interest on your purchase price ($4,000 at 5 per cent) I200, plus mortgage interest ($2,000 at 5 per cent) 1100, equal in all to $300, all that the land is worth for use, use being the only relation of land to man with Which economics has reasonable concern. Proposition 3. — But, besides being subject to a mortgage of $2,000, assume further that this lot of land P subject also to an old tax* of $100, which charge the purchaser must also assume. You will then purchase the land not at $4,000, but at $2,000. (a) As already seen, the mortgage interest charge of * By the term “old tax” is intended the tax in force at time of last purchase; “new tax” one imposed since last change of ownership. THE A B C OF TAXATION 40 1100 reduces the selling price of the land by the amount of the mortgage, $2,000. It is equally true that the tax charge of $100 reduces it by the same amount, $2,000; the mortgage and the tax together therefore reduce it by $4,000; and you will buy the land at $2,000, the value of the equity which remains after both mortgage interest and tax have been paid. This $2,000 is the capitalisation of the annual value of the lot to you after all charges have been met. (b) In purchasing you will assume both mortgage interest and tax and will pay them, but you will pay them out of the gross income of $300, and not out of the net income of $100 from your investment of $2,000. Therefore no part of the $2,000 which you pay for the equity will be taken from you in taxation, either as principal or interest. (c) The lot of land will thus cost you for use: interest ­ on your purchase price ($2,000 at 5 per cent), $100; plus mortgage interest ($2,000 at 5 per cent), $100; plus taxes, $100; and these together aggregate $300, what the land is worth for use, the same as before. (d) It follows then that, under the present system, assuming free competition, the selling value of land is an untaxed value,* and land owners who invest to-day are exempt from taxation — not indeed upon their land, but upon its annual net or income value to them, or, in other words, upon their investment. The gross value is a taxed value. The net value is an untaxed value. (e) As this exemption of the present owner holds * Assessors make use of the selling value of land as the basis for their levy because it is more easily ascertainable than the gross value, but in reality and effect the levy is upon the gross value, which, if land were not taxed at all, would be also the selling value. VALUE OF LAND AN UNTAXED VALUE 41 true to-day, so it will be true in future of each new purchaser subsequently to the imposition of any new tax. It is in the very nature of things that the burden of a land tax cannot be made to survive a change of ownership. (/) This is equally true of a bond, but it is assumed that a tax levy should be not upon intangible stocks and bonds legally conceived as property, but only upon tangible goods and estates. It is, to be sure, just as true that a man who builds a house to rent pays no tax on his investment, but for a different reason. The tax, in that case, is shifted upon the user in increased house rent, except so far as, by discouraging building, it is reflected in lower wages for building. But an old tax upon the land is a burden neither upon present owner nor user. The tax on land is “absorbed,” that on the house is “shifted.”* (g) We cannot too soon or too rigidly fix in mind the fact that this ground rent of $300 is the governing factor in the situation;** that it is a tax laid not by the State but by nature, which every man must pay for the use of land, either to a private owner as rent, or to the State as a tax, or to both. No statute or ordinance ­ can increase or reduce, exempt from, or abolish the payment of this “economic rent,” or ground rent, to somebody. Its amount is neither fixed nor affected hy the tax that is put upon it, whether large or small. Taxing it cannot increase it; cannot decrease it; cannot abolish it. Its amount may always be calculated by this simple formula: ground rent equals interest * Landlords who own and let both land and tenement houses, apartment houses, and business blocks thereon, escape the burden of the tax on their * a nd, and at the same time shift upon their tenants the building tax, thus avoiding all share in the tax burden. **This is indeed the point from which the whole discussion proceeds. 42 THE A B C OF TAXATION on purchase price, plus interest on any mortgage, plus taxes. Proposition 4. — Neither a tax upon ground rent, nor the ground rent itself, adds anything to the cost of land for use. (a) Economic rent, ground rent, measures the value of all public, quasi-public, and social service. If the whole ground rent is not a burden, but merely an equivalent for social values received, neither can interest and taxes, two of the parts of which ground rent in our illustration is composed, be a burden upon the user. A tax upon rent comes out of rent, which, as has been explained, is the natural tax that every user has to pay to some one, and hence it subtracts nothing from wages and adds nothing to the cost of living. Proposition 5. — You cannot pay |6,ooo for the land and in addition pay either the mortgage interest of |ioo or the tax of |ioo, because that would make land cost you I400 per annum which by our assumption is worth only $300. (a) The tax upon land cannot be added to the ground rent—which is kept at its maximum by market demand — but is a part of, and must come out of, ground rent. If it could be added, that fact would itself indicate that the ground rent was I400 instead of $300, which is contrary to supposition. Land worth only I300 a year cannot be made worth I400 a year by putting a tax of $100 upon it. (ib) Let it not be forgotten that ground rent, in the sense in which the word is used, is the same homogeneous ­ thing, one and indivisible, the world over — what land is worth for use. It is rent —or use value — not cost of construction or cost of production — VALUE OF LAND AN UNTAXED VALUE 43 that fixes the price of land. Economic rent is the initial and governing factor from which all calculations must proceed. second: the house Proposition 6. — The lot having been acquired, let it he supposed that you are in need of a house, and that such a house as you want would cost to build $6,000, or, in interest, $300 a year, the same as the annual cost of the land. (a) You will observe at once that the problem of the house is quite different from that of the land. The cost of acquiring land depends primarily upon its rent. Conversely, the rent of a house depends primarily upon its cost. Builders will not build houses unless they can get interest on the cost of construction. Competition among builders will not allow one builder normally to get more than interest °n cost of construction. Proposition 7.— If such a house were free of tax, but mortgaged for $2,000, it would cost you to buy only I4.000, and it would cost you to use, as in case of the land, interest on purchase price (4,000 at 5 per cent) I200, plus interest on mortgage ($2,000 at 5 per cent) 1100, making $300 as before. (a) The mortgage upon a house, like that upon land, will add nothing to the cost of the house for use. Proposition 8 — But you find that such a house is subject also to a tax of 1100, which you will have to pay l n addition to the above $300, interest on purchase and mortgage, making the house cost you for use altogether $400, instead of $300 a year, or $100 more on account °f the tax. 44 THE ABCOF TAXATION (a) Unlike the tax upon land, the tax of $100 upon the house cannot come out of the $300 rent (house rent or interest) except indirectly through its effect upon wages as before mentioned, because house rent cannot normally be less than interest on the actual cost of building the house; it must instead be paid by the user of the house, over and above his interest, making his house rent, the annual cost of his house for use, I400 instead of I300. (1b) To repeat: a house rent, otherwise $300, is increased to I400 by a tax of fioo on the house. In contrast with this, you may either take off a present tax of 1100 from the land, or you may increase that tax to I200, and in neither case will the cost of the land to the user be affected. Take off the fioo tax from the house, and the cost of the house to the user will be reduced from I400 to $300 a year; of land and house together, from I700 to |6oo. Proposition 9.— The moral of this illustration is that you get for use annually I300 worth of land for I300, and a house costing $300 for I400. In other words, a tax upon land is a part of, is included in, and comes out of, ground rent, and is no burden to the user: while a tax upon a house is a clear addition to house rent, and comes principally out of the user of the house. To recapitulate: (1) It has been shown that a house tax of |ioo that has been regularly levied takes in taxation |ioo a year of the user’s income. (2) It has been shown that a land tax of $100 takes in taxation no part of the income of the user or present owner, provided that he purchased the land after the tax was imposed. VALUE OF LAND AN UNTAXED VALUE 45 The beauty of this illustration is that (in a classification ­ which excludes duplication by certificates or mere legal evidences of property, like stocks, bonds, etc., and includes only actual tangible property) While land stands as always for everything except the products of labour, a house is here made to stand as the representative of any and all products of individual labour, that is, for everything except land, and the illustration thus becomes all inclusive. If you have had the patience to follow it understanding^ ­ you may rest assured that you have mastered ­ a basic principle of taxation, and have solved one of the most perplexing problems of political economy. What the Authorities Say of The Third Leg of the Single Tax Tripos, viz.: That the Selling Value of Land Is an Untaxed Value. “The land tax, which is next on the list, should equally cause but little controversy. It is persistently claimed as a burden Upon land, or land owners; but this will not bear scrutiny when w e inquire out of whose income the tax is paid, or what way it causes pressure, so that its reduction or abolition would be a benefit to the community. “As a fixed charge upon land for generations, it is now past all controversy a rent-charge. In many instances it has long since been redeemed, the property having subsequently changed bands; in others, inheritors of property have acquired it under the burden, and have calculated their income minus the tax, while purchasers, in buying, invariably allow for it. To reduce” (abolish ?) “it now would be to present the landowners of England with a capital sum of nearly £30,000,000. Their estates, relieved of the burden, would become at once so much u^ote valuable, and if they did not sell, they would pocket an additional income which they never inherited or paid for.”—Sir Robert Gijfen, “Essays in Finance ” First Series, p. 242. 46 THE A B C OF TAXATION “But whatever may be thought of the legitimacy of making the State a sharer in all future increase of rent from natural causes, the existing land tax (which in this country-[England] unfortunately is very small) ought not to be regarded as a tax, but as a rent-charge in favour of the public; a portion of the rent, reserved from the beginning by the State, which has never belonged to or formed part of the income of the landlords, and should not, therefore, be counted to them as part of their taxation, so as to exempt them from their fair share of every other tax. As well might the title be regarded as a tax on the landlords; as well, in Bengal, where the State, though entitled to the whole rent of the land, gave away one-tenth of it to individuals, retaining ­ the other nine-tenths, might those nine-tenths be considered as an unequal and unjust tax on the grantees of the tenth. That a person owns part of the rent does not make the rest of it his just right, injuriously withheld from him. The landlords originally held their estates subject to feudal burdens, for which the present land tax is an exceedingly small equivalent, and for their relief from which they should have been required to pay a much higher price. All who have bought land since the tax existed have bought it subject to the tax. There is not the smallest pretence for looking upon it as a payment exacted from the existing race of landlords. “These observations are applicable to a land tax only in so far as it is a peculiar tax and not when it is merely a mode of levying from the landlords the equivalent of what is taken from other classes. In France, for example, there are peculiar taxes on other kinds of property and income (the mohilier and the patente), and supposing the land tax to be not more than equivalent to these, there would be no ground for contending that the State had reserved to itself a rent-charge on the land. But wherever and in so far as income derived from land is prescriptively subject to a deduction for public purposes, beyond the rate of taxation levied on other incomes, the surplus is not properly taxation, but a share of the property in the soil, reserved by the State. In this country there are no peculiar taxes on other VALUE OF LAND AN UNTAXED VALUE 47 classes, corresponding to, or intended to countervail, the landtax. The whole of it, therefore, is not taxation but a rentcharge, and is as if the State had retained, not a portion of the rent, but a portion of the land. It is no more a burden on the landlord, than the share of one joint tenant is a burden on the other. The landlords are entitled to no compensation for it, nor have they any claim to its being allowed for, as part of their taxes. Its continuance on the existing footing is no infringement ­ of the principle of equal taxation.”—Mill, “Principles of Political Economy,” Volume II., Book V., Chapter II., Section 6. “A more difficult and disputable point arises in connection With the incidence of a long continued land tax. Here it is said that the tax is really a deduction from property. As land is sought for its revenue, what lowers its revenue lowers its selling price, and therefore a land tax falls altogether on the Possessor at the time of its imposition. Subsequent acquirers take the land subject to the burden, and pay a lower price in consequence. This process of “amortisation,” as it has been called, makes the subsequent removal of the tax undesirable; the persons who have lost by its establishment are not the same as those who gain by its remission. A purchaser has got land cheaper, and gains a further advantage by escaping the tax; m fact he is allowed for it twice over, once at the time of purchase and again at that of remission. ‘The element of truth in this theory, which has received much favour, appears to be the following: (i) as previously pointed ° u t, when a land tax becomes definitely fixed so that it can be foreseen, or even capitalised and redeemed, there is no inaccuracy ln speaking of it as a charge on land, which lowers its selling price; it is just the same as a mortgage, and is so regarded by Purchasers.”—Bastable, "Public Finance” {1903), page 440 If a certain tax is levied and it is expected that itwill continue to be levied indefinitely in the future, it will reduce the selling 48 THE ABCOF TAXATION value of the land by the amount of the capitalised value of the tax. The future owner will, therefore, be able to buy it so much cheaper that he will realise as large a percentage on his investment ­ as though the tax had never been levied.”—Thomas N. Carver, Tale Review, Nov. l8g6. A recent College and University text book* makes reference to the argument of this illustration, as restated ­ in Chapter XII., in the following comment; Many present-day followers of Henry George find in this principle of amortisation at once a justification and a method of securing for society all economic rent. Under present conditions, ­ they say, a man who buys land wholly escapes taxation upon it. Consequently, in order to make landowners pay as much as other people we should have to increase the tax upon land by a rate equal to that paid by the average tax payer as often— say every thirty years— as the land of the community changes holders. In this way the State could gradually and with justice absorb all economic rent. But this whole chain of reasoning is fallacious for three reasons: (a) This capitalisation takes place only to the extent that the tax on land is exclusive and unequal, and modern taxes upon land are not of this nature. (h) In so far as this programme of the single taxers were anticipated and understood, it would visit the whole burden of the “reform” upon present owners, instead of being distributed ­ over several generations. Subsequent purchasers would discount these periodic increases of the tax and pay to owners for their land only the present value of the rapidly vanishing income from land. Land would be valued simply as a terminable annuity. ♦ “Outlines of Economics,” Revised Edition, by Richard T. Ely. The Macmillan Company, 1908, pp. 621, 621. VALUE OF LAND AN UNTAXED VALUE 49 (c) This whole doctrine overlooks the inevitable consequence ­ that, if “the selling value of land is an untaxed value” and “if the burden of a land tax cannot be made to survive a change of ownership,” these facts would so increase the demand for land that the profits from its purchase and ownership would not exceed profits in other lines of investment.” Let us examine these points one by one. Ca) It is, as I understand, admitted by all economists ­ that in the United States (the country now under consideration) the tax on land is everywhere exceedingly ­ unequal, and, especially in the large cities, almost exclusive. Either the capitalisation of the land tax is a fact or it is not. If it is a fact it is, with its corollaries, the most vital fact of all those bearing upon the material Welfare of the race, and ought not to be brushed aside m three short unsupported sentences like the above, all of which are substantially contrary to the mass of evidence assembled in these chapters. But the capitalisation of the land tax in the United States is a settled fact, and hence not debatable; a business condition of every-day knowledge in the buymg and selling and assessment of land. It is out of the domain of theory, and not dependent upon any abstract speculation concerning an exclusive and unequal tax. _ For the sake of illustration; First. Let it be assumed fbat there are two, and only two, fields open to myestment, viz., land paying 5 per cent on purchase Pnce and bonds paying 5 per cent on purchase price (because either by exemption or by evasion they esca pe taxation). What is it that fixes the above rate 50 THE A B C OF TAXATION of 5 per cent prevailing to-day in both cases? Is it not supply and demand? When there is a surplus of capital, rates are depressed; when a scarcity of capital, rates are advanced. The question is, What and how has taxation to do with this 5 per cent rate of interest? Again; Let it be assumed that a way has been found to exact from all bonds a tax of $25 per thousand, or one-half the income. Inviting investment, there would then be, land paying 5 per cent, bonds paying 2\ per cent, and what would happen? If the interest rate is 5 per cent owners of bonds will continue to hold them for an income of 2 J per cent or they will sell at approximately ­ half price, but as loans are renewed borrowers will have to pay the market rate of interest, what capital is worth for use, plus the tax. The rate of interest will still be fixed, as now, by supply and demand, ­ and not by taxation. What has taxation to do with the general interest rate more than with the gross ground rent of land? The idea that if a uniform rate of tax were imposed and collected from all incomes it would lower the rate of interest is admitted to be highly speculative and seems to find contradiction in every money market. As to the statement that modern ­ taxes upon land are not virtually exclusive and unequal, how can this possibly be true when the alleged bane of the present system is that more than three-quarters of personal property escapes taxation? Cb) The proposed plan of “some of the present-day followers of Henry George” is set forth in the same text book in the main correctly, and admirably, as above, except that their specific recommendation is limited to absorbing only enough economic rent to meet all public expenses, an object which might be accom ­ VALUE OF LAND AN UNTAXED VALUE 51 plished gradually and almost imperceptibly in one generation. The execution of this particular plan would involve an increase in the rate year by year sufficient to take in taxation annually an additional 1 per cent only of the gross ground rent for thirty years, or one generation. An average 0} about 20 per cent of gross ground rent is now taken in taxation, as for instance in Boston. If an additional 1 per cent should be taken each year for thirty years, it would amount finally to 30 per cent, which, added to the 20 per cent already taken, would make 50 per cent, or one-half, which is about the average proportion that present taxes bear to ground rent. By this plan, at the end of thirty years the burden °f $15 (1J per cent) per thousand on present valuation, now borne by the occupier, will have been placed on the land holder, and this transfer of burden would, even rf land did not meantime increase in value, reduce the selling value of his land, every 11,000 to I700. Meantime, ­ few land owners would suspect the change, much less be prejudiced by it. But if a thirty-year bond is at a premium, and Worth one hundred and fifteen dollars to-day, and Will be worth only one hundred dollars or par at maturity, does the whole burden of the vanishing fifteen dollars premium fall upon the "present owners”? The new million dollar office building will Probably be worth little or nothing in three generations, hut this whole burden of ninety years natural decay is n °t visited upon “present owners.” The immediate reduction of 1 per cent (or one point on the stock hoard) in value of land would not greatly depress selling v alue, while increased taxes and consequent deprecia ­ 52 THE A B C OF TAXATION tion of ten, twenty, or thirty years hence are very slightly discounted to-day. Therefore, the assertion that the above programme "would visit the whole burden of the reform upon present owners ” is erroneous and confusing, especially when the burden of a three hundred dollar thirty years’ depreciation is offset by an appreciation of perhaps more than $1,500 (as is the case in Boston) which offset is rightfully a part of the economic situation. Many laws, tariff laws among others, do not pretend to insure against sporadic cases of possible injustice but the universal law remains that, with civilisation, the value of land increases. (c) The statement of the book on this point comes far short of covering the actual condition. The facts that the “selling value of land is an untaxed value” and that “the burden of a land tax cannot be made to survive a change of ownership” have indeed so increased the demand for Boston land that in value probably more than three-quarters of it is to-day in dead hands or in the hands of trustees and syndicates which cannot ­ die, all of whom refuse to loosen their grip upon this “preferred stock” except at exorbitant speculative prices which would yield income far under other lines of investment. PART II. three boston object lessons IN TAXATION Chapter IV. Winter Street and the Single Tax. Chapter V, Washington Street and the Single Tax. Chapter VI. CoRNHILL AND THE SlNGLE Tax. 55 Chapter IV FIRST BOSTON OBJECT LESSON WINTER STREET AND THE SINGLE TAX* % SHOULD THERE BE A NORMAL RATIO BETWEEN THE VALUE OF LAND AND THE VALUE OF BUILDINGS? HE following text, diagram,tpictures, and tables A are designed to illustrate the absurd ratio existing between the values of land and buildings, and the possible application of the single tax principle MAP OF WINTER STREET SHOWING ESTATES NUMBERED ^°tal area of lots 83,522 square feet, or one and eight-tenths acres. Total length of street 485 J feet. The numbers in small figures on this plan are the street numbers; the numbers in large figures are the square feet of area in each lot. * The statements contained in this chapter are adapted from an address at -- v,umanii-u m nuo ou. auu^iv,u till dUUlCM dL ® anquet given by the Massachusetts Single Tax League in the Hotel Vendome, 5,1899, t0 Representative Business Men of Boston. This was the tenth to VI, contained in original Chapters IV, V and VI, are 5 6 THE A B C OF TAXATION to one of the most important business thoroughfares in the heart of the shopping district of Boston, an impressive lesson in the inequalities of the present system of taxation. In this and the following object lessons the valuations, ­ unless otherwise noted, are those of 1907. The total valuations on both sides of Winter Street including ­ the estates on the Tremont and Washington Street corners were: 1898 $5,142,600 LAND $61.57 per sq. ft. $2,681,989 per acre 1907 8,272,000 97.50 per sq. ft. 4,247,100 per acre 1898 $675,000 BUILDINGS $8.08 per sq. ft. $ 353.836 per acre 1907 605,200 7 ■ I 3 P er s q- ft-310,582 per acre Showing for nine years an increase of 58 per cent in land, and a decrease of 11 per cent in buildings. The assessed valuation of the estate at the southwest corner of Winter and Washington Streets (Fig. I), was in 1907, 1557,000, of which $19,400 was for buildings. The land alone, 1,955 square feet, increased from $342,000, $175 per square foot, in 1898, to $537,600, banquet in a series of seventeen given by the League during the years 1897-1903 to the following bodies: (1) Patrons of Husbandry; (2) Association of Massachusetts Assessors; (3) Labour Organisations; 4) Massachusetts Woman’s Suffrage Association; (5) New England Free Trade League; (6) The Massachusetts Clergy; (7) Young Men’s Christian Association; (8) Boards of Charities and Corrections; (9) Representative Taxationists; (10) Representative Business Men; (n) Twentieth Century Club; (12) Real Estate Men; (13) The Catholic Clergy; (14) Members Boston Merchants’ Association; (15) Political Economists; (16) Professional Economists; (17) Landlords of Boston, followed by (18) A Dinner-Discussion of the Economic Club of Boston, and (19) Lorimer Hall, Finale. FIRST BOSTON OBJECT LESSON 57 $275 per square foot, in 1907. This assessed valuation of $275 per square foot for land is the highest in Boston, in 1893 the estate had been sold for 1350,000. The present building was erected in 1881, but it is no distinct improvement, in height or otherwise, over its predecessor. Isvit reasonable that the owner of this land should in fourteen years realise an increase on his investment of 59 per cent (8207,000 °n $350,000), and business reap little apparent advantage in accommodation during twice or thrice that time? in 1907 the estate was paying the owner an income of about $25,000. The Transit Commission took this estate by eminent domain, and settled for it in 1908 for 1630,000 or $320 per square foot for the land and buildtngs. After appropriating subway station accommodations, ­ it leased the balance of the estate for the s um of $28,000 a year and taxes, or $36,000 as long as no taxes are assessed. This is a return of about per cent net on the purchase price of $630,000, ° n which sum the city is paying—as the money was borrowed—about 4 per cent. ^hat Better Buildings Mean Query. Is it not a fact that with up-to-date buildings, having ample rear courts for the receipt a nd shipment of goods, business might be far better a ccommodated, and Winter Street be made 20 feet yider in the bargain? Would not up-to-date buildln gs on Winter Street at least double the business Accommodations, and hence be equivalent to doubling ­ the area of the land? The limited land space of Winter Street commands 58 ..THE A B C OF TAXATION a high price because its area cannot be increased. The limited floor space of Winter Street commands ­ a high average price because its area has not been increased. How Capital Is Handicapped Query. If capital is the friend of labour why does it not build better buildings on Winter Street? Simply because it cannot get at the land. The land owner, being unable or indisposed to build, and unwilling ­ to sell his land, there is no inducement to capital to put up lasting buildings to be forfeited at the end of the lease. When business from compulsion builds for itself in this way, it puts up the cheapest building that will answer for the time being, instead of what is best for all time. The one hundred and seventyfive or more concerns on Winter Street are in the merchandise, and not in the building, business. Such building is exceedingly disadvantageous to large concerns ­ and impossible to small ones. Query. Were the land holder and the business man of Winter Street “created free and equal”? The extensive alterations and improvements in Shepard, Norwell Co.’s stores (Fig. Ill), as in many other cases, have been paid for by the tenants, who have also paid all taxes on them. At the expiration of the usual twenty-year lease, all these improvements revert to the owners of the land. Is it fair that the land owner should, in the disposal of his land, have the benefit of the sharpest kind of competition, while the business man is debarred from all kind of competition in the obtaining of new buildings? Is it not about time that all Winter Street build ­ FIRST BOSTON OBJECT LESSON 59 ings should, in a comprehensive sense, be “altered to suit tenants”? A Striking Illustration of a Common Fact The land in Winter Street, which was assessed at less than $4 per square foot in 1850, was assessed in 1907 at 1130 per squar& foot. During the fifty-seven years intervening, the income, above taxes, from the land, in rent and appreciation has amounted to an average of 150 per cent annually on the investment of 1850. Three Burdens for “Business and None for the Landlord Query. Is that a constitutionally “just and reasonable” system of taxation which constrains the business man of Winter Street to erect at his own expense a basis of taxation, pay the tax itself, and then turn over without consideration ­ the very basis itself to the pocket and Profit of another man? Should not the land be taxed until it is at least as profitable to use it as to hold it out of use? Leading Questions Query. Why should not Winter Street, with its concentrated business and highest land values in Boston, have the best buildings, with the best attainable ­ equipment, elevators, ventilation, heat, light, Water, sanitation, etc.? Query. Wherever business has up-to-date accommodations, ­ as in the Exchange Building on State Street and the new Tremont Building on Tremont 6o THE A B C OF TAXATION Street, is it hot a fact that the value of the buildings approximately equals or exceeds the value of the land? Should not the value of the buildings at least keep s'ome sort of pace with the increasing value of the land? It is not asserted that Winter Street ought to have buildings worth, like the land, $97.50 per square foot, but that $7.13 per foot is too low and means a great detriment to business. Query. If estate holders in their quest of profits had been as dependent on buildings as on land during the past forty years, would Winter Street, the centre of business and of highest land values, ever have lacked building accommodations of a value approximating ­ much more closely to that of the land than has been the case? Query. If the income from the land of Winter Street, including appreciation, were no greater than the income from up-to-date buildings, would the business of Winter Street tolerate to-day its seventhrate accommodations? Query. Was the land of Winter Street made for the use of business or for the speculative profit of the land owner?* Is the business of land owning pure and simple deserving of so much consideration as to merit encouragement ­ at the expense, and to the detriment, of industry and enterprise? If not, is not the present system of exempting it from the burden of taxation unwise and indefensible? A modern eight story building covering the * By land owner is meant any man in his capacity as owner of land only, independently of his capacity as owner of buildings and improvements or anything else. FIRST BOSTON OBJECT LESSON 61 location of A. Stowell & Co. (Fig. VI) would afford to business four times as much floor space as now at one-quarter the present average rental per square foot. The ground rent of 5 per cent on $130, the assessed valuation, would l}e $6.50 per square foot. The rent of a building eight stories in height, costing $50 per square foot, would be fa.50 per square foot, making ­ ground rent and rent of building together $9 per square foot. Subtracting from this $9 three-quarters (16,75) for ground floor and basement, there is left for the remaining seven floors $2.52 per square foot, °r 32 cents per square foot for each floor. Upon the area of 4,630 square feet at $6.75 per square foot, this means a total rental for ground floor and basement of $31,253, and for the other seven floors 110,417, or an average of $1,488 each. This figure is probably much under what such floors Would actually command. This estate occupied by A. Stowell & Co. costs the city of Boston just as much in the way of Public service as it would with the finest possible building. It is this constant expenditure for public service that maintains the value of the land, while adding nothing to the value of the buildings. Further, maintenance is not all. The present value °f the land has been paid for, dollar for dollar, by the people of Boston. Why should not this estate P a y taxes in proportion to the taxes that are spent Upon it? Query. Is it reasonable that the business of A. Stowell & Co. should be required to pay $30,000 ground rent (5 per cent on $600,000 worth of 62 THE A B C OF TAXATION land) in order to secure floor space worth 112,000 a year? What Does the Business Man Think of It ? The following facts and figures are given for business men to consider, being careful to avoid hasty conclusions, ­ and to remember that the more nearly the value of buildings approaches the value of the land the better it appears to be for business. Comparison by Counties Massachusetts has fourteen counties. In every one of thirteen of these counties the assessed value of the buildings exceeds and in most cases largely exceeds the assessed value of the land. In the one other county, Suffolk (Boston, Chelsea, Revere, and Winthrop), containing 49 per cent of the whole land value of the state, the buildings fall far below the land in value. The Small Towns Again, eighty-eight towns (out of Massachusetts’s 354 cities and towns), having lowest valuations, show average assessments as follows: of buildings, $ 130,000; of land, $145,000. A single tax assessment based upon site value of uncultivated land and exempting not only buildings, but all other farm improvements, ­ would reduce this average land value for these eighty-eight towns, so far as they represent farm land foe assessment, from $145,000 to probably ­ less than $75,000. The following figures show Winter Street in company with the three smallest of these towns: FIRST BOSTON OBJECT LESSON 63 BUILDINGS LAND RATIO RATIO Mashpee $46,530 $140,020 33-100 22,680 84,825 27-100 30,790 119,246 25-100 605,200 8,272,000 7-100 Peru * U • a a Florida . Winter St., Boston . For the County of Suffolk, which contains the City of Boston, as well as fpr the state, no such discrepancy appears. Following are the figures: BUILDINGS LAND RATIO 66-100 140-100 County of Suffolk Other 13 counties lS444,44i,725 $673,208,750 949,283,781 679,071,599 Whole state . . $1,393,725,486 $1,352,280,349 101-100 Twelve Cities and Towns In the twelve following large cities and towns the value of the buildings greatly exceeds that of the land. BUILDINGS LAND RATIO Lenox . . . . Pittsfield . . . $2,306,500 8,685,715 $i,73i ,375 6,971,255 1,256,613 7,886,470 9,772,050 18,587,850 23,238,785 15,456,380 36,13!,445 39,989,600 26,389,020 22,878,475 133-100 124-100 191-100 119- 100 126-100 123-100 128-100 117-100 103-100 I23-100 126-100 120- 100 North Attleborough Gloucester Haverhill.... Lawrence.... n a it oin 12,392,960 22,854,800 29,892,705 18,194,860 37,!88,4i5 49,245,700 33,293,59° 27,590,325 ’nn olyoke Springfield . . Cambridge . Lowell . . Newton . . . Total.... $253,445,430 $210,289,318 120-100 Seventeen Cities and Towns In the following seventeen cities and towns, representative ­ of their class, the valuation of the buildings is in the average double that of the land: 64 THE A B C OF TAXATION Athol .... BUILDINGS LAND $1,204,097 RATIO i93-I00 Clinton . . . • • 4,246,230 1,967,307 2I5-100 Abington . . . . . 1,749,697 634,610 275-100 Plymouth. . . . . 5,477,025 2,206,250 248-100 Amherst . . . 899,535 204-100 Chicopee . . . . . 6,115,900 2,221,270 275-100 Amesbury. . . 1,397,681 203-100 Newburyport . . 5,269,850 2,379,600 221—100 Adams. . . . 1,085,300 239-IOO North Adams . . 7,257,210 4,827,075 i50-100 Attleborough 5,479,385 3,474,395 158-100 Taunton . . . . . 11,024,365 5,214,520 21I—100 Easthampton • • 3,412,906 408,720 836-100 Rockland. . . • • 2,346,350 891,323 263-100 Chelsea . . . . . 14,600,570 8,922,300 163-100 iilackstone . . . . 1,244,065 760,410 163-100 Gardner . . . • • 3,767,096 1,395,618 27O-IOO Total . . • • $81,595,727 $39,890,011 205-100 An Enormous Discrepancy Query. Why is the value of the buildings on Winter Street, 1605,200, so insignificant as compared with the land value of Winter Street $8,272,000? Is it not because the present system of taxation (by making partly improved real estate the choicest of all investments) enables the owner to get on such an investment a far larger percentage of revenue, with buildings thirty to sixty years old? Under the present system the buildings of Winter Street yield in taxation only about onethirteerth as much as the land, so that with the very moderate advance in rate from 115.90 to |iy per thousand upon the land alone of Winter Street its business might to-day have thirteen times as good accommodations in untaxed FIRST BOSTON OBJECT LESSON 65 buildings, and the city lose nothing in taxes from that locality? A Tax That Defeats Itself Query. Do not the above questions indicate not only that the taxation of buildings has defeated itself by discouraging the increase of buildings to be taxed, but also that the city is deprived of a much larger revenue by thus preventing the large increase of land Value in the whole neighbourhood adjoining, which Would follow the erection of eight million dollars Worth of buildings on Winter Street? Winter Street is the centre of the highest land values of Boston. It is 485 J feet, or less than one-tenth of a mile, in length. It has two subway stations of different ­ lines, one at the Washington Street and one at the Tremont Street end. The city is spending eight or ten millions for these subways, besides other millions ­ annually to provide shopping facilities for a million people. The result here is $8,000,000 worth of land value for the benefit mainly of the land owners of Winter Street, and $600,000 worth of shopping accommodations ­ for the people. Is the result pleasing or Profitable? Chapter V SECOND BOSTON OBJECT LESSON WASHINGTON STREET AND THE SINGLE TAX* I N VIEW of the nature of ground rent as already considered there is one way that promises to simplify and equalise taxation, viz., by beginning at once the gradual transfer of the burden to shoulders by which eventually it will not be felt, thus tending to correct the distribution of wealth, abolish strikes, silence the clamour against monopoly and special privilege, and sweep from before the halting wheels of social and moral progress much of the degradation, distress, and vice precipitated to-day upon society by want on the one hand and surfeit on the other. Men who have large selfish interests often prove themselves just as open to conviction of fairness and soundness as those who have small selfish interests. So far as the case is made plain to them their judgment generally will be impartial. No business interest, for instance, is more keenly sensitive to crooked taxation than is the real estate business; none quicker to take alarm at the sound of hostile legislation. No one would claim, and few would allow, that to justify a reform it should be shown to be to the pecuniary * This chapter is adapted from an address at a banquet given by the Massachusetts ­ Single Tax League to Representative Real Estate Men in the Hotel Brunswick, Boston, October 8, 1900. 66 SECOND BOSTON OBJECT LESSON 67 advantage of any one class of men over another; yet it is not difficult to conceive how, in the relief of houses and stores and factories from taxation, the real estate business would get a large share of betterment from the change. Herewith is offered a collection of facts and definitions, ­ coupled with \ few simple statements, calculations, ­ and deductions, criticism of which is invited. These take the form of observations, purposely disjointed ­ in order that a connection dropped may not be a connection lost. It is hoped that in the consideration ­ of these points a sufficient vantage ground of agreement may appear from which to begin at once gradually to supplant the bad with the good, the crooked with that which is straight, the unattainable and indefensible with that which is practicable, simple, and near at hand. The assessed valuation of Washington Street, from Adams Square to Eliot Street, 3,495 feet, or twothirds of a mile in length, with an area of 745,003 square feet, I7tV acres, comprising 179 estates, was in 1907: Land .... $61,135,900 $77.00 per square foot Buildings . . . 10,793,200 $13.50 per square foot This is an increase in valuation, over the year 1898, of land, $20,438,400, or 50 per cent; of buildings, |i,955,too, or 20 per cent. In 1899 the valuation of the buildings was 21J per cent that of the land; in l 9°7, only 17^ per cent. The property, land and buildings, yields to the city, in taxes at $15.90 per thousand, $1,143,672. By an increase of $2.80 in the rate, with all buildings 68 THE A B C OF TAXATION exempted, the land alone would yield the same amount, (161,135,900 at I18.70 equals $1,143,672). Some Pertinent Illustrations There are on this street, between Adams Square and Eliot Street, 179 buildings, twenty-one of which have been erected in the last twenty years. At this rate Washington Street is confronted with the happy prospect of buildings of modern beauty and convenience ­ in only a trifle more than one hundred and seventy years, provided only that none of them grows old meantime. Has not fifty years been the limit of a useful life for the average building of the past? If so, Washington Street should have three full crops of new buildings, instead of one, in the one hundred and seventy years. All nature renews itself and comes out in a new dress once a year. The more the land is enriched, the more fertile the agricultural crop. Why is there not found the richest economic crop of buildings on land richest in value? Is not something “rotten in Denmark”? If so, what is it? The human body, as man’s habitation, is renewed once in seven years, cuticle and all. Of Boston’s 87,300 buildings 1,657 were erected in 1907. If one-half, or 828, of these are due to a natural growth of less than 1 per cent annually (the annual increase in population is over 2 per cent), and only one-half are to renew old buildings already enumerated, then it v/ill take at this rate upwards of one hundred years to scrape off the surface scurf, and give to Boston a fresh and healthy cuticle. It will require these one hundred years even if every new building is proof against decay. SECOND BOSTON OBJECT LESSON 69 Meantime, where is the builder’s occupation gone? Is this health for a body politic? If not, will some wise physician furnish a prescription? Do the I231,600 worth of nearly worthless buildings shown in Fig. IX represent those business interests of Boston for which a Washington Street subway is being completed; fof which aTremont Street parallel subway was completed only a few years since, and but one square away? These subways add nothing to the value either of these old buildings or of the new ones which might replace them. Yet they soon will have doubled the value of the land. It is submitted in all honesty and seriousness that this Washington Street, from Adams Square to Eliot Street, is a veritable economic monstrosity. Whenever ­ any section of a city is in a state of transition, like the West Street and Tdmple Place of a generation ago, or like the Summer Street of to-day, altered fronts and other makeshift devices are for a time natural and inevitable. But here in Washington Street, for a couple of centuries the main business artery of a great city, there are not on its whole length more than three °r four buildings which you could point out with special pride to the visitor from Chicago, or Kansas Qty, or Marblehead, or Cape Cod. For this condition there must be a cause, and this cause is the private appropriation of a public value; a value publicly created, and publicly maintained. If this is not the cause, we ask you to help us find what is. Query. Is it the Old Corner Bookstore (Fig. VIII), n °w almost two hundred years old, valued at $2.62 Per square foot, that needs a new Washington Street subway? Is Washington Street land at $50 to $300 7 o THE A B C OF TAXATION per square foot a proper place for this and a hundred other similar tombstones? The economic, or ground, rent of this estate is not (probably) what the present tenant pays for the use of the land with its worthless buildings, but is what such use would command in connection with an up-todate building. This gross ground rent is at least 5 per cent on $730,000 (the assessed valuation), $36,500, plus present taxes on the land, $2,035, or $38,535. Whatever the user receives in return for the annual payment of this ground rent or natural tax (be it $38,535, or more or less), he receives from the city and people of Boston. The owner, as owner, to whom this rent is paid, gives him nothing in return. Ought not the owner at least to pay the taxes? Question. Why do these worthless Washington Street buildings withstand the march of improvements? ­ Labour wants to put up better buildings. Capital wants to invest in better buildings. Business wants to occupy better buildings. Answer. The reason is that a building investment involves labour and business risk, while land investment does not; and further that people are not only permitted to hold this land practically unimproved, but are actually paid handsomely for doing so. Query. Is it not a fact that the business of Washington ­ Street would be better accommodated to-day if every alternate square were covered by an up-todate eight or ten story block, with open parks or even market gardens in the intervening squares? Ground rent is whatever amount a user pays, or would be willing to pay, annually, for the use of the SECOND BOSTON OBJECT LESSON 71 land itself. It is whatever is paid for the use of a Whole property, land and buildings, less taxes, insurance, ­ and repairs, and a fair interest on the value of the buildings. When new buildings, or extensive alterations are made by the tenant which are to revert to the landlord at the end of say a twenty years’ lease, then one-twentieth ofV his outlay becomes a part of the annual ground rent, because it forms a part of the price paid for use of the land. Ground rent is simply “a premium paid for the advantage of location; it is the value of the special privilege of the occupancy of a particular spot of land to all of which all men have an equal right, but from which all but one are and must be excluded.” To tax this value of land is no burden upon the user, because he can get a better living by using this land, after paying the rent, than by using some other land that nobody wants, and that hence has no rental value. The Transit Commission took the estate, northwest corner of Washington and Boylston Streets (Fig. X), by eminent domain for subway purposes,and the expert estimates of its value ran as high as $625,000, or $587 a square foot; the Commission conveyed the property back, allowing the owner as compensation for the reservation ­ of the basement and part of the ground floor for transit purposes, $150,000, a sum only $17,000 less than the assessed valuation of the whole estate, besides interest and an allowance of $10,000 toward necessary reconstruction of the building. While this is a very complicated case, and the owner, a wellknown Boston merchant, claims that the sum received by him for damages does not compensate him fully for the diminution in the value of the estate, the facts 72 THE A B C OF TAXATION certainly show that the property was greatly underassessed. ­ Boston’s Ground Rent $55,000,000 In the estimate, offered in Chapter I, page 18, is clearly shown the all-sufficiency of ground rent to bear the whole burden of present taxation. Criticism ­ of these figures, with fair consideration of the process and steps of the calculation, will be welcome. The 155,000,000 ground rent of Boston is the natural tax which the people of Boston pay for the occupancy and use of their land. This, it is submitted, ­ is tax enough for them to pay. But, since only 110,382,628 of this natural tax is taken for public purposes, while 144,617,372 is permitted to be absorbed into private incomes, by the “private appropriation of ground rent,” the people of Boston have to pay an additional tax of 113,038,91400 buildings, personal property, and polls, with the result that the occupancy of their land, with its benefits of good government and public service, costs the people of Boston to-day in round numbers:* The natural tax of ..... $55,000,000 An unnatural tax (on buildings, personal property, and polls) of 13,038,914 Total burden of taxation .... $68,038,914 Of its ground rent, estimated as above at . . $55,000,00o Boston now takes in taxation less than two-tenths, or . . . . _ . . . . $10,382,628 While Boston’s whole tax is much less than fivetenths, or $23,421,542 * Credit for this simple formula of great convenience in dealing ■with taxation in any locality is due to Mr. James R. Garret, a Boston lawyer and conveyancer. SECOND BOSTON OBJECT LESSON 73 The assessed valuation of the Ames estate (Fig. XI) is: land, $654,500, or $1 15 per square foot; buildings, $469,500, or $75.32 per square foot. The tax upon the land is no burden upon the owner, because he purchased only the equity after payment of tax. (See Chapter HI.) Neither does he bear the burden of the tax on the building, because he can shift it upon hi? tenants, who do. This fact no one disputes. Howland Street (Fig. XIII)—thirty-two well-to-do homes — has an average assessed valuation: land (8,275 feet, at 5 1 cents per foot), $4,220; houses, $6,371, 77 cents per foot; houses and land, over $10,000. The valuation of the land and office building of the Ames estate is equivalent to that of the land and houses of about three Howland Streets. The latter Would pay taxes on $1,015,500, at 115.90,01 $16,146, While the owners of the Ames estate escape the burden of the tax on both land and buildings, neither of which can they be made to bear. The estate, corner of Cambridge and Charles Streets (Fig. XII), taken by the city of Boston in 1899 for a n approach to the Cambridge bridge, was at that time assessed, land $69,600; buildings, $3,400. The commissioners’ award was $170,000, or $97,000 in excess of the assessed valuation. This award was based upon the income of the property, which was claimed to be $8,000, or 5 per cent on a value of $160,000. The income of $8,000 was 11 per cent, of the assessed valuation of $73,000. Allowing Mr. Edward Atkinson’s full claim, that the single tax— i°cal, state, and National—would take 4 per cert of assessed land values, 7 per cent would still be left in 74 THE A B C OF TAXATION this instance for the landowners. This may be an extreme illustration, but it goes to show the viciousness ­ of the present system, and points unerringly to the sufficiency of ground rents for all purposes of taxation. Few persons now call in question the right of the owner of any Washington Street lot to tear down his building and hold his lot vacant. If one owner may do this all owners may do the same. Must there not be some fatal weakness in an apportionment between the rights of individuals and the rights of the people that would make possible such an impolitic condition? But the fact that modern buildings would be worth $50 to $75 per square foot instead of $13.50, the value of present buildings, is proof that most of this land, though not held entirely vacant, is held practically three-quarters to nine-tenths vacant, or, in other words, put only to one-quarter or one-tenth of its legitimate and most economical use. A public economy that turns a landowner from a public friend into a public enemy, whether he will or no, cannot be wise. If Boston should take the $4,383 received for taxes from the marble Sears Building on Washington Street, and the $7,465 from the Ames Building, and spend these amounts in the improvement and repair of the worthless buildings of Washington Street, the owners of the Sears and Ames Buildings would complain, and very justly. Exactly what the City of Boston does is this: It spends these same taxes in the “improvement ­ and repair” of the land value that is under these and similar buildings. But is this really less unjust? This is one more way of looking at the unequal incidence of a tax on buildings. SECOND BOSTON OBJECT LESSON 75 Why should the Boylston Building and the old Masonic Temple and the old Public Library have come down in their youth and beauty while these Washington ­ Street buildings are allowed to remain standing in their decrepitude? There must, we say, be some sufficient reason. If the reason here suggested is not the real one, we ask the? reader what it is. Question. How, then, are we to know just when old buildings should give place to new ones? Answer. When the single tax shoe begins to pinch, that is, when, under the single tax, the old buildings cease to be profitable: in other words, when, upon land with buildings unsuited to the situation, a tax seems heavy which, upon the same land with proper buildings, would seem light. The Honourable Henry Winn, a well-known advocate of the multiple tax, says: “Why does a man owe a tax? First, because society protects his person; second, it supplies and keeps in order streets for his Passage; third, it lights his way by night; fourth, it furnishes parks and libraries; fifth, it schools him a ud his children; sixth, it protects his property; seventh, it keeps courts open to redress his grievances; eighth, it provides a government to make and enforce iaws; ninth, it supports him if he falls into poverty; and tenth, chiefly because he has been placed here by God to serve and improve, not himself alone, but urankind in general, and as that can only be done by uaaintaining government, order, and civilisation, he owes his tax as he owes his life, to support that government.” “Amen,” says the single taxer; and these are exactly the things for which every man is paying when y6 THE A B C OF TAXATION he pays his ground rent, the natural tax. Why ask him to pay for the same things a second time? The people of Boston, as hereinbefore alleged, actually pay in single taxation a natural tax of $55,000,000, coupled with an unnatural and “double” tax of $13,000,000, a grand total of $68,000,000. They receive in return benefits amounting only to $23,000,000. The failure to pay all public expenses out of this natural tax of $55,000,000 is the cause of gross inequality in the division of wealth, an inequality greatly exaggerated by the additional $13,000,000 unnatural double tax. The single tax stands for the recognition of a scientific principle of taxation. When or how it is to be introduced is not for us to say. All that is here asked is that you shall study the problem, adopt the single tax principles, and then begin to apply them. The complaint is against a condition and never against an individual or a class. The man who, when paying his water rate, or his city gas bill, or city electric light bill, pays in full for a public service rendered to him, is not paying a tax. How, then, could a land owner, who, in paying his single tax, would pay to-day not in full, but only fifty cents on a dollar for the communal service rendered him, say that he was paying a tax, or that he was the victim of confiscation? The proposal of the single tax is gradually to abolish the present complex, unequal, and systemless method of taxation, and to defray all public expenses from a tax upon land values alone. This surely would be a simple process. It would be to distribute the public burden with invariable justice, because in SECOND BOSTON OBJECT LESSON 77 accordance with a natural economic law, instead of a variable and impossible statute law. This is all there is in the single tax of complexity, absurdity, or impracticability. The City of Boston is lavish of its millions in order that Washington Street space may yield proportionately ­ more business, rhore profit, more convenience, and more satisfaction to people. Enterprising syndicates ­ of men and capital are ready and watching to make the most of the situation. It is the unequal advantage enjoyed by the owners of lots small or large that hinders this realisation of the city’s good intentions. This is the canker that destroys the city’s harvest from its planted millions. The people tax themselves 1100,000 to build a beautiful Milton, Dorchester, Newton, Cambridge, or Lynn boulevard. Then straightway the same people again pay interest on the same outlay in the form of ground rent, before they can establish their homes and enter into the enjoyment of their own benefactions. In other words, they deposit ? 100,000 in the ground, and then pay 5 per cent annually for the privilege of appropriating the interest thereon. Why should a city which creates the enormous v a!ue of its land, be powerless to insure, or even to facilitate, the use of it by the provision of suitable buildings thereon because paralysed and checkmated by unequal rights vested in the dead hand of corporations, ­ trustees, and institutions. German cities exercise themselves about the municipal “housing of the poor.” Why should not American cities cast about to remove the municipal 78 THE A B C OF TAXATION impediments which prevent poor and rich alike from housing themselves, both in private and business homes? The nature of the problem is the same in the case of a store on Winter Street as in the case of a house on Salem Street. Every argument in favour of municipal initiative in the renovated housing of the people has no less force in connection with the renovated ­ housing of the people’s business. If all men are to have equal rights, then the right of the landlord, the storekeeper, and the customer ­ should not be in conflict but in harmony. Chapter VI THIRD BOSTON OBJECT LESSON CORNHILL AND THE SINGLE TAX* Map OF block bounded BY CORNHILL, brattle street, scollay square, AND ADAMS SQUARE. Total number of square feet ...... 21,419 Number of lots 2 3 Average number of square feet to each lot «... 93 1 Total frontage on Cornhill, in feet . • -> • 45° Average frontage per lot, in feet . 20 Average width of block, in feet ...»•• 45 Width of Cornhill, in feet 4^ Width of Brattle Street, in feet 5° Width of subway underneath . • » . • 2 4 Land, assessed value .,••••• $1,220,700 Buildings, assessed value $101,800 Land, assessed value, per foot ..*••• $57 Buildings, assessed value, per foot . $5 Between Cornhill and Brattle Street, Boston, and lacing upon both streets, are found to-day twentythree houses built by Uriah Getting for the Cornhill * This chapter is adapted from an address at a banquet given by the Massachusetts Single Tax League to members of the Boston Merchants’ Association in the Hotel Brunswick, October 22, igol, 79 8o THE A B C OF TAXATION Company in 1817 (Figs. XIV and XV). More than one hundred firms and individuals are doing business in these contracted quarters, in which not one of their number would deign to live. These estates, as they stand, net the owners an income of probably 20 to 50 per cent on their original investment. With modern buildings they would net say 5 or 6 per cent on to-day’s valuation of land and buildings. Why, we ask, should there not be a board of business health to condemn buildings which, like these, are untenable for business? As a matter of fact, a proper system of taxation would vacate these untenable buildings without the aid of any such board. If the erection of the Exchange Building, the Tremont Building, and other modern office buildings could empty immediately hundreds of dingy and stuffy offices, why would not a hundred business palaces, as fast as they could be built, empty the same number of cramped and ill-appointed stores, workrooms, and attics? If land and buildings stood on their respective merits, subject to equal competition, that is, accessible to capital and labour at the price each is worth for use, these buildings would quickly condemn themselves. Such unmerchantable material, if at sea, would follow the decayed frigate to some navy yard to be broken up. On land, if they had not been fastened to it, they would long ago have gone to the junkshop; but as they are fixed to the land, whoever uses the land must use them. Under the best of conditions, it is sufficient for the city to maintain a street at the front doors of abutting lots, each one hundred feet deep. Here, on Cornhilk THIRD BOSTON OBJECT LESSON 81 are lots averaging forty-five feet deep, having one forty-eight foot public street, with all its public utilities, at the front door, and another fifty foot street at the back door, equivalent to one street for abutting lots, each twenty-five feet deep, making the one item of street cost, for the accommodation of these buildings, four times what the highest public welfare demands. On the other hand, it is probable that if the buildings in Cornhill were new and adapted to the situation, they could easily accommodate four times the business that is done in the present area. With four times as much street as is needed, for onequarter of the amount of business, is it not a simple calculation that Boston’s taxes, on account of the business done on Cornhill to-day, are something like sixteen times as heavy as they need to be? One would naturally think that the owner not only should pay for the maintenance of the land value, by which he profits, but should also make the utmost of such public facilities. As a matter of fact, he does neither. Is it hardship to require him to bear the taxes? Is it possible to conceive ­ of the adaptation of unlimited means to a smaller end than in this case of Cornhill? The object of all public service and good government is to provide people with home and business facilities. When, as in this case, neither of these objects is attained, is not the expenditure a public waste? Is it not money spent for nothing? Surely, there is no prosperity in vacant lots. These are, in one sense, worse than vacant, yet their value keeps on increasing. New buildings on the top of land increase its value, but a new subway tvith two new subway stations at public expense, under the land, will, as is here witnessed, sometimes 82 THE A B C OF TAXATION double its value in spite of the old buildings upon it. Is it for such buildings as these that Boston builds its subways? One of the good things claimed for the single tax is that under it those genuine building syndicates which erect and improve buildings at their own expense for the benefit of the occupiers, may be expected to put a happy end to those alleged “ land improvement companies ” which exploit the land for the benefit of themselves, largely at the expense of the occupiers. When the palaces which insurance companies* build for their own investment are such shining examples of what the most carefully guarded capital can profitably do, how can these waste places in Cornhill be charged to capital? Capital would any day gladly undertake to pay annually for this whole square of land what it is worth for use, would pay for the present buildings their total worth, and would then equip the land luxuriously for business occupancy, asking in return only a secure title to its improvements. But when capital is asked to do this, as tenant, with no title either to land or improvements thereon, it declines to play against loaded dice, and business has to live in tents and log cabins because its best friend, capital, is forced to play the role of a seeming enemy. The malefactor, i. e., the evil factor, in the case, is the private appropriation ­ of ground rent, which is like a check valve— the higher the steam pressure of public expansion and * It has been thoughtlessly alleged that the single tax would bring ruin to savings banks and insurance companies, by impairing the value of their land securities. Under any gradual adoption of the single tax this could hardly be a serious charge so long as investments are changed every three or five years, as is the custom of those fiduciary institutions. THIRD BOSTON OBJECT LESSON 83 the demands of business, the more securely the title valve is pressed down to its seat. A title to land bought and paid for five or fifty years ago is not like other wealth. Title to land is simply a warrant to take indirectly at the annual round-up a certain proportion out of the wealth which other people’s labour Ihas produced upon that land. That is, it is a warrant to take the ground rent which public expenditure creates, leaving other people to go on paying the taxes with which to meet that public expenditure. Ground Rent a Reflected Value It may help to an understanding of the subject to remember that the site value of land is so to speak a reflected value, an intangible value, not value resulting ­ from individually directed labour. The immovable land reflects the movables that are upon it. In great centres of traffic in movables, the land value is great. Withdraw all movables from Boston, New York, or Chicago, divert them to other centres, and land value would vanish as does your image from the glass when you step away from it. How plain, then, is the unwisdom of taxing the things which a community wishes above all else to invite and to hold; how plain the wisdom of taxing nothing that can evade taxation The Natural Basis for a Natural Tax The ultimate natural basis for the assessment of a natural tax upon land is manifestly the basis upon Which the assessor makes all his calculations of land value, viz., gross ground rent, what the land is worth for use. Ground rent is something that every map 8 4 THE A B C OF TAXATION pays, and must pay, for the use of his land, and no constitution or statute, army or navy, can relieve him f rom this natural tax. He now pays this ground rent, and all other taxes besides. Our desire is to turn Ephraim from his petrified idols of taxation until he pays no tax except his ground rent, which he must pay in any event. The inequality in the division of wealth effected through special privilege is caused by the failure to put a natural tax in the right place, and the subsequent aggravation of this unequal division is caused by the error of putting artificial taxes in the wrong place. The single tax is not a new device with a set of newly devised principles peculiar to itseT; it must stand, if it stands at all, upon demonstrable scientific principles of political economy. These we are seeking to determine ­ and apply, believing that the operation of such principles must bear the fruits by which they may be known and justified. Other sciences — mathematics, chemistry, physics, astronomy — have long been showering the world with blessings. Is it not time that economics, the science par excellence of the fair distribution of all these blessings, should assume its high privilege and prerogative ­ as quartermaster, commissary, and purveyor, to govern the issue of all these Aladdin stores? In considering the possible ease with which the burden of taxation may be made finally to weigh, let the fact never be lost sight of that the selling value of land will, with the new purchaser, subsequently to the imposition of a new tax, slip out from under the burden like a globule of mercury from under the thumb. We find that the only place where the tax yoke will stay THIRD BOSTON OBJECT LESSON 85 put is squarely upon the shoulders of ground rent, what the land is worth for use, its gross annual value. Take, for taxation, a portion of ground rent, and you have a basis for assessment that is stable, in that it is a value not affected by taxation. The selling value, or the assessed valuation, is not the shoulders, but the rump, or the small of the back, that will “slip the yoke,” as the farmers say, as soon as real estate moves. By fact and reason we are, not led, but driven, to the conclusion that more than 1650,000,000 of capital invested in Boston land to-day escapes entirely the burden of the tax which is assessed upon capital invested in buildings; and the happy landlord of land and buildings bears no land tax burden, shifts his buildings tax upon his tenant, and thus himself entirely escapes the tax burden. This statement is a corollary, or consequent, of the accepted economic principle, that the selling value of land is reduced by the capitalised tax that is laid upon it. This view is in literal harmony with the substantial agreement of the economists, that the only direct tax (with the possible exception of taxes on incomes and inheritances) — the tax which cannot be shifted or evaded — is a tax, not upon the assessed valuation of land, nor upon the selling value of the land, but upon ground rent, or its capitalised value, the gross value of land. Chambers of commerce, merchants’ associations, Manufacturers, and dealers are constantly seeking to find or make the best and largest market for their commodities. The best market, it is fair to say, is the largest number of persons who are able to buy the ^ares they want. The greater the number of people 86 THE A B C OF TAXATION who want every good thing that is made (and are able to have it) the better it is for trade. Thus, an equitable distribution of wealth is a vital requisite in the case. Make taxation equal, impartial, “reasonable” to the poor man, “proportionate” to the rich man, and the distribution of wealth will then be as equal as justice can make it, for it will be in proportion to the skill and industry of the hands and brains producing that wealth. “ Equal opportunities for all, and special privileges to none.” The equitable ideal is to-day unrealised because, while a comparatively equitable distribution of a portion of wealth is going on through the one universal channel of wages, congestion of wealth is constantly occurring through the second and only remaining channel, the channel of special privilege, which is invariably a privilege of the private appropriation of ground rent, always and wholly a social product. The single tax aim is, on the one hand, to widen the channel of wages by opening the way to equal opportunities, ­ and by increasing the purchasing power of wages through reduction of prices, and on the other hand, to narrow the channel of special privilege by making the man who has this privilege pay a tax proportioned to his privileges. Another Illustration The St. Paul’s Church property on Tremont Street, Boston, standing between two large stores (Fig. XVI), furnishes another good illustration of what we have been saying and reiterating. Less than ten years ago $1,500,000 was offered for THIRD BOSTON OBJECT LESSON 87 this property for business purposes, and the offer was declined. Since then the assessed valuations of the adjacent Tremont Street estates between Winter Street and Temple Place have increased more than 75 per cent. In view of these facts it should be very conservative ­ to estimate to-day: The value of St. Paul’s Church property at . . $2,000,000 For this value the St. Paul Society paid in 1820 . 100,000 The people of Boston have since contributed by their aggregate and particular activities, industries, and expenditures .... An annual contribution for 87 years of much above ........ But, in recent years, this increase in value has been at the annual rate of not less than Church property being exempt from taxation, the people of Boston have to make up the amount of the exemption. This, in the case of St. Paul’s is $22,500, and for all church property in the city is $385,000, a year. If then to the above average annual contribution of the public there be added these taxes for 1907, more than ....... $1,900,000 20,000 $75,000 22,000 The total annual contribution amounts to $97,000 An amount equal to the 5 per cent ground rent of almost $2,000,000 worth of land, or to the taxes, at $15.90 per thousand, on $6,100,000 worth of property! Ten out of the 354 cities and towns of Massachusetts — Everett, Hyde Park, Melrose, Milton, North Adams, Revere, Salem, Taunton, Waltham, and Watertown — and the whole county of Barnstable, have each an average land valuation of $6,000,000. Thus the cost °f St. Paul’s to the people of Boston has been far greater than would be the average income at the 88 THE A B C OF TAXATION Boston rate of |i6 per thousand, from taxation upon the land of any one of the above named ten cities or one county of the state for the year 1907. Under the single tax such conditions could not prevail. Prevailing, as they do, nothing but the private appropriation of a public ground rent can perpetuate them. Nothing but the taxation of ground rent can correct them. The St. Paul’s illustration seems extreme on account of the total exemption of church property, but what has been said of it is from two-thirds to nine-tenths true of all vacant land, or of land slightly improved, as is the case with a large part of the business section of Boston. Granting all that St. Paul’s may claim for religion and sentiment, we yet maintain—and its forty-one proprietors will doubtless admit—that an impartial distribution of the cost of religion and sentiment to the one hundred and twenty thousand families of Boston at this rate of more than $2,000 each, amounting to a total of more than $240,000,000 a year, would be an undreamed of union of Church and State. The object of this illustration is not to cast any invidious reflection upon St. Paul’s Church, but rather to impress upon your minds the enormous dimensions of the reservoir from which the single tax proposes to draw all public revenue. The proprietors of St. Paul’s are a body of Christian gentlemen of discernment and philanthropy; none are more likely than they to see the inconsistency of their situation; none more likely to welcome its correcting; ­ none more likely to see that they will get a full share of betterment from a new and improved order of THIRD BOSTON OBJECT LESSON 89 things; that a religion and a church worthy of justification ­ have no need of such alms as these from the people whom they seek to save. Brought face to face with a true apprehension of the problem, seeing the unequal operation of a tax exemption that gives the least to those most needing aid, and most to those who need it least, it would not be surprising if they were themselves ­ to instigate and inaugurate the remedy. Some Objections Answered It is objected to the single tax, that it is confiscation. But what is taken from the owner? No land is taken. The single tax is not land nationalisation. No right of occupancy or improvement or sale or devise is taken from the owner; nothing except the right to collect natural taxes from other people, and to be himself exempt. In the aggregate the new tax would be compensated for oy the exemption of an equal value of buildings and personal property. The landlord who thinks himself discriminated against by such a tax has only to improve his land to escape the burden. Both land value and house value require to be maintained. The public creates and maintains the value of the land. The owner, directly as builder, or indirectly as purchaser, creates and maintains the use value of the house. The maintenance of the use value of the land by the public gives outright to the owner a fund the interest of which will pay his land tax. The maintenance of the use value of the house falls upon the owner, and he must recover his house tax out of the house rent increased so as to include the tax. This will be true. 90 THE A B C OF TAXATION because, unless the owner can get a rent sufficient to pay interest on the cost of the house, over and above taxes, no more houses will be built, until they become so scarce as to force rent to a point that will cover the cost of maintenance. How can taxation be confiscation? Etymologically the words have nothing, and colloquially almost nothing, in common. To confiscate is, according to the Century Dictionary, “to adjudge to be forfeited to the public treasury by way of penalty” —the meaning is inseparable from the idea of forfeiture. To tax, on the contrary, is “to levy money or other contributions, as from subjects or citizens, to meet the expense of government.” Is it just to allow the landowners’ investment, now exempt, to remain exempt? Does either legal equity or ethics require that the land should be exempt from an increased tax, or that its owner should have even partial, much less total, immunity from the burden of taxation? Because a new tax upon land would reduce proportionately the selling price, should owners of land for that reason continue to go scot free? The advance in Boston’s tax rate per thousand for 1907 ($15.90) is $3 over that of 1897 ($13.00.) The capitalised value of this increase, $650,000,000 multiplied ­ by $3 per thousand, multiplied by twenty years (the number years purchase), is $39,000,000. Do we hear that Boston has confiscated $39,000,000 worth of her citizen’s land in the last ten years? Boston has to-day some $560,000,000 of new land value, which it did not have fifty years ago. Meantime ­ the tax rate doubled from $8 in 1856 to $16 in 1906. The capitalised value of this $8 increase in THIRD BOSTON OBJECT LESSON 9i rate amounts to say $90,000,000. Is it charged that Boston is to-day confiscating $90,000,000 of the land of her citizens? All taxes are expended in maintaining the value of land. How can any vested right, or statute law, or hoary custom make it confiscation for the community to tax a value of its own creation, especially since, through the capitalisation of an established land tax, it is now, or soon becomes, to the owner of the land, a burdenless tax? What Is Meant by the Single Tax At the eleventh Dinner-Discussion of the Economic Club of Boston, the club was addressed by Professor E. R. A. Seligman, of Columbia University, upon the topic: Resolved-. That it would be sound public policy to make the future increase in ground rent a subject of special taxation. On that occasion there was printed and placed at each plate a statement of the meaning of the single tax, which, slightly revised, was as follows: 1. It means the abolition of all taxation (not regulative or restrictive) except that upon land values. 2. It means the gradual transfer to land of all those taxes now raised from buildings and other improvements, ­ personal property, etc. 3. It means that Boston would raise its whole tax in the same way that less than one-half of it is now raised, viz., by a tax upon the value of its land. 4. It means to provide for common needs out of ground rent — a common product — instead of out of Wages — an individual product. 92 THE A B C OF TAXATION 5. It means that out of its ground rent of fifty millions or more Boston would collect its whole tax of twenty millions instead of only ten millions as now. 6. It means that Boston could raise the amount of its existing taxes by taking a trifle more than two-fifths of its ground rent (the annual value of land for use) in taxes instead of less than one-fifth as at present, thus making it possible to remit all other taxes if desired. 7. It means the taxation of unearned incomes, instead of hard-earned incomes. 8. It means a tax that is non-repressive, because, being wholly a tax upon special privilege, it can never be a burden upon industry or commerce, nor can it ever operate to reduce the wages of labour or increase prices to the consumer. PART III. OTHER ESSAtS AND ADDRESSES Chapter VII. Private Property in Land. Chapter VIII. Justice of the Single Tax. Chapter IX. The Single Tax and the Farmer. Chapter X, Regulation by Taxation. Chapter XI. Inheritance and Income Taxes. Chapter XII. The Single Tax. Chapter VII PRIVATE PROPERTY IN LAND “The primary error of the advocates of land nationalisation is in their confusion of equal rights with joint rights. . . In truth the right to the use opland is not a joint or common right, but an equal right; the joint or common right is to rent.” —Henry George. M OSES and Isaiah and Herbert Spencer made their ages resound with the thunders of the moral law on the land question, and yet a groping world had to wait for Henry George to devise a modus operandi, and so Make channels for the streams of love Where they may broadly run. Asserting “the equal right of all men to the use of the earth,” Herbert Spencer declared that “equity does not permit property in land.” But, failing to see any alternative other than “nationalisation of the land,” which was abhorrent to his philosophy, he later, while disavowing none of his former principles, proclaimed his intellectual despair and unconditional surrender in these words: I cannot see my way toward reconciliation of the ethical requirements with the politico-economical requirements. . . . The belief that land would be better managed by public officials than it is by private owners is a very wild belief.* * Letter to the London Times, November 6, 1889. See Henry George’s “Perplexed Philosopher” (Doubleday, Page & Co., 1906), p. 77. 95 g6 THE A B C OF TAXATION Coming upon Spencer’s lost field, Henry George formed a new line of battle, changed the war cry of “equal right to land” to “joint or common right to rent,” picked up the shepherd’s sling of taxation, the familiar weapon which had escaped Herbert Spencer’s attention, and gradually dispelling the mists of the old conflict, won the day. It is my opinion that few men have been more misapprehended, ­ misinterpreted, and hence misjudged, than Henry George, and this, too, not infrequently, by zealous friends. This is especially true of the interpretation ­ of his ultimate views regarding land tenure. Few people know of the distinction made by Henry George, by the science of economics, and by statute law between private property in land and private property in the things produced by labour, or between the private ownership of land and the private possession ­ of land. Therefore, if you say that private property in land is unjust, or that private ownership of land is unjust, the tendency is to close many minds to further consideration of a statement which to them savours too strongly of confiscation. One may attack with vigour the private appropriation of ground rent (what land is worth for use), and be easily understood, while an attack upon private ownership in land is very apt to be misunderstood. Able men sometimes assert that the aim of the single tax movement is the complete ­ subversion and overthrow of the institution of private property in land. This confusion arises partly from a lack of clear understanding as to the meaning of terms, and partly from applying to land the theory of ownership which in law applies only to other things. Coming to an analysis of the different terms, posses ­ PRIVATE PROPERTY IN LAND 97 sion, ownership, and property, used in describing the tenure of land, we find that while they are far from synonymous, they yet have much in common, and the terms are often used interchangeably. The “possession” of the dictionaries does not always imply ownership; but possession does imply the same physical dominion that belongs of right to ownership — which right the legal title to ownership grants and conveys. Henry George’s proposal was to leave owners in possession of land, and to accord to that possession the legal right of physical dominion by means of a broad definition of the word, made to include the right “to buy and sell, bequeath and devise,”* or, in the usual form of the real estate deed, “to give, grant, bargain, sell, and convey”—a right universally granted to ownership and property. A title to land is a title to the rights and privileges that constitute its value, and that, largely at least, are created by the labour of the community. Title to the land itself, whether its value is one dollar or a million dollars, is necessary to security of improvements. ­ Title to the annual value of land — ground rent — is not necessary to the security of improvements, ­ which would be equally secure whether onequarter or three-quarters of ground rent be taken in taxation. The dictionaries do not include land value in their definition of land. Land itself, deprived of the rights and privileges pertaining thereto — that is, land with a ninety-nine years’ restriction of a tight and high board fence around it so that there would be no legal right of way to and from it — could have no market value. The value of land is in large part * “ Progress and Poverty” (Doubleday, Page & Company), 1906, p. 403. 9 8 THE ABCOF TAXATION created by those tributary surroundings which are provided through taxation, and hence such value is largely the product of the labour of the community as represented in its public, quasi-public, and private outlays. A man who owns land owns the soil, which of itself has little or no value, and he owns every right and privilege, fee, title, etc., pertaining to the land from zenith to earth’s centre, exclusive and absolute as against any other individual, but qualified and conditional as against the community. Private ownership of land may be defined as the proprietorship of the rights and privileges pertaining to the situation. It extends to the exclusion of all other persons (person being limited in law to “ an individual, or a body corporate, other than the State”), but is subject always to the claims of the community to its share in the value of those rights and privileges, so far as that value is a social product, this claim to be asserted and maintained by means of the sovereign power of taxation. Property in land, ownership of land, in law, means tenure, holding, right of possession (subject to the sovereign right of taxation) and no more. The owner can have no more enjoyment of these rights than can the possessor as defined by Henry George. Either must have an exclusive enjoyment (proprietorship) in the benefits of which no one else can claim a share except through the agency of taxation. The rights of the public are the same under either definition. If, under the single tax, land owners should be allowed to retain a small percentage of rent, there is no moral difference whether such privilege attach to their ownership or to their possession. In either case PRIVATE PROPERTY IN LAND 99 there is no recognition of the right of the private appropriation of ground rent, no compromise with any wrong attendant upon ownership that does not attend alike upon possession. It is not individual proprietorship of land, but the private appropriation of ground rent, which is charged with maintaining industrial slavery. True it is that under present conditions “when land value is made private property the law of equal freedom is denied”; but under the Single Tax this would not be true. Any degree of justice or injustice, with the single tax or without, would be exactly the same whether the tenure be called property, ownership, or possession. What practical difference, then, does it make, whether the tenure be called by one name or the other? The private property in land of which Herbert Spencer and Tolstoy* and Henry George treated was the untaxed ownership of our day and generation with its corresponding private appropriation of ground rent. It may be confidently asserted that when Henry George said, “Private property in land is unjust,” he meant — as the whole principle and spirit of his teaching require us to believe, and as the context of controverted passages shows — that private property in land values is wrong.f * See Appendix B. t “The words ‘private property in land’ have two meanings. One meaning ,s > the legal power privately to appropriate rent. The other meaning is, the legal power exclusively to possess land in perpetuit} r . * The first power is the essence of landlordism. It was attacked by all the force Henry George possessed. The second power is land ownership, and this Henry George did not attack, but on the contrary said, if his plan were adopted, would ‘continue just as now.’ The value of land has nothing to do with the validity of its title. If a man oolds title to a parcel of land of no value, he is nevertheless a land owner.”— John Z. White, in the Single Tax Review. IOO THE A B C OF TAXATION It is sometimes said that if land owners can rightfully ­ claim ownership they are entitled to all the ground rent; that the common right to land and the common right to ground rent go together. How can this be true, when even under the land tenure of to-day, which is that of ownership, no one claims that land owners, as, for example, those of the City of Boston, are entitled to all the ground rent, but only to that part which is not taken in taxation. Their own claim falls short of “all” by the $10,000,000 now yielded up in taxation. In case the demands of taxation should be twice as great, would they be any more than now entitled to “all”? It is not easy to see how ownership ­ can carry with it as a necessary consequence the private appropriation of ground rent, because, while there has never been a denial, there has always been a recognition, of the sovereign power and right to tax the land. Private ownership of land is no injustice to anybody to-day, nor has it been at any time. The untaxed private ownership of land value as it exists to-day is unjust. This does not mean that the ownership is unjust, but that not to tax it is unjust. An absolute ownership in land, such as Henry George recognises in the products of labour, would be unjust, but, says Mr. Edward Atkinson, no such “absolute ownership of land is recognised in the law books.” Its tenure is always subject to taxation, and to the superior right of eminent domain. Feudal tenure would seem to have been a rude recognition of the principle that the beneficiaries of a government should pay the expenses of government. Henry George said, in 1879, “ Progress and * Doubleday, Page & Co., New York, 1906, p. 242. PRIVATE PROPERTY IN LAND ioi Poverty,” Book VIII., Chapter II., “I do not propose . . . to confiscate private property in land” but “to appropriate rent by taxation.” “It is not necessary,” ­ he says, “to confiscate land; it is only necessary to confiscate rent.” And again, “People are led into confusion by assuming that we propose to take land from its owners.” Yet again, in 1892, in his chapter on Compensatitm in “A Perplexed Philosopher,”* ­ Mr. George says: “The primary error of the advocates of land nationalisation is in their confusion of equal rights with joint rights. . . In truth the right to the use of land is not a joint or common right, hut an equal right; the joint or common right is to rent.” The appalling distress and havoc consequent upon tenant eviction in Scotland, Ireland, and even in New York City, would be abolished if the evictors had to pay as much for land to be held idle as the evicted are willing to pay for it to use, and Mr. George’s prediction that the users of the land would eventually become the owners would be realised. An unjust ownership would give place to a just ownership. The wrong is not in a just ownership, but in an unjust, because untaxed and hence monopoly, ownership. What Mr. George plainly aimed at was to destroy the latter while conserving the former. Mr. George perhaps never had an abler or fairer opponent, or one more analytical in his treatment of the issue, than Mr. Edward Atkinson. Mr. Atkinson, early in his argument at Saratoga in 1890, in order to limit their discussion to their differences, proceeded to eliminate their agreements, chief of which, to his mind, was that land should remain private property. I 102 THE A B C OF TAXATION Mr. George, although he immediately followed Mr. Atkinson, made no attempt then or later to contradict ­ Mr. Atkinson’s representation, nor did the other principal speakers in opposition, Professors Andrews, Clark, and Seligman, charge Mr. George with advocating ­ the abolition of private property in land. Mr. Atkinson said: Mr. George and myself concur in one point: namely, that there is no absolute property in land in any States which are founded on the English common law. In fact, there is, I believe, no absolute property in land anywhere. Conditional property in land — i. e., peaceful individual possession of specific parcels of land ■—■ is admitted to be necessary to its use by Mr. George and myself. . . . Mr. George holds throughout his argument to the absolute necessity of giving conditional ownership, or complete, full, and peaceable possession of land to those who may chose to take it under the new condition; and he has justified this ownership in many ways, not only in fact, but in words. He says, “In applying to public use the power of drawing on the general wealth which pertains to the ownership ­ of land, we discourage ownership without use.” In that phrase he admits the ownership which he later justifies in the following words: “It (i. e., ownership) arises from the necessity which comes from the highest use of land of giving individual possession, and comes from the difference in the capacity of land.” And, finally, after advocating the single tax on land valuation, he justifies it only in these significant words: “Under such conditions, men would not care to hold land which they did not want to use; and users of land, where their use was more than transient,would become the legal owners, having the assured privilege of peaceable possession and transfer as long as the tax was paid.” . . . What is the right of transfer except the right of purchase and sale ? What is peaceable possession and legal ownership, except a grant of property in land by the State ? . . . Mr. George sustains the necessity of private PRIVATE PROPERTY IN LAND 103 ownership of land, in the most positive terms; and he is right. . . . To haggle about the difference between possession and ownership of land is mere word-catching. But Mr. George uses the term “ownership” (i. e., private ownership) in the most positive way. Neither he nor myself sets up absolute ownership. Therefore, it follows of necessity that the only ground of difference between the advocates of the single tax system, who concur with IV^r. George in admitting the absolute necessity of private ownership of land, under suitable conditions, to whiclr all shall be subject alike, is as to the conditions under which that private ownership and possession shall be granted, and under which peaceable possession through all time and through all transfers shall be sustained by the whole power of the State. . . . In the present discussion, it has appeared that Mr. George and myself agree:— 1. That there is no absolute ownership of land under the English common law. We agree that what individuals now possess is “an estate in land,” which is subject to many conditions. ­ These conditions may be varied. . . . 2. We agree that the individual possession of land is necessary to productive use, in order that humanity may be sustained; in other words, that the land must be impropriated. ^ And so, with Henry George, we insist that the real controversy in hand is not over the question whether private property in land is right or wrong, but whether in law and in morals private ownership of land should or should not include the private appropriation of ground rent, the annual value of the land and —if it should —what ought to be the limit of such appropriation. The contention of the single tax advocate is that this limit is to be found in the dictates of justice rather than in the letter of any ephemeral statute. On this Point, above the utterances of agitators and economists. 104 THE ABCOF TAXATION let there be heard the voice of the Christian Church, as found in the doctrine of St. Thomas Aquinas when he says: Human law is law only in virtue of its accordance with right reason, and it is thus manifest that it flows from the eternal law. And in so far as it deviates from right reason it is called an unjust law. In such case it is not law at all, but rather a species of violence. This is reiterated in the teachings of the Catholic Church, notably in the Encyclical of Pope Leo XI11. on the Condition of Labour, and is referred to in the following quotation from a prominent Catholic priest: As to all property, land included, the Pope lays down the law of the Church in this comprehensive sentence; “The right to possess property is from nature, not from man; and the State has only the right to regulate its use in the interests of the public good, but by no means to abolish the right to possess it altogether. The State is, therefore, unjust and cruel, if in the name of taxation, it deprives the private owner of more than is just.” It follows from this declaration that if the single tax theory as presented by its advocates aims at no more than to “regulate” the right of property in land “in the interests of the public good,” and not “to abolish it altogether,” or to take away from the private owner of land, “in the name of taxation,” more than is just,* surely such a proposal is not condemnable on ethical grounds. Now, if 1 understand the aims and claims of the Single Tax League, it clearly recognises the right of private or individual ownership of land. It proposes only to levy such a tax upon land as will support the government; thus throwing the burden of taxation on that part of the value of the land which is not the result of the owner’s foresight, intelligence, or labour, but is the result of the collective labour, growth, and development of the whole community. * Henry George, in his Open Letter to the Pope, apparently did not advert to these words, “more than is just,” and hence his reasoning is open to the charge of lacking that complete justice which was his highest aim. PRIVATE PROPERTY IN LAND 105 In considering, therefore, a tax on land values, we must bear in mind that it is a fundamental teaching of the Church that the common good of all mankind is an end that must be kept in view; that the community is the overlord of the landlord; that every individual holds whatever land he possesses subject to the high and supreme title of eminent domain. “If I thus correctly interpret your aim and object, I do not hesitate to say that your system of taxation is not condemned by the Catholic Church, nor is it contrary to her ethical teachings.” * ) To the foregoing there should be added the following words of the Rev. Edward McGIynn in his statement to the authorities of the Church of Romef regarding what he broadly conceived to be the right of eminent domain with deductions therefrom; The organised community through civil government must always maintain the dominion over those natural bounties, as distinct from products of private industry, and from that private possession of the land which is necessary for their enjoyment. The increasing need for public revenues with social advance being a natural God-ordained need, there must be a right way of raising them — some way that we can truly say is the way intended by God. ... By a beautiful providence, that may be truly called divine, since it is founded upon the nature of things and the nature of man of which God is the creator, a fund, constantly increasing with the capacities and needs of society, is produced by the very growth of society itself, namely, the rental value of the natural bounties of which society retains dominion. The justice and the duty of appropriating this fund to public uses is apparent in that it takes nothing from the private property of individuals except what they will pay willingly as an equivalent for a value produced by the community, ­ which they are permitted to enjoy. The fund thus * Extract from an address by the Rev. Robert J. Johnson, Rector of the Gate of Heaven Church, South Boston, at a reception and dinner given by the Massachusetts Single Tax League to the Catholic Clergy of the Archdiocese of Boston, December 3, 1900. t for Dr. McGlynn’s complete statement as presented in Italian to Mgr. S^atolli, December, 1892, together with English translation, see Appendix D. created is clearly by the law of justice a public fund, not merely, because the value is a growth that comes to the natural bounties which God gave to the community in the beginning, but also, and much more, because it is a value produced by the community ­ itself, so that this rental value belongs to the community by that best of titles, namely, producing, making, or creating. To permit any portion of this public property to go into private pockets, without a perfect equivalent being paid into the public treasury, would be an injustice to the community. Therefore the whole rental fund should be appropriated to common or public uses. In the desired condition of things land would be left in the private possession of individuals, with full liberty on their part to give, sell, or bequeath it, while the state would levy on it for public uses a tax that should equal the annual value of the land itself, irrespective of the use made of it or the improvements ­ on it. The only utility of private ownership and dominion of land, as distinguished from possession, is the evil utility of giving to the owners the power to reap where they have not sown, to take the products of the labour of others without giving them an equivalent. Thus it should be clear that what people need to see in order to incline them to the single tax is not so much “the wrong of private ownership” —a phrase which often both violates and confuses their moral sense — but “the wrong of the private appropriation of ground rent” — a phrase which does neither. It does not necessarily follow from this characterisation ­ of a doctrine as morally sound, that what is right in principle may not be wrong in method. As to method, Dr. McGlynn was in accord with Henry George in his mature conclusion, given in his own words* that “we can only accomplish the change we seek by the slow process of educating men to demand it. In the very nature of things it can only come slowly, and step ♦ “Saratoga Discussion, 1 ” 1880, p. 78. PRIVATE PROPERTY IN LAND 107 by step. We do not delude ourselves on that point, and never have.” And again: * “ But in thinking of details it should he remembered that we cannot get to the single tax at one leap, but only by gradual steps, which will bring experience to the settlement of details.” Neither of them concerned himself with specific ways and means. Neither thought of interpreting the statement ­ that all ground rent ought to be taken for public use to mean that the whole of it ought to be taken and at once. But both, recognising that a right thing may be done in a wrong way, insisted that a right way ought to be found to do a thing that ought to be done. This book, The A B C of Taxation, is a search for that right way. * Century Magazine, July, 1890, p. 401. Chapter VIII JUSTICE OF THE SINGLE TAX T O GO to the foundation of the whole matter of taxation, we contend that the social disorder and derangement complained of to-day is mainly due to an unnatural and unequal distribution of wealth. The solution of the problem of taxation will solve the problem of the distribution of wealth. Wealth is produced in proportion to the skill and the industry of the hands and brains of all the world’s workers. The annual division of this wealth among these workers, before taking taxes into account, is in proportion to ability and in proportion to special privilege, chiefly the private appropriation of ground rent. After this grossly unequal annual division has been made, comes an unequal and unjust taxation to aggravate still further these inequalities. By the process of taxation, Mr. Shearman estimates, the taxable savings of the very rich shrink 4 per cent while those of the very poor shrink 78 per cent.* Under the single tax the savings of both rich and poor would shrink in the same proportion, ­ that is, about 50 per cent. Such inequalities tend to increase rather than decrease with time. We say that the division under the present system (unequal by more than a hundredfold) of the annual taxable savings (before taxation) is regulated in two ways, and in only two ways — by ability and by * See Natural Taxation by Thomas G. Shearman (Doubleday, Page & Co.), pp. 35 to 37. JUSTICE OF THE SINGLE TAX 109 special privilege. We agree that a large part of this inequality is due to difference of ability, but that much larger part which is due to special privilege (chiefly the private appropriation of ground rent) we would by our proposed system of taxation abolish. To a discrimination of a hundredfold in the division of savings there is now added another twenty-fold discrimination in taxation. In pursuit of an equitable system of taxation we want to right this glaring wrong at once. First, distribute wealth according to ability, that is, according to production; second, destroy special privilege by a direct tax, which is paid by the man upon whom it is assessed (rich and poor alike), instead of an indirect tax, which is never paid by him upon whom it is assessed. Land By land, we mean, strictly speaking, all natural bounties, forces, and opportunities — the source of all wealth. Blackstone says it means “everything terrestrial.” Franchises The single tax theory regards all the special privilege value in railroad shares, telegraph and telephone, gas and electric stocks as “land” and nothing else, subject to taxation with all other land values, and at the same rate, because franchise values are created and maintained ­ by precisely the same public expenditure and service that gives value to land. In this way the special privileges of corporations would be taxed. Their tracks, rolling stock, buildings, and improvements Would not be taxed. f HO THE A B C OF TAXATION A franchise value is a land value. Land value is total value of real estate less value of improvements. Franchise value is total trust or monopoly value less value of improvements. Land value and franchise value should be taxed at the same rate. Single taxers believe that taxation is the one and only effective weapon, and that right in hand, with which to destroy the evil of trusts and monopolies, without harm to the good that is in them. Wealth Man, by the application of his labour to land, the source of all wealth, directly and indirectly produces the things he wants for the satisfaction of his desires. All these things taken together we call wealth. To class land as wealth savours, we say, of economic confusion. What features, we ask, has land in common with wealth? On the other hand we ask you to note the differences between land and wealth. Land includes nothing made by man. Wealth includes nothing not made by man. Land is a source. Wealth is a product. Land is raw material. Wealth is a manufactured article. Land has to be created not oftener than once in “six thousand years.” Wealth has to be recreated every four or five years. Land is indestructible. Wealth is perishable. Land never wears out, but is worth more the more it is used. Wealth is always going in quick consumption. Land is a fixed quantity. Wealth can be increased at will. The site value of land is determined by demand only. The value of wealth is fixed by supply and demand. Land never requires insurance or repairs. Wealth always needs them. Land can always be found. JUSTICE OF THE SINGLE TAX 111 Wealth is mercurial and fugitive. While wealth is a private product, so to speak land value is a public product, publicly created and publicly maintained. What more than these differences is needful to make reasonable and convincing a separate classification of land and wealth, especially for purposes of taxation? The right of property in wealth is the right of a man to eat his bread in the sweat of his own brow. The right of property in land to-day is the right of a man to eat his bread in the sweat of another man’s brow. Usufruct means property in what the land produces this year by the application of one’s own labour. Private ownership, including as it does to-day the private appropriation of ground rent, means property in what the land may produce for the next ten, one hundred, or one thousand years by the application of the labour of others. The Capitalised Tax By the capitalised tax is meant a sum, the interest of which would pay the tax. It is usually found by multiplying the tax by twenty because 5 per cent interest ­ is one-twentieth of the principal. For every $16 of tax, the selling value of land is less than it would be if free of this tax, by I320, an amount which at 5 per cent would pay the tax, $16, and leave for the selling value a purchasing price which would net 5 per cent return to the investor. Value and Valuation There can be, strictly speaking, only one value for anything, and that is, what it will sell for. But there may be many valuations of the same thing, and a thing 112 THE A B C OF TAXATION subject to charges is not, scientifically speaking, the same as a thing free from charges. Title to a tract of land subject to taxation, is not by any means the same thing as title to the same land free of taxation. Therefore, in dealing with land, we speak of a gross value, and an assessed valuation. Gross value is the capitalisation of the gross ground rent. If the current rate of interest is 5 per cent, the capitalisation is said to be “ at twenty years’ purchase,” that is, twenty times the amount of the annual income. In other words, it is an amount 5 per cent of which would be equal to the annual rent which the land commands for use, free of charges. What pays $1,000 annual net income, is worth $20,000 to buy. This gross capitalised value is the value, which, as we claim, should even under the present system be taxed uniformly ­ with other private property. If the gross ground rent of a tract of land is f 1,000 a year, and it is subject to no taxes, the market value, assuming the usual rate of interest to be 5 per cent, will be $20,000. But if it is subject to an annual tax of $200, the tax reduces the net rent by 20 per cent and hence reduces the price of the land correspondingly to 116,000. Net value is the capitalisation of the net rent (the income less the tax) at the current rate of interest, and is more familiarly known as the selling value. The assessed valuation is the valuation placed upon land by assessors for purposes of taxation. It varies in different localities, being in Massachusetts usually from 13 to 100 per cent of the selling value. We often speak of this tax upon land value as a tax according to benefits bestowed, but, strictly speaking, JUSTICE OF THE SINGLE TAX 113 it is a tax neither according to benefits nor according to ability, because it is a tax only in form, not a tax in substance. The public merely takes out of the land with its left hand the value which, with its right hand, it has put into the land. We ask your thoughtful criticism of the single tax tenet regarding wages. We believe in high wages and low prices, which are the equal opportunity channels for the equitable distribution of wealth, instead of low wages and high prices, which are the special privilege channels for the inequitable congestion of wealth. Contrary to popular illusion, wages are not regulated by dollar wheat, but the price of wheat is fixed by the competition of dealers, and wages are fixed by the competition ­ of labourers. The benefits of high prices go to the few, while the benefits of low prices go to the many. Increase in ground rent does not tend to an increase in prices, because usually sales increase faster proportionally ­ than rent, thus reducing the ratio of rent to sales. The larger the product, the lower the individual costs. The larger the gross sales, the lower the competitive ­ prices. If a man has the best corner lot in a city he has a monopoly, because by the private appropriation of ground rent (a special privilege conceded to him by the State, and having all the sanction of law and custom) he cannot help diverting, without fault of his own, into his own private pocket, the public expenditure in its transmuted form of ground rent. So we say that the special privilege greater than all others put together is the private appropriation of ground rent. We are entirely agreed to the private ownership of land. I THE ABCOF TAXATION 1*4 With the right to possess, “to buy and sell, bequeath and devise it,” provided only that equal rights shall be asserted and secured by taking in the form of taxation enough of the ground rent to meet all public expenses. Because taxes are spent upon the land, we would take them from the land. The tendency to-day of this regulation by taxation, of trusts, monopolies, franchises and special privileges in all its forms would, we claim, be strongly toward a rectification of the admittedly unjust distribution, not of present wealth, but of wealth hereafter to be produced. When all special privileges, including the special privilege of private appropriation of ground rent, are abolished by exacting payment for the same at their market value, then taxation, which now so grievously aggravates an unjust distribution, will be unnecessary, and you will have one channel only, and that the one proper channel, for the distribution of wealth, viz., wages proportioned to skill and industry. In all primitive societies the soil has been held as common property with equal rights of the many to natural opportunities. To-day the land tenure pendulum ­ has swung clear to the other side, and in highly civilised society land has come to be held by the few in private ownership with its special privilege of the private appropriation of ground rent. The single tax aim is to bring the pendulum back into a position of reconciled equilibrium, modern individual ownership by the few brought into harmony with primitive common ­ ownership by the many. One reason why so many men are averse to conceding to the individual the right of ownership in land is that the right has JUSTICE OF THE SINGLE TAX 115 been so often abused. The single tax offers itself as a means of correcting this abuse. The Self-operating Social Law We ask you to look with us until you see, as we think we see, in ground rent the self-operating law for the social system, something that will, if unobstructed, tend to hold in just equilibrium the conflicting factors of land, labour, and capital, The particular factor in our reform which we would press upon your attention, because generally least understood, is the nature of ground rent. While land and wealth (or other wealth) have no feature in common, ­ taxes and ground rent appear to us to have close resemblance in every feature. Taxes are the cause, ground rent is the effect. Taxes are the fertilizer, ground rent is the crop. Where there are no taxes, there is no ground rent. Where taxes are scanty, ground rent is scanty. Where taxes are abundant, ground rent is abundant. The ground rent of a community ­ is, roughly speaking, one-half of it the result of public expenditure and one-half the result of quasipublic ­ and private expenditure; but all taxes (public expenditure) are transmuted into ground rent, a change of name without a change of nature. The single tax, we claim, is absolutely just and equitable, because it gives to every man equal (not joint) access to the land; because it exacts tribute from every man in proportion to his use of the land; because it leaves untouched the wealth which labour creates; taxes for the public use only a value of its own creation upon land of God’s creation, giving full value received ip the privilege of exclusive possession and hence is THE A B C OF TAXATION 116 not a tax at all, but a divinely natural provision, restoring to every man his inalienable share in the value of the land. Just in Its Apportionment Full single tax would mean all national taxes apportioned to cities and towns in proportion to their respective land values; all local taxes, including national, assessed upon land values alone. In “Natural Taxation,” page 147, Mr. Shearman makes a plausible claim that for the year 1890 “all national and local taxes, if collected exclusively from the ground rents of the United States would have absorbed only 44J per cent of those ground rents, leaving 55J per cent to the owners of the bare land as a clear annual income, besides the absolutely untaxed income from all buildings and improvements upon their land.” Repeated calculation of the ground rent of the state of Massachusetts and of the City of Boston, as well as of many other cities and towns, has fully justified Mr. Shearman’s position that gross ground rent is approximately ­ double the amount of taxes in each case. The constitutions of the several states and the moral sense of all the people maintain that government should not take private property for public use without full compensation. Single taxers maintain not only that there is no right, but that there is no need to do this, even under forms of taxation. We would exempt personal property because by the same system under which you collect a tax upon the poor man’s “visibles,” you are putting upon the rich man’s “invisibles” a tax which you cannot collect. Equalisation is possible only by abolishing the tax JUSTICE OF THE SINGLE TAX 117 on both “visibles and invisibles.” We would exempt buildings, because, by the same system under which you collect from the poor man a tax upon his house in which he lives, you are assessing the rich man for his store, his office building, and his apartment house, a tax which he himself can never be made to bear. Equalisation is possible only by abolishing the tax on all buildings. i Single taxers want to shift the taxes from the house to the land, because every time this is done it is made easier for the individual to get the house; whereas when the tax is shifted from the land to the house, it becomes harder to get both house and land. We say, tax the land and exempt all other wealth, because, when you tax both the opportunity to produce (land), and the thing produced (wealth), you are in the broadest sense inflicting double taxation. You do not tax the old building, because, commercially ­ speaking, it has “gone to decay.” Why, then, should you tax the new building, which, from the moment it is finished, is fast “going to decay”? We say, tax only the land value, which never decays. The millionaire should pay for the same sort of land the same tax per acre as the poor man, and no more. When he occupies a similar seat in the theatre, to see the same show, he simply pays the same price for his ticket, full value for what he gets. When taxes are levied in proportion to “benefits bestowed,” no need remains for taxation according to ability to pay. Justice of the School Tax We sometimes hear the question: Is it proportionate and reasonable that the poor man’s vacant lot should 118 THE A B C OF TAXATION be taxed to send the rich man’s children to the public school? But what difference does it make whether the rich man sends a dozen children or none to the public schools? Public schools add their cost to the land value of the city or town. They add just as much value to the land of the man that sends no children as to that of him who sends a dozen. Is not this fact sufficient to reconcile the childless man to the justice of his school tax? The cultivation of a family would not increase his tax any more than the cultivation and improvement ­ of his farm would add to the farmer’s tax, and thus by the single tax both farmers and families would be encouraged. Socialism The single taxer appeals also to the socialist to see and realise the self-evident truth that, without the socialisation of ground rent, were every other possible dream of socialism, political socialism or Christian socialism, brought to a perfect realisation, its full benefit to the last farthing would be reflected in the enhanced value of the land and so go straight and unearned into the pockets of the land owner. There is in natural taxation nothing of technical socialism,* which means the artificial assumption by society of a function that is primarily individual. It is rather a resocialisation of that which by it s own nature, in its inception and its growth, can be nothing but socialised, but which has been artificially desocialised. Socialism would replace artificial discord with artificial concord. Single tax is natural harmony i n * See Appendix A. JUSTICE OF THE SINGLE TAX 119 the absence of artificial discord. We speak paradoxically ­ of the socialisation of ground rent as though it were something to be artificially done. How can we socialise that which by its very nature socialises itself, and can never be naturally anything but socialised? A Puzzling Question and a Simple Answer What are the obstacles that to-day so impede a thorough consideration of the basic economic principle of the single tax by pulpit, press, and legislator? The answer to this apparently puzzling question is after all a simple one: First is the notion that the single tax contemplates public ownership of land, which is not true; second, the impression that it would disturb present land titles, which is not true; third, the charge that it would take for the community what belongs to the individual, which is not true; fourth, the poisoning misapprehension ­ that, right or wrong, it would amount to-day to taxing into the public treasury practically the whole rental value of one species of property. All men are agreed as to the ethics of the single tax, that the earth was made for all men and not for a few. This is what Mr. George calls an instinct, an intuition of the human mind, a primary perception of the human reason. If we were to-day starting anew, the single tax would be manifestly wise as a method of taxation; if it could to-day be put in operation without injustice to any one, it would still be a manifestly wise plan of taxation. Can it be done? The single taxer is firmly of the opinion that it is no part of God’s economy that justice to one man can work injustice to another; that for every alleged 120 THE A B C OF TAXATION injustice to one man there would be a far greater justice wrought to hundreds and to thousands; that the vacant lot which is his only all, is not the poor man’s universe; that his individual loss or benefit will be measured, not by his relation to that vacant, unproductive ­ lot, but by his relation to the social fabric into which he is woven and to the universe of which he is a part; and that for every alleged confiscation there would be a score of compensations. If the moral theory of the “compensationists” were sound, it would apply — and many of its advocates ­ claim that it does apply — as well to slavery as to landlordism, so that slaves could not be justly set free unless the masters were compensated. The most outrageous act, then, of what the “compensationists” call confiscation, was committed by God himself, when he led the Israelites out of Egypt. Instead of compensating ­ the Egyptians, who thereby lost valuable “private property” which had had the sanction of four hundred years’ acquiescence, He engulfed in the Red Sea those whose sensitiveness to the injustice of “confiscation” stirred them to follow and reclaim their confiscated property. If the cinder is not removed from your eye at once, and inflammation follows, what then do you do? Do you bathe the head, apply a plaster to the back, hot water bottles to the feet, and some specific to the stomach? Or do you forthwith remove the speck from the eye whatever the pain it costs you? The smaller the offending cinder, the more intense oftentimes the inflammation, and the more difficult of removal. The longer the operation is delayed the more painful the conditions. While guarding well “the apple of the JUSTICE OF THE SINGLE TAX 121 eye,” what irritation from mote or beam or cinder can compare with the social irritation caused by injustice? Single Tax and the Massachusetts Constitution Query: Is not the present system of taxation clearly in violation of those state constitutions which, like that of Massachusetts, provide that assessments shall be “proportionate and reasonable” since, under that system a whole class of property holders is practically exempt from taxation? Query: Is not a system of taxation which so favours one class of citizens above another in direct violation of the constitution of Massachusetts, which provides. Part I., Article VI., that “no man, or corporation, or association of men, have any other title to obtain advantages, or particular and exclusive privileges, distinct from those of the community, than what arises from the consideration of services rendered to the public? Query; Is not the taxation of ground rents in lieu of all other taxation manifestly in harmony with the constitution of Massachusetts, which reads as follows, Part I., Art. VIE: “Government is instituted for the common good; for the protection, safety, prosperity, and happiness of the people; and not for the profit, honour, or private interest of any one man, family, or class of men. Therefore the people alone have an incontestable, unalienable, and indefeasible right to institute government; and to reform, alter, or totally change the same, when their protection, safety, prosperity, and happiness require it.” CHAPTER IX THE SINGLE TAX AND THE FARMER D O NOT let it be thought that the single tax would be less at home in the country than in the city. The farmer was the first wage-earner, himself his own employer, his wages the full produce of his labour. He is the primary wage-earner — the one nearest the ground. His wages (one-third those of the whole country) are sufficient to determine all other wages, and should be the highest imputable to his ability, unabridged by special privilege or by taxation. One mission of the single tax is to raise and maintain the farmer’s wage at the primitive point of the full produce of his labour, and to protect and defend the farmer as his own employer, not merely as a tenant farmer. What taxes ought the farmer to pay? He should, of course, pay his fair share of the common expenses in proportion as he is benefited by the services of his community. It would not be fair for him to pay any part of the share of another man who has greater benefit than he from this service. What could be fairer than to tax the farmer and the village man respectively, in proportion to the benefits bestowed upon each of them by the social services which his property puts at his THE SINGLE TAX AND THE FARMER 123 command? What better indication can there be of his proportionate share of these public advantages ­ than the site value which they contribute to his land? The farmer is, so to speak, to a great extent his own commonwealth, his own municipality, and very sensibly ­ municipalises most of his own public utilities instead of farming them out. The usual items of common town expenditure are for water, light, fire department, police, sewerage, pavements, sidewalks, roads, schools, and the poor. As to water, light, fire department, police, and sewerage, the farmer furnishes himself at his own expense, and this is a sufficient practical reason for exempting him from the burden of contributing for village services of the same sort provided at common expense. This leaves in general three things for which the farmer ought to be taxed, viz., the roads, the schools, and the poor. These three things represent needs which the farmer has in common with the community in which he lives, and it is submitted that in justice to him, and greatly to his advantage, they should be provided for by a common ­ tax, levied in proportion to land values, either by the State or by a minor political division, as efficiency and economy may dictate. A tax laid upon land values is by far the most “proportionate ­ and reasonable ” because every man, woman, and child contributes to this value. The farmer today, ­ whose land values are so small — almost insignificant — but whose labour values — his buildings ­ and improvements, such as drains, fences, trees, crops, reclamation and fertilisation of land, and his personal property, which is of course a labour value — 124 THE A B C OF TAXATION are seen and known of all men, he it is who is bearing in great degree the evaded burden of the owner of stocks and bonds. Such discrimination finds illustration ­ on every hand. For instance, with the value of the buildings and improvements of the Berkshire, Mass., farmer far in excess of the site value of his land, while in Boston, Winter Street buildings have only one-thirteenth the value of Winter Street land, it is easily seen, as a matter of simple proportion, how the taxation of buildings bears more than thirteen times as heavily on the Berkshire landholder as it does on the Winter Street landholder. In calculating the relief to the farmer through the exemption of improvements, three classes of farmers are to be considered: (i) The small farmers; (2) the large farmers; (3) the bonanza farmers. The buildings and improvements of the small farmer will invariably have a much greater value in proportion to his land than those of the large farmer, and greater still when compared with the bonanza farmer, so that the same amount of tax distributed in proportion to land alone, as compared with a tax laid upon land and improvements, ­ would relieve the small farmer just in proportion as his improvements were a larger fractional part of his total holding. Herein surely lies the only cure for “speculative” farming — i. e., farming more land than can be tilled—and for tenant farming — i e., farming the farmer. The farmer to-day is doubly discriminated against, first in the over-valuation of agricultural land, and secondly, in the under - valuation of urban or village land. Between these upper and nether millstones he is being ignorantly ground. These THE SINGLE TAX AND THE FARMER 125 inequalities of assessment deserve separate and particular treatment. 1 The Overvaluation of Agricultural Land Mr. Thomas G. Shearman in his “ Natural Taxation”* has made a careful estimate, with which the farmers themselves would no doubt agree, that improvements in the land itself constitute 60 per cent of the assessed valuatiofi of farm land. His language is: Upon the whole, it is safe to say that, under a system of valuation excluding all improvements, cultivated farms would be assessed at less than 40 per cent of their whole value, improvements included. 2. The Undervaluation of Urban or Village Land As already stated the dimensions, as well as the continuous character, of the contribution made by the people to the growth and volume of ground rent, are seldom realised — by many persons hardly suspected, even in cities, where they are more acutely discernible. But especially is this the case in village communities and factory towns, where it has not been the habit to note closely the value of land apart from buildings, and the rise and operation of ground rent. A few illustrations will show how this potential agency, ground rent, escapes observation both in small and large towns, and in small cities as well. In the following illustrative examples, the ratio between assessed valuation and actual net value of land, as indicated by actual rentals, is calculated by deducting from the net income of the entire estate (i. e., total income less taxes) an amount equal to 10 * Chapter XII., Section u, p. 188. 126 THE A B C OF TAXATION per cent of the assessed valuation of the buildings, to cover interest, insurance, repairs, and depreciation. Twenty-five specimen estates in Lawrence, Scituate, Clinton, and Whitman, Mass., show ratios, thus calculated, ­ as follows; 25 estates . . average tax rate per thousand, $16.85 f Land .... $197,828 Assessed valuation j Buildings . . . 236,955 I l Total .... $434,7 8 3 Gross rental of properties actually received by the owners ....... $56,067 Taxes (on $434,783, at $16.85 per thousand) • • 7,325 Net rental after paying all taxes .... $48,742 Less 10 per cent on buildings ($236,955) for interest, insurance, repairs, and depreciation . . . 23,695 Net income from land alone (equalling 12J per cent on $197,828) ..... $25,047 This income is 5 per cent return on an indicated net value of at least ...... $500,940 Instead of on less than 40 per cent of that amount, or the amount at which the land is assessed . . $197,828 Leaving out the City of Lawrence, the ratio for the three smaller communities of Scituate, Clinton, and Whitman averages only 30 per cent. The figures for the above twenty-five estates in detail are as follows: IN LAWRENCE, A COTTON MANUFACTURING CITY OF 70,000 INHABITANTS Of seven estates the several assessed valuations were respectively 72, 67, 62, 48, 42, 38, and 15 per cent THE SINGLE TAX AND THE FARMER 127 of the net value. The average assessed valuation was 48 per cent of the net land value. IN SCITUATE, MASS., A SHORE TOWN OF 2,600 INHABITANTS Of four estates the several assessed valuations were respectively 52}, 50, 48, and 13 per cent of the net value. The average assessed valuation was 37^ per cent of the net land value. IN CLINTON, A MANUFACTURING TOWN OF 13,000 INHABITANTS Of five estates the several assessed valuations were respectively 38, 37, 34L 27-J-, and 22^ per cent of the net value. The average assessed valuation was 32 per cent of the net land value. IN WHITMAN, A SHOE MANUFACTURING TOWN OF 6,500 INHABITANTS Of nine estates the several assessed valuations were respectively 83, 62, 45J, 43, 32, 27, 23, 19, and 14 per cent of the net value. The average assessed valuation was 21 per cent of the net land value. If Mr. Shearman’s estimate of the overvaluation of farm lands is approximately correct, and if the foregoing ­ illustrations of undervaluation of municipal lands are fairly representative of general conditions, then the conclusion seems inevitable that the farmer pays more than six times as much tax on every fi,ooo of unimproved land value as does the villager. 128 THE A B C OF TAXATION In other words, upon every $1,000 unimproved or site value of his land— The farmer pays on fa, 500, or two and a half times the actual value, say at fao a thousand, a tax of f 50 The villager pays on $400 which is 40 per cent, of the actual value, at |ao a thousand |8 Under the single tax each would pay the same. Should the Farmer Be Taxed on Fertility No one questions that, after the natural exhaustion by cropping of original capabilities of the soil, fertility becomes a matter of individual improvement. But of original fertility itself it may be said that: On the surface of the globe are countless varieties of exhaustible fertility, i. e., chemical constituents, differing in kind and degree, from the nitrogen, hydrogen, oxygen, and carbon of the soil to the carbon of the coal and the diamond. Fertility is not an attribute of agricultural land alone. Economic fertility belongs equally to any other land which yields to labour its product, whether in food, mineral, ­ or metal. Land may be fertile in wheat, corn, and potatoes. It may be fertile in cotton, in tobacco, or in rice. It may be fertile in diamonds, in gold, silver, copper, lead, or iron. It may be fertile in oil, coal, or natural gas, in water power or water front. The value of artificial fertility is an improvement value. The value of natural fertility of any kind is a site value. This view appears to be a welcome simplification of the problem, and greatly to the benefit of the farmer, because in the assessment of his taxes the element of fertility may be disregarded, thus reducing the basis of his assessment to that of his urban neighbor, viz; site value alone. Since, then, the farm land of Massachusetts, as already shown, accounts for only one-tenth of the assessed THE SINGLE TAX AND THE FARMER 129 land value of the whole state, and since the unimproved land value, which alone would be taxable under the single tax, is less than 50 per cent, of the assessed valuation, or one-twentieth of the whole, it follows that the value of fertility* as a contributor to rent is not only a debatable value, but almost a negligible factor in the diminishing twentieth of the taxation problem. The Minor Importance' of Agricultural Rent Search in the principal authorities shows that in the treatment of rent about fourteen times as much space has been devoted by them to agricultural as to urban rent.f The Massachusetts valuations for 1907 offer a *There is respectable economic opinion to the effect that fertility is not a social but an individual product; that it is the result of individual labour expended upon the land; and that the amount paid for the fertility of land, as distinct from its situation, is interest on capital invested, rather than a true rent. “Treat the land as mere situation and ascertain what would be its value if the fertility of the soil were exhausted. The value of the soil itself will be the cost which would be necessary to bring it up from a state of exhaustion to its existing state of fertility. The valuing of improvements will remain as it is at present. We shall then have three items for the assessor to ascertain, namely, land, soil, and improvements. ­ The first is a social value based on a market surplus, which is true rent. The second and third are individual values, the product of effort and abstinence. The first is individually unearned, but socially earned; the second and third arft. individually earned. . . . “If the single taxers will work out both a theoretical and a practical system by which the situation value of agricultural laud can be identified with the site value of urban land, and by which the fertility of the soil can be identified with capital, the prospects are good for winning over both the economists and the farmers.”—Professor ­ John R. Commons, University of Wisconsin, in The Public, March 21, 1908. “W T hen studying the phenomenon of land rent, urban land and land used in manufacture ­ and commerce rather than that utilized for agricultural purposes should be considered. Writers who persist in studying agricultural rents are investigating the more obscure manifestations of rent phenomena. . . . The true function of all land is, in fact, reduced to that of land in a city: namely, to that of furnishing a site upon which to do business. The value of the site depends upon the 'market opportunity' ­ which it offers. . . . Land in its proper sense furnishes standing room and situation with regard to markets. According to this definition, land performs the same function in agriculture as for all non-agricultural purposes.” Professor Frank T, Carlton, Albion College, Quarterly Journal of Economics, November, 1907. i. tFor details see Appendix C. I THE A B C OF TAXATION •3° marked illustration that actual conditions call for an apportionment the very reverse of this academic treatment of the subject. Thus: ASSESSED VALUATIONS LAND BUILDINGS TOTAL 33 cities $1,088,329,177 $998,896,745 $2,087,225,922 37 large towns 139,965,083 178,810,787 318,775,870 70 cities and towns . . . $1,228,294,260 $1,177,707,532 $2,406,001,792 •284 small towns 123,986,089 216,017,954 340,004,043 354 cities and towns . . . $1,352,280,349 $1,393,725,486 $2,746,005,835 Thus the land valuations of the 284 small towns ($123,986,089) and of the 70 cities and large towns ($1,228,294,260) are seen to be about in the ratio of one to ten. Nor must it be overlooked, that there is a larger proportion of urban property in small towns than of farm property in the large ones. The state census, which gives farm values by themselves, corroborates ­ the above estimate that the Massachusetts farm land value left for the agricultural illustration of Ricardo’s law of rent does not; exceed one-tenth of the assessed land value of the whole state. Putting the foregoing statements together—that is, considering at once the relative weight assigned to the two, as indicated by the treatment of the authorities, and the relative importance of the subjects —we are confronted with the spectacle of fourteen times too much attention given for a hundred years to ten times too small a matter. Proceeding now to the multiplication of fourteen by ten, we are brought face to face with the mathematical conclusion that in order to restore a lost equilibrium, the schools might reasonably from now on give one hundred and forty times more study to the subject of urban or city rent than they have been in the habit of doing in the past. THE SINGLE TAX AND THE FARMER 131 This extravagant conclusion is set forth in the hope that it may prove a magnet that shall draw present attention away from agricultural ground rent, which may almost be ignored, and fix it upon the fifty-five millions of ground rent in Boston, which the people pay yearly for the use of its land; upon the one hundred and fifty or two hundred millions of ground rent in Greater New York; upon the two or three thousand millions of ground rent in the United States; and upon the billions of franchise values which in recent years have sprung up all around us like gourds in the night. Confronted, as we are to-day, by such acute conditions, ­ we ask you to pardon whatever may seem like impatience with a theory that has dealt so laboriously with the cuticle instead of with the heart of production. We seek a proper understanding and economic treatment ­ of this vast river of ground rent, which, like a great Mississippi, drains every field of industry, labour and capital, wages and interest, in the whole country around. Our earnest contention is that to such wise treatment we must look for the correction of most that is now wrong in the distribution of wealth. Out of this vast current of ground rent we would provide for all public need. 132 PUBLIC UTILITIES —REGULATION BY TAXATION* T HE following thoughts are prompted by a desire to make some contribution, however small, to the elucidation of a problem that to-day is clamouring for solution. The chapter is a first essay at the subject and contains tentative views as well as settled opinions. In this country of ours, in the last half century, have grown up new and great public utility undertakings, some of which in a short generation have taken on stupendous ­ proportions. Their nature is neither wholly public nor wholly private, but partakes in differing ratio of both, and is best described as quasi-pubiic. Ownership or Regulation It is admitted that one of two things must come, viz., either these public utilities must be owned by the public, or they must be regulated by law. Public ownership, it is objected, may be all right under comparatively pure civic conditions, as in Switzerland ­ or in Glasgow, but public ownership is not safe where there is graft. Of taxation it can be asserted that it is likely to be safe and sane, graft or no graft. Thus a conservative public hesitates to accept public ownership as the right way out, for a country so young and expanding as ours, until a higher standard of civic virtue and administrative capacity is attained, prefer-• The prime concern of this paper is not taxation for revenue, but taxation as an instrument of regulation. REGULATION OF PUBLIC UTILITIES 133 ring to endure the ills of monopoly rather than hazard what seems a gigantic experiment. Yet, considering the great advance already made by the city and state of New York* in the regulation of public utilities, it is difficult to believe that the people will not hold fast to what they have now obtained. For one 1 do not incline to ownership, though I do not pretend to be wise enough to reach a sure decision. Fortunately, it does not appear to me immediately necessary to make such choice. There is one good way easily open for its determination, viz., the comparative ­ test of time. That the employment of taxation, ­ as one instrument ready-made and close at hand, is wise, 1 have not a doubt. The astonishing thing is that economists, legislators, and newspapers, in their opposition to ownership of certain monopolies, do not more prominently suggest and discuss, even if they are not ready to advocate, the compromise alternative to ownership. How else can the opposition to public ownership head off its coming better than by advocating taxation in its stead, and why not be as persistent in experiments of taxation as of ownership, thus contributing to the only possible solution — experimental test and demonstration — the survival of the fittest? The true system when found will be the one that bears the supreme test of furnishing ­ a maximum service at a minimum cost. Legislature or Commission If, in the course of events, it should appear that public regulation is preferred to public ownership, and there-^See Reports of Public Service Commission, First and Second Districts, for the six months ending December 31, 1907. 134 THE A B C OF TAXATION fore should have the right of way, so to speak, in public consideration, then the next question is: Shall it be regulation by Legislature or regulation by Commission? The Legislature Considerable effort has been recently directed, notably in the mooted question of the New Haven and Boston & Maine merger, along the line of regulation by legislation, but it must be admitted that at best legislative regulation, being uninformed and uninspired, cannot be otherwise than arbitrary, unaccommodating, undiscriminating. Perhaps no better preparation can be made for treating ­ the problem than to endeavour to define to ourselves as clearly as possible the nature of the task proposed. What are some of the matters for which regulation, wisely or unwisely, is invoked? First and indispensable ­ are public audit and public inspection; the questions of the capitalisation of franchises, and the capitalisation of earnings, which may or may not be made subject to a general law: then follow the problems of mergers, absorptions, extensions, connections, common ­ use of tracks, and pooling; the question of rates and rebates, standard of equipment, strikes and wages; exploitation of every kind, including the pocketing or sequestration of valuable franchises or patents; the vicious insurance plan of control of stock to secure control of salaries; the just attribution of dividends to capital and profits to skill; valuation of property; valuation of franchises; and lastly, like the speed governor on the engine, taxation of the franchise. To frame a creditable statute to cover all these par ­ REGULATION OF PUBLIC UTILITIES 135 ticular features would be an all engrossing occupation for legislators. To make a specific law for each class and case would seem to be an impossible undertaking. The Legislature of Massachusetts, which ranks high in intelligence, alertness, and honesty, is to-day struggling with the New Haven and Boston & Maine merger, and I venture to say that not a single legislator feels himself competent to the the task. If all similar questions required the action of the legislature, what would become of the docket and the time of legislators? The Commission The already established trend toward regulation by national or state commission, to which it is proposed that the exercise of regulative governmental power shall be delegated, brings us to a consideration somewhat ­ in detail of the reasons for, and the possibilities of, the commission idea as applied to the regulation, under statute, of special franchises or public utilities, either by rate making, by taxation, or by any other means whatsoever. Mr. Henry Clews voices a pregnant truth when he says that a large part of the gross evils in trusts and syndicates and public service corporations are traceable to the fact that “legislatures have not kept pace with national progress.” Similarly, President Woodrow Wilson of Princeton University, says: The corporation lawyers of this country know what is going on; the legislators do not. I want to say to all corporation lawyers, “if you would save the corporation, you will come out from cover and tell the legislators what is needed. You know what is needed; they don’t. By telling them you will save the corporation. If you don’t you will have the mob at i its doors in a decade.” 'S3 6 THE ABC OF TAXATION In these public service corpou-tions the public is a recognised partner, holding, through the franchise, perhaps a minor interest, possibly a major interest. The private interest in these partnerships is administered ­ by men skilful, alert, of life-long experience, masters of their art. Of the public’s interest, which has too long or too often been that of a silent partner, the Legislature is the constitutional representative. But legislative bodies, by reason of the method of their selection, their short terms, and by their limited and varied experience, are disqualified to cope directly with the specialised ability and experience of the private administration. Consequently the question has already arisen and is being answered, viz. why should not the interest of the people, the State, in the co-partnership, be represented by the ablest men whom the President, or the Governor, can secure at adequate salaries, constituting permanent commissions ­ — men who shall learn to know what is needed without asking corporation lawyers, who shall become as competent in their distinct sphere of regulation, including the field of taxation, as are the Hills, Harrimans, Mellens, and Tuttles in what should be their own sole province of railway administration — commissions whose duty shall be to ascertain the facts, to frame the argument for the people’s side — to defend the rights of the public against aggression, now inseparable from the situation, and to render a decision which shall stand as the verdict of the people’s representatives. Not until some such harmonising agency is employed can it be possible for these great corporations and the people to get their respective rights without wrong to the one or the other. REGULATION OF PUBLIC UTILITIES 137 I The great lack to-day is not so much in the general wisdom and honest intention of the people or their representatives as it is a lack of understanding of certain general principles of simple application; the longer this understanding is deferred the harder the problem becomes. The President of Princeton says also: We have, in fact, turned from legal regulation to executive regulation. We have turned from law to personal power. But what we are here considering is legal regulation, executive regulation under law. What is needed is a Legislature to make wise general regulative laws, courts to interpret them, and a competent executive agency to administer them. Regulation by Rates, or by Taxation, or by Both Granting the probable establishment of the commission ­ method, the endeavour of this chapter is to bring to the front, in the railroad and other public utility problems, the factor of taxation; not taxation for revenue; not taxation of future franchises or their capitalised earnings; but taxation of franchises already granted and exploited and capitalised, together with earnings already capitalised — taxation of present franchise earnings to bring them into the public treasury, instead of leaving them in private hands; not the taxation of the earnings of industry, but the appropriation by taxation of the dividends that are earned by the public; to the end that the profit of "operation” shall go to skill and enterprise, and the profits of the franchise shall go to the people, o If there is one problem, National and state, that i 3 8 THE A B C OF TAXATION to-day towers above all the rest, it is the problem of railway regulation. The avowed aim of what is known as the New York Ford Amendment is to facilitate the raising of revenue. It contains no suggestion of possible extension to include the far higher and more difficult function of regulation. There are those who believe that the vexatious perplexities of this, as of all other public franchise problems, will prove more amenable to the correcting tendencies of taxation than to any other agency. Legislative regulation is, at best, clumsy and intermittent, often amounting to a weak confession that hostility of interests cannot be converted ­ into harmony. Taxation is neither of these, but is elastic, self-adjustable, and self-operative. The best hope of any graft extermination must reside in taxation — the taxation of special privilege. Would any one maintain that change for the worse is possible in American graft of to-day? Is the public graft of a corporate city worse than the private graft of all its constituent citizens? Are not the people the victims in either case, and cannot graft be resisted more concretely ­ and thus more effectively by the arm of a strong individual executive than by the slower instrumentalities ­ of public administration? It will be profitable, in approaching the problem, to analyse in our own minds what is meant by the phrases public utilities, quasi-public corporations, semi-public functions. We mean, do we not, that a part is public business and a part is private business; that one part of their capital is public, another part private: that one part of their function is public and one part individual; that one part of their value rests on franchise, ­ the other part on equipment and operation? REGULATION OF PUBLIC UTILITIES 139 The sensible question at once suggests itself: If these constituent parts can be separated, why not treat them separately? Why, in order to control the public agency, is it necessary to assume control over the private agency? Why not, through taxation, assume gradually the public’s right to the franchise, and let improvement and operation remain in private hands? Or, if we are not quite sure that it is wise to take over both, why not take the franchise fir^t, and observe the effect? And even if we are persuaded that it is wise to take both, why not take them over in the natural order, one at a time — the franchise first? How better can the municipality learn to “run” its own utilities than by first learning to regulate them? The all important preparatory step must be to separate as distinctly as possible regulative functions from administrative functions, so that the commission ­ may not meddle with administration further than to set such limits, not fixed by statute, as bound the public’s right. The following tentative classification is offered: REGULATIVE Audit Capitalisation of earnings Capitalisation of franchises Exploitation of every kind Inspection Reduction of earnings Rate of taxation Rebates Standard of equipment Stock control of salaries Stock watering Taxation of the franchise Valuation of franchises Valuation of property ADMINISTRATIVE Absorptions Common use of tracks Rate Making Pooling Connections Extensions Mergers Strikes Wages THE A B C OF TAXATION I40 Most of the things set down under the head of “Regulative” clearly belong there. The regulative reduction of earnings would involve a reduction of rates in general, but the original making of specific rates would seem to fall inevitably within the province of administration, while questions of absorption, common ­ use of tracks, connections, extensions, mergers, pooling, strikes, and wages would naturally range themselves ­ under the same head; and so, too, it is respectfully ­ submitted, the most effective, definite, and delicate (because flexible) regulation possible is through the agency of a franchise tax, which can be made to extract annually from the corporation that part of its profits directly contributed by the public, leaving all its improvements — in other words, its plant, the capital devoted to its industry — free of taxation. The natural operation of such a system would be to leave to the corporation only such profits as are due to capital and industry actually involved, and thus to reduce capital stock to a fair market value, tending to reduce present overcapitalisation, as is now being effected in the City of New York. The trend of such taxation would be to destroy the motive for exploitation, by appropriating, through taxation, the public's share of the profits, thus tending to take public utilities out of politics. Taxation: would thus be, as it were, the vital nexus between public; and private Interest, extracting annually a profit already accrued to the franchise alone, and operatinglike a board of equalisation between the corporation; and the state. When this point is reached, regulation; and administration will no more think of exploiting each other than would individual partners in a REGULATION OF PUBLIC UTILITIES 141 * “ The Ford Bill,” Municipal Jfjairs, June 1899, New York Reform Club, 'business firm. Clearly, the advantage, if it be an -advantage, temporary or permanent, of regulation ‘over public ownership, is the relief of the public from ithe details and responsibilities of administration. The State of New York has a Public Utilities Commission ­ already installed byway of example, and has paved the way with an enabling statute to aid in the process of valuation for purposes of taxation of those public assets to which the public may rightfully lay claim. The Ford Law for the Taxation of Special Franchises, now in operation in the State of New York, was enacted in 1899. It was amended at a special session called by Governor Roosevelt, and, after five or six years’ contest, was sustained by the Court of Appeals of the State of New York, and by the Supreme Court of the United States. This bill did not “prescribe any specific method of assessment,” but simply “added certain items to the prescribed classes of real property, full provision for the assessment and taxation of which was already provided for by other laws in force.”* An essential provision of the original bill was set forth in the following lines: “The terms,‘land,’'real testate,’ and ‘real property,’ as used in this chapter, include the land itself above and under water, all buildings and other articles and structures, substructures ­ and superstructures, erected upon, under or above, or affixed to the same; all wharves and piers, including the value of the right to collect wharfage, cranage, or dockage thereon; all bridges, all telegraph lines, wires, poles, and appurtenances upon, above, and under ground; all surface, under ground, and elevated 142 THE A B C OF TAXATION railroads, all railroad structures, substructures, and superstructures, tracks and the iron thereon; branches, switches, and other fixtures permitted or authorised to be made, laid, or placed in, upon, above, or under any public or private road, street, or ground; all mains, pipes, and tanks laid or placed in, upon, above.or under any public or private street, or place for conducting steam, heat, water, oil, electricity, or any property, substance, or product capable of transportation or conveyance therein or that is protected thereby; all trees and underwood growing upon land, and all mines, minerals, quarries, and fossils in and under the same, except mines belonging to the state.” What is known as the Ford amendment was an addition ­ of seven lines to the above section further elaborating ­ the legal definition of ‘‘land” in the following words: Including the value of all franchises, rights, authority, or permission to construct, maintain, or operate, in, under, above, upon, or through, any streets, highways, or public places, any mains, pipes, tanks, conduits, or wires, with their appurtenances, for conducting water, steam, heat, light, power, gas, oil, or other substance or electricity for telegraphic, telephonic, or other purposes. These seven lines are a clear and concise restatement ­ of the legal meaning of the term “land” as including the recognised “rights and privileges thereto pertaining.” It is this definition for purposes of taxation ­ that is the basis of the few words of argument which I have to offer. It is interesting, because, with the sanction of the highest courts of the state and Nation, it defines a public franchise as “land,” a public franchise value as “land value.” It is evident that the public can reap its franchise REGULATION OF PUBLIC UTILITIES 143 benefit either in lower fares or in franchise taxes. It may be assumed that the gross amount of the benefit is the same whichever way it is distributed. If the franchise is taxed, the benefit is distributed immediately among all the people. If rates are reduced, ­ would not the benefit, while going immediately to the patrons of the road, likewise be ultimately diffused ­ among all the people? If the above analysis be correct, it follows that the question of method is one, not of justice, but of expediency, and it is submitted that, on the ground of expediency, the taxation method is preferable by reason of its greater simplicity. A too frequent change in schedule rates is at least inconvenient. This disadvantage finds illustration in the contrasted conditions of 1907 and 1908. By hard times and greatly reduced business, the railroads now seek to justify either a reduction of wages or a paradoxical advance of rates, in place of the reduction usually resulting from dull business. It is at this point that taxation offers itself, like the “ratchet” or the “follower” in the machine, to “take up the slack” be it more or less from year to year. Under the system here considered, in which regulation ­ is supplemented by taxation, instead of a legislative ­ reduction of rates once in every five, ten, or twentyfive years, in the face of a formidable lobby, there would be a periodical but not too frequent general readjustment ­ of rates, which presumably must be high enough to include dividends on capital actually employed; there would be an annual flexible regulation of the tax based upon the net earnings of the previous year, in the light of an honest, expert, and inquisitorial public 144 THE A B C OF TAXATION inspection and accounting. This tax would appropriate ­ to the public such net earnings (barring a liberal surplus), leaving the industry itself free from tax. Such regulation would seem to promise all the benefits which could be claimed for public ownership ­ without the dangers which would attend that policy. It may be that the management and the commission could be merged into a holding company, which would become, to all intents and purposes, a public commission with all the benefits of actual municipal ownership. By way of illustration, let it be supposed that a number of railway experts (not exploiters) have formed a company to take over the franchise and operation of a great railway. Although small holders of stock, these men naturally become the salaried officers and managers of the business. Under what must amount to a municipal guarantee of dividends (out of profits in good years, or out of surplus in bad years), the promise of a low market rate suffices to attract ample funds from the sale of capital stock, and the corporation is established as a going concern. Let it be further assumed that taxation has been operative, say, for a generation; that it has gradually recovered to the public the value of the franchise by a process so tentative and even cautious as to make "grim financial disaster” impossible. Let it be next assumed that, as a result, the triple concurrent agencies, "private ownership,” “public regulation,” and "taxation ­ of franchise,” are now in mutual and harmonious control of the situation, from which speculation and exploitation will have been eliminated as superfluous. REGULATION OF PUBLIC UTILITIES 145 The problem of government regulation will be to harmonise the three interests of capital, management, and the public; a fair profit to capital; fair rewards for skill and enterprise in management; a fair return to the public for franchise privileges. Capital: A fair rate of return to capital invested in railways is the market rate of interest upon investments ­ of equal security, as fixed in competitive industries, ­ and this is al*l that capital (minus speculation) demands. When the public thus asserts its rights and enforces them, it must, of course, first guarantee dividends to the stockholders, whose property rights would otherwise ­ be imperilled. Capital does not run the road, and hence it is not entitled to unusual profits due to the risks of an established business. Reduction of rates and taxation of franchise will have squeezed the water from the stock, and actual capital, as determined by the commission ­ valuation, will get its “fair profit” in dividends, and profits will go to skill and enterprise, where they properly belong. The claim that a higher rate of dividend should be paid to capital on account of skill and enterprise in management is a vicious one, arising from the attribution to one factor of what clearly belongs to an entirely distinct one. Management; The administration of the business of the public service corporation would be, as now, in the hands of agents, superintendents, and managing directors, who would profit by salaries in proportion to their skill and brains, from |i ,000 to $50,000, a year. It is these men who run the road now, and it is their concern to deserve profits by so doing. “Traffic men, 146 THE A B C OF TAXATION as a whole, keen, adroit, and sensitive to every change in the industrial world, would turn to with their magnificent forces and abilities and work with the commission instead of against it.” Skill and enterprise, ­ and public exigency, instead of selfishness and greed, would provide the initiative for legitimate extension and development. The Public: Its concern is to reap from its own business, delegated to private hands, a fair return, whether it be by lower rates or higher taxation. The public utilities commission, composed of men of good judgment and incorruptible honesty, its functions being supervisory rather than managerial, will fix upon a fair capitalisation, and will determine when and what gross reduction in current or accumulated earnings the administration should proceed to effect through the reduction of specific rates. By the municipalisation of the franchise the main motive for “stock watering and corporation wrecking” or for “underpaid or overworked ­ employees or false economies ” will be destroyed. Whatever “rebates,” “stock watering,” and “corporation wrecking" survive the assumption of the franchise by taxation, the commission will prevent under statute. The value of the franchise will be gradually absorbed through reduction of rates, leaving, however, a substantial margin as the best possible index and basis for taxation and regulation. This marginal surplus would serve the purpose of equalising conditions from year to year, bridging over lean financial periods, and thus securing more fully the stability of the fair profits to capital invested. To sum up, it is my contention that, with railways privately owned, publicly regulated, and taxed approxi ­ REGULATION OF PUBLIC UTILITIES 147 mately to the value of their franchises, public audit will increasingly protect both public and stockholder; public inspection will keep up the standard of the service; capital will get its interest; managerial skill and enterprise will get its compensation; the public will get its low rates and taxes. It will, therefore, appear, that franchise taxation is proposed not as a sole solution of the railway problem, but as a flexible, practicable, speedy supplement to the necessarily more rigid policy of regulation. The people should have the benefit of monopoly, and how can this benefit be better secured to the people than by charging the corporation a fair price for what the people do for it, leaving the corporation free to prosecute its private business in its own way? 14S Chapter XI INHERITANCE AND INCOME TAXES* T HE proposed Presidential and Congressional plan of limiting fortunes and raising revenue by inheritance ­ and income taxes may, it is suggested, be greatly improved by two simple modifications, viz.: (i) Let fortunes be taxed chiefly in the process of their accumulation, ­ rather than at probation; and (2) let the income tax be limited to those incomes which are not only unearned, but which are now untaxed. I ask consideration ­ for a few of the arguments upon these points. It is substantially correct to say that wealth, as fast as produced, is divided into two parts: one part goes to wages of hand and brain, the other part goes to privilege. The greater the part that goes to wages, the smaller the part that goes to privilege, and vice versa. The prime agency in determining how large shall be the part that goes to privilege is the private appropriation of ground rent, economic rent, in its various forms. The essence of privilege is the lawgiven power of one man to profit at another man’s expense. A man gets rich, not out of his earnings, but out of his savings. If obliged to spend all his earnings it is not possible for him to accumulate riche:, The poor man rebels, not because his rich neighbour * Address before the Economic Club of Boston. Published in the New York Evening Post, March 6,1907; Harper’s Weekly, May z?, 1907; and the Outlook, August 3, 1907. INHERITANCE AND INCOME TAXES 149 can accumulate five hundred dollars to his one, but because, through the operation of this special privilege, it is at his, the poor man’s, expense that the rich man’s accumulation is made. Ex-Governor Long says that there will be discontent just so long as certain comforts and possessions are within the reach of one class and beyond the reach of another class. This discontent Archbishop O’Connell calls the “tumultof theenvious.” But unprivileged men, whether unprivileged rich or unprivileged poor, have not far to look to find that discontent and envy start only where skill and enterprise leave off and special privilege begins. You are not envious of Edison or Marconi or Bessemer or railroad magnates, or captains of industry; you gladly accord them princely rewards as public benefactors. It is only when the people are called upon to provide an Edison fortune for every city and town in the country through privileged exaction that your discontent is aroused. It is only when they are required to superimpose ­ upon an unprivileged steel fortune of three or four millions a privileged fortune of a thousand millions, based upon economic rent, that the shoe begins to pinch. It is only when the ore baron, the coal baron, the oil baron, the railroad baron, and the land baron are privileged to take ten dollars or a hundred dollars from their wages and add it to the monopoly price of coal and iron and oil that men are swayed by the “tumult of the envious.” Legislation has been busy constituting criminal offences. The air is charged with criminal prosecution and conviction where fortunes have been swelled through violation of law. But is it not true that neither legislatures nor courts have seriously addressed ^„ 150 THE A B C OF TAXATION themselves to stopping the continuous drain of wealth from the pockets of the producers into the coffers of the privileged? President Roosevelt in his last message enjoins upon Congress: “ Let us not do what the next generation cannot undo. We have a right to the proper use of both the forests and the fuel during our lifetime, but we should not dispose of the birthright ­ of our children.” Mr. Bryan, in his prediction of “A Great Moral Awakening,” quotes the declaration of the United States Supreme Court that “an unjust tax is larceny in form of law.” Unjust fortunes are, we claim, the fruit of unjust taxes, taxes that subtract from wages and make almost impossible the savings of labour while augmenting the fortunes of privilege; or, to be more exact, unjust fortunes are due to the absence of just taxes. But it is asked, what are you going to do about it? We say that there is just one punishment to fit the crime, to wit, the taxation of privilege. Tax the oil and the coal, the franchise, and all other forms of economic rent, at its fixed initial source, the land, which, without inquisitorial or dooming process, bears always the imprint of its own market valuation. Tax, not private ownership or corporate franchise, but the privilege attached thereto. The colossal error of the century is the private appropriation, instead of the taxation, of rent. This it is that makes the shopping district of every city a continuous battlefield for the business interests of her people, and every battle a Waterloo. For the prevention of unjust fortunes a natural process is already provided. For an equitable reduction ­ of accumulated fortunes artificial machinery INHERITANCE AND INCOME TAXES j51 remains to be invented. President R.oosevelt in his message confesses that the question of an income tax is “very intricate, delicate, and troublesome.” It would seem that the proposed dissipation of fortunes by means of an inheritance tax must prove awkward and of questionable justice, besides discouraging enterprise at its point of greatest efficiency, and in the midst of a beneficent career. It would discourage the accumulation of Unprivileged fortunes, which are a blessing in proportion to their size. With all his boasted freedom, the American citizen cannot invent or manufacture his own principles. He can select them, but he cannot remould or ignore them. He may make permutations and combinations to his heart’s content, but two and two will always make four, and the square of the hypotenuse will always be equal to the sum of the squares of the other two sides of the triangle. So in economics, certain fundamentals cannot be disregarded, as for example that the expenditure, enterprise, and activity of society express themselves in economic rent, the value of land. Whoever pa)'s this rent pays, as President Roosevelt says, “for the protection the State gives him.” Whatever of this rent the city gets in taxes it has bought and paid for; whoever else gets any considerable part of it gets something for nothing. Taxes are like the wheat poured into the public hopper; rent, in whatever form, may be described as the flour that comes from the public mill. The privileged man, who is allowed to carry off the grist, eats his bread, as it were, at the taxpayer’s ­ expense. A tax upon rent subtracts nothing from wages, and any tax upon rent, however large, I 52 THE A B C OF TAXATION cannot remain a burden upon the owner beyond a generation at most. Land value, otherwise perishable, is made imperishable by public conservation; hence the plea that the whole tax, whether inheritance or income, be gradually transferred to this one basis. Whether it shall be imposed lightly, as a life rate, or heavily, as a death rate, is merely a question of method. In either case it will soon cease to be a burden upon any one. Unjust fortunes are made out of ground rent accumulated ­ and compounded. They can be perpetuated only by the private appropriation of ground rent; cut off from ground rent the public nutriment and they will quickly crumble and perish from the face of the earth. Mr. Carnegie says: “Who made the ‘wealth’ of the Manhattan Island farm? The community, the population, ­ the people. Then you tell me that wealth is sacred. I say that the community was the leading partner that made that wealth. It was hundreds of people settling up there, thousands of people settling around there, and here are these millionaires. They have toiled not, neither have they spun.” Is it not sensible to make such cumulative fortunes as these the basis of live taxation? President Roosevelt cannot eliminate “intricacy, delicacy, and troublesomeness” from his income tax until he learns to distinguish sharply between capital and privilege, between incomes that are earned and those that are unearned 153 Chapter XII THE SINGLE TAX* F OR the practical views which it is my privilege to present toAhis distinguished conference I beg to assume responsibility individually, rather than as representing any organised body, who thereby might be compromised. To express my conviction in ecclesiastical form I begin with the Credo (i) I believe in the single tax defined by Henry George in “Progress and Poverty” as ‘‘the abolition of all taxes save those on land values,” to be accomplished, as he said at Saratoga, ‘‘by the slow process of educating ­ men to demand it”; to which he added: “In thinking of details it should be remembered that we cannot get to the single tax at one leap, but only by gradual steps, which will bring experience to the settlement ­ of details.” (2) 1 believe that the amount of the single tax should be limited to the needs ot the State for an effective ­ and economical administration of government. ♦Address before the National Tax Association, November 13, 1907, at Columbus, Ohio. See il State and Local Taxation. First National Conference, 1907.” The Macmillan Company, 1908. The reader is warned that this chapter is made up largely of expressions found elsewhere in the book, especially in the first three chapters. The only reason for its insertion is that it represents the author’s latest resume of the subject, prepared for an important occasion. 1 54 THE A B C OF TAXATION “ It is a question of applying land values to common use as far as they will go, or as much of them as may be needed, as the case may prove to be.”* (3) I believe in the classification,formulated by the New York Ford Franchise Act, of a public franchise as “land,” and a public franchise value as “land value,” together with the plainly consequent converse truth, viz., that the site value of land is a private franchise value, because land depends for its value upon those same concrete and tangible things that give value to a public franchise. (4) 1 believe with Henry George that "in truth the right to the use of land is not a joint or common right, but an equal right; the joint or common right is to rent, in the economic sense of the term. Therefore it is not necessary for the State to take land; it is only necessary for it to take rent.” Accordingly I believe that a man who owns land owns the site, and every right and privilege, fee, title, etc., pertaining to the land, from zenith to earth’s centre, exclusive and absolute, as against any other individual, but nevertheless ­ subject always to the right of eminent domain, and to the claims of the community to its share in the value of those rights and privileges, through the sovereign power of taxation. (5) I believe in this single tax doctrine of Henry George, because it is broad and catholic like the air, the sunshine, and all other bounties that heaven sends alike upon the just and the unjust. It knows no distinction ­ of race, denomination, party, sect, or creed. It knows no socialism, individualism, communism, anarchism, Greek, barbarian, bond, or free. The Land * Louis F. Post, u The Single Tax,” p. 86. THE SINGLE TAX 155 Question is under all these. Where it leaves off, these begin. A single taxer may be any of these. All these should be single taxers. The Argument The argument in the case may be put briefly as follows; The three economic legs necessary and sufficient whereupon the single tax stool may firmly stand are found in three generic peculiarities quite exceptional in their nature, which distinguish land from houses or other man-made products. The failure to recognise this distinction is, we believe, sufficient to account for the crookedness of present systems of taxation. Such a recognition must lie at the very foundation of any just system of the future. These three attributes, firmly grounded in orthodox economics, are, in economic language, as follows: a The site value of land is a social product. b A land tax cannot be “shifted.” c The selling value of land is an untaxed value. These three fundamentals are worthy of brief separate consideration. a First in order is the fact that land value is a social product, i. e., it is created principally by the community through its activities, industries, and expenditures. The value of land is based primarily upon economic rent, defined as “what land is worth for use,” what it would command in the open market. Strictly speaking this “worth for use” usually attaches not to the land itself, not to the earth’s surface, not to the inherent capabilities of the soil, not to light and air or other bounties of nature resident in the land, i 5 6 THE A B C OF TAXATION but to scores of things exterior to the land and through it made available for use, so that, as applied to urban land, the following would be a more accurate definition: Ground rent is the annual value of the exclusive Use and control of a given area of land, involving the enjoyment of those “rights and privileges thereto pertaining” which are stipulated in every title deed, and which, enumerated specifically, are as follows: right and ease of access to water, health inspection, sewerage, fire protection, police, schools, libraries, museums, parks, playgrounds, steam and electric railway ­ service, gas and electric lighting, telegraph and telephone service, subways, ferries, churches, public schools, private schools, colleges, universities, public buildings — utilities which depend for their efficiency and economy on the character of the government; which collectively constitute the economic and social advantages of the land; and which are due to the presence and activity of population, and are inseparable therefrom, including the benefit of proximity to, and command of, facilities for commerce and communication ­ with the world—an artificial value created primarily through public expenditure of taxes. In practice, the term “land” is erroneously made to include destructible elements which require constant replenishment; but these form no part of this economic advantage of situation or site value. Consequently ground rent may be said to result from at least three distinct causes, all of which are connected with aggregated social, as distinguished from individual, activity: (i) public expenditure; (2) quasi-public expenditure; (3) private expenditure. Thus their very nature and origin would seem to point to land THE SINGLE TAX 1 57 values as peculiarly fitted to bear justly the burden of taxation. b Second in order is the fundamental fact that a tax upon ground rent cannot be shifted upon the tenant in increased rent. The argument in the case may run thus: Ground rent, "what land is worth for use,” is determined not by taxation, but by demand. Ground rent is the gross income, what the user pays for the use of land 1 ; a tax is a charge upon this income, similar in its nature to the incumbrance of mortgage interest. It is a matter of every-day knowledge that even though land be mortgaged nearly to its full value, no owner would think to rid himself of the mortgage interest that he has to pay through raising his tenant’s rent by a corresponding amount. Mortgage interest is a lien upon land held by an individual; similarly, a tax may be conceived most clearly as a lien upon land held by the state. Both affect the relations between owner and mortgagor, and between owner and state respectively; neither has any bearing upon the relations between owner and tenant. "Tax” is simply the name of that part of the gross ground rent which is taken by the State in taxation, the other part going to the owner; the ratio these two parts bear to one another has no effect upon the gross rent figure, which is always the sum of these two parts, viz., the net rent plus the tax. The greater the tax the smaller the net rent to the owner, and vice versa. Ground rent is, as a rule, “all that the traffic will bear”; that is, the owner gets all he can for use of his land, whether the tax be light or heavy. Putting more tax upon land will not make it worth any more for use. If the market value of a lot of land for 1 5 8 THE A B C OF TAXATION use is $300 a year, a tax of |roo will not make it worth 8400 a year. These two propositions (a) that land value is a social product, and (b) that a tax upon land cannot be shifted by the owner upon his tenant in increased rent, are well settled in the professional mind. (c) Third and last is the fact, a necessary corollary of the second, that the selling value of land is an untaxed value, a proposition that has received the definite approval of upwards of fifty leading American teachers of economics and has been seriously questioned by but two or three of the three hundred to whom it has been submitted. Every purchaser of a piece of property knows, without ­ argument, that he is governed as to the price he will pay, not by the gross income, but by the net income that will remain to him after all charges and incumbrances ­ by way of mortgage interest or tax have been discharged. To illustrate: Assuming a piece of land worth I300 a year for use to be free of all charges and incumbrances, and assuming the current rate of interest to be 5 per cent per annum, a purchaser would buy the lot for |6,ooo, because interest upon that sum would amount to the stipulated $300 a year. But assume that, on the contrary, it is found to be subject to a mortgage of $2,000, upon which the annual interest charge is |ioo; then he will buy the land, not at $6,000, but at $4,000, the value of the equity remaining after mortgage interest has been paid. But assume further thas this lot of land, besides being subject to a mortgage of $2,000, is subject also to an established tax of $100, which charge the pur ­ THE SINGLE TAX 159 chaser must also assume. He will then purchase the land not at $4,000, but at $2,000. The tax charge of $ 100 and the mortgage interest charge of $100 respectively ­ reduce the selling price of land by the same amount, $2,000. The mortgage and the tax together therefore reduce it by $4,000; and the purchaser will buy the land at $2,000, the value of the equity that remains after both mortgage interest and tax have been paid. This $2,000 is the capitalisation of the annual value of the lot after all charges have been met. The gross value is the taxed value. The net value is an untaxed value. It follows from the above too brief analysis that, under the present system, the selling value of land is an untaxed value and land owners who invest to-day are entirely exempt from taxation. As this exemption of the present owner holds true to-day, so it will be true in future of each new purchaser subsequently to the imposition of any new tax. It is in the very nature of things that the burden of a land tax cannot be made to survive a change of ownership. But when we turn to the case of the taxation of houses we find that no parallel appears. Whereas a tax upon the lot could not, in the nature of things, increase its annual rental, or cost for use, a similar tax upon the house is added directly to the annual cost to the user. If a house costing $6,000 to build is subject to a tax of |ioo, this amount must be paid annually in addition to an interest charge of $300. Increasing or decreasing taxation upon the lot has no influence upon its annual cost to the user; while increasing or decreasing the tax upon the house increases or decreases in exact proportion the annual cost to the user. The moral of this illustration is that a tenant gets for use annually $300 worth of land for I300, and a house costing I300 for $400. In other words, a house tax of $100 takes in taxation $100 a year of the user’s income. A land tax of $100 takes in taxation no part of the income of the present owner, provided that he purchased the land after the tax was imposed. The beauty of this illustration is that while land stands for everything except the products of labour, a house is here made to stand as the representative of any and all products of individual labour, and the illustration thus becomes all inclusive. The practical exemption of the selling value of land is vital in its bearing upon any proposition for obtaining ­ an increased revenue from that source, accompanied ­ by a corresponding exemption of other property. In the light of the foregoing argument it is interesting to consider WHAT ONE CITY, THE CITY OF BOSTON, MIGHT HAVE DONE TO PROMOTE BUSINESS AND SECURE EQUITY THROUGH A SOUND AND JUST SYSTEM OF TAXATION The following estimate indicates the gigantic proportions ­ of the factor ground rent, and its sufficiency to meet all reasonable costs of government economically administered, not only without impoverishing the landowner, but without subjecting him at any time to a THE SINGLE TAX 161 tax more burdensome or more continuous than that borne by every man that has lived in a house since a house tax was invented. The gross ground rent of the land of the City of Boston is by careful estimate more than .... 155,000,000 Of this amount there is already taken in taxation ­ more than ....... 10,000,000 Leaving to the landowners of 1916 a net ground rent of ....... . $45,000,000 The fact that this sum amounts to $75 per capita, or $375 pet family, will help the mind to grasp its magnitude as a factor in the distribution ­ of wealth. State and local taxes upon improvements, buildings, personal property, and polls amount to much less than $15,000,000 If this additional amount were taken from rent there would still remain to the landowners a balance of $30,000,000 or $50 per capita, or $250 per family. Coming to the consideration of the means by which more revenue may be gradually raised from the land and the burden of taxation made more proportionate and reasonable, choice may be had from a variety of methods. The one most frequently suggested is that of appropriating by taxation part or all of the future increase in land values. If Boston should decide to start to-day and take in taxation her future unearned increment above the present value of $722,000,000, the case would be exactly the same as that of some new community where no value has accrued, a situation in which the ideal justice of the single tax is so frequently ­ conceded. If Boston had decided ten years ago to take in THE A B C OF TAXATION 162 taxation an additional 2 per cent (55) of its gross ground rent each year for ten years, amounting in that period to a total of 20 per cent, coupled with a corresponding reduction in the tax upon buildings and personal property, that city would be raising to-day from its land more revenue than now by Twenty per cent of $55,000,000 (p. 18) or . . $11,000,000 The increase in the gross ground rent in the same ten years has been .... $20,000,000 So that Boston would be taking in increased taxation to-day little more than one-half of its “unearned increment” ­ for the same period. Under this supposition the $468,000,000 valuation of ten years ago would still remain untouched by taxation, as is now the case with substantially the whole $653,000,000 valuation of 1907. The foregoing Boston figures are submitted simply for purposes of illustration, not in any way as support of a specific recommendation. Important Conclusion If the preceding argument is valid, it establishes the fact of gross inequality in the incidence of taxation as between land values and improvement values. If it is admittedly wrong that present land values should be untaxed, how can such fiscal wrong best be righted? Begin at once a transfer of taxes from improvements to land, so gradual that two old injustices will cease for every new one that is begun, until this untaxed value is made to bear at least its proportionate burden at the same rate with other things. In conclusion I wish to emphasise this basic fact: THE SINGLE TAX 163 that the burden of a land tax cannot be made to survive a change of ownership has in turn this corollary of its own, viz., that a new tax burden if imposed to-day would in one generation, by sale or by inheritance, cease to be a burden. If all taxes are finally collected from the landowner, he will then be the only man taxed. If another generation serves to let his successor out from under the burden, who will remain under it? Ground rent, economic rent, being an equivalent for value received, is not a burden, and if all taxes are ultimately taken from rent, it follows that in the course of two or three generations taxation may cease entirely from being a burden upon any one. If professional economists and taxation experts will at once, to use a nautical phrase, quit their dead reckoning and steer their craft by the single tax polestar, time and tide will do the rest. PART IV. APPENDIX A. Ethics of the Single Tax : Its Breadth and Catholicity. B. Tolstoy and Henry George. C. The Disproportionate Treatment of Agricultural Rents by Economists. D. Statement of the Rev. Edward McGlynn. E. A Protest Against Unjust Taxation. F. Agreements in Political Economy. G. Details of One Hundred and Twenty Sales. H. Details of Seven Hundred and Fiftyone Rentals. A ETHICS OF THE SINGLE TAX, ITS BREADTH AND CATHOLICITY* The appeal to reason contained in the doctrine of Henry George, whether as a moral philosophy, or as a system of taxation, ­ is as universal as is the natural tax (ground rent), which has been in automatic and irresistible operation for centuries, in every civilised country under the sun. A response to this universal appeal only awaits the precipitation of a mass of relative ignorance and error now held in solution in the public mind regarding the author and his doctrine. This single tax of Henry George is broad and catholic like the air, the sunshine, and all other bounties that heaven sends alike upon the just and the unjust. It knows no distinction ­ of race, denomination, party, sect, or creed. It knows no socialism, individualism, communism, anarchism, Greek, barbarian, bond, or free. The land question is under all these. Where it leaves off, these begin. A single taxer may be any of these. All of these should be single taxers. There is in the single tax, or natural taxation, nothing of technical socialism, which means the assumption by society of functions that are primarily individual. It is rather a re-socialisation of that which by its own nature, in Its inception ­ and in its growth, can be nothing but socialised, but which has been artificially de-socialised. There is in natural taxation ­ no communism, if by communism is meant the compulsory ­ pooling of the products of human labour. Such taxation is, however, the divine communism of the common enjoyment of a natural bounty bestowed upon all in common. There is in natural taxation no taint of the anarchism of disorder. ­ It is the recognition of the ideal anarchism of law, so perfect, self-adjusting, self-operating, that no external force is needed to carry it into execution. ♦Published in the Arena of January, 1899. 167 THE A B C OF TAXATION 168 Its appeal is no less to the Catholic than to the Protestant; no more to the Christian than to the Jew or the Mohammedan, or the Pagan; it appeals alike to Republican and Democrat. Being a veritable lodestone— all attraction, no repulsion, and with the whole arsenal of arguments on its side — why should it not quickly gather to itself a victorious host ? Economically, the single tax proposes the displacement of an unjust distribution by a just distribution of wealth. Instead of distribution according to special privilege, and taxation according to ability, it proposes distribution according to ability, and taxation according to special privileges, chief of which is the private appropriation of ground rent. Morally, it offers itself as a fundamental bond of unity to reinforce the great accomplishments already made, and greater efforts to be made along the line of Christian agreement. Henry George offers to the world, not only a political philosophy ­ that will stand the test of the gospel, but a religious philosophy also, that removes a great beam from the eye of the Christian Church, enabling it to see clearly where it now confesses blindness, and adding to its light a warmth and a radiance which the indifference of the world could not resist. Hence the persistent disciples of Henry George ask Christians to consider this doctrine; to gather to the standard of the single tax, and to follow that standard, not as the hound follows the fox, winding and redoubling upon its own trail, but as the bee flies, and as the carrier-pigeon flies, by the instinct of principle, in the straight line that lies between right and wrong. B TOLSTOY AND HENRY GEORGE* Tolstoy’s letter to the London Times upon the subject, “A Great Iniquity,” is the Russian philosopher’s latest utter-♦ Published in the Springfield Republican, December 10, 1905; New York Evening Post, December 19, 1905; and the Boston Evening Transcript, December 26, 1905. APPENDIX B 169 ance upon the land question. In it Is declared his belief that the greatest of all iniquities is the private ownership of land, together with his explicit endorsement of the single tax doctrine of Henry George. The utterances of this world-famous man, heralded far and near, are likely to foster the misapprehension that the aim of both Henry George and himself is the destruction of private property in land. I, therefore, beg, with only a word or two of comment, to call critical attention U> one of Tolstoy’s statements, leaving it to the reader to make his own interpretation of its meaning. Notwithstanding Tolstoy’s unequivocal declaration that “the soil must be restored to the people,” and his reiteration of “the wrong of private property in land,” the conclusion that he would destroy the private ownership of land must be, it seems to me, a mistaken one, and out of harmony with both his text and context. Henry George specifically arraigned the institution ­ of private property in land, as it now exists. He condemned ­ that feature of land tenure which necessitates the invasion ­ by taxation of the otherwise sacred right of private property in the products of labour in order that ground rent may continue ­ to inure mainly to private benefit. Hence, it must be submitted that what Tolstoy had in mind was private property in land “ as now existing.” The length and breadth of George’s proposed remedy, to which Tolstoy gives full endorsement, was, in Mr. George’s own words, “I do not propose ... to confiscate ­ private property in land. . . but to appropriate rent by taxation.” (“Progress and Poverty,” Book VIII, Chapter 2). In the enjoyment of every other “right and privilege” of tenure, the right to “own, possess, buy, sell, devise and bequeath” excepting only the one privilege of the private appropriation of rent, Mr. George’s specific declaration was that the land owner should be left undisturbed. The following paragraph is from Tolstoy’s “A Great Iniquity”: “A member of the English Parliament, Labouchere, could publicly say, without meeting any refutation, that ‘he was not THE A B C OF TAXATION 170 such a visionary as Henry George; he did not propose to take the land from the landlords and rent it out again; what he was in favour of was putting a tax on land values.’ That is, whilst attributing to George what he could not possibly have said, Labouchere by way of correcting these imaginary fantasies, ­ suggested that which Henry George did indeed say.” Tolstoy’s language thus proves beyond a possible doubt that he does not believe in taking the land from the landlords, and that he does not believe that Henry George could have said so, but that both are agreed in taking ground rent in taxation. One more thought by way of comment. George and Tolstoy, in common with Herbert Spencer, found, in the literature of the land question, in the dictionaries, and in works on political economy, one word, “land,” standing for soil and for situation, and they used the one term without defining to themselves and to their readers the two ideas embraced in it. A clear distinction presents itself between what academic economists might call two separate “concepts,” viz., “land” and “land value.” It is as follows: “Land,” defined as the earth’s surface; the inherent capabilities of the soil; the bounties of nature; natural resources; “natural media”;—“land value,” defined to be the value of “rights and privileges thereto pertaining,” ­ as specified in deeds of conveyance; value of the advantages of society and government; value of proximity; value due to command of facilities for commerce and communication ­ with the world; an artificial value, not a value of “natural media.” Land and land value as above defined may be contrasted by supposing one of two city lots to have a doorless and windowless hundred foot wall around it, or to have no legal right of way to and from it, in either of which cases the value would be that of land as a purely physical thing, without its social incidents. If any one will re-read both authors, bearing in mind to apply to private property in land wherever it occurs, the above distinction, as well as the qualifying words, “as at present existing,” a great deal of confusion will surely be dissipated, APPENDIX C 171 and sense will appear in place of what may have been pronounced ­ foolishness. C THE DISPROPORTIONATE TREATMENT OF AGRICULTURAL RENTS BY ECONOMISTS Has not agricultural rent, as a somewhat natural result of the fact that Ricardo’s law of rent was specifically expressed and illustrated in agricultural terms, received undue attention from the schools, to the neglect of urban or city rent in its more acute forms ? Out of a curiosity to ascertain the actual preponderance accorded to agricultural over urban rent in standard economic treatises, the writer has instituted careful comparisons of the space devoted by the authorities to agricultural land and to urban land respectively in treating questions bearing on land values and land rent. The result shows that in thirty-four leading works of thirty authors, 42,094 lines were given to agricultural rents, and 2,919 lines to urban rent,* a ratio of fourteen to one. Following is the list complete: Author and Work At Text lines Adams, H. C., The Science of Finance, 1887 803 Andrews, E. B., Institutes of Economics, ­ 1889 3° Bullock, C. J., Introduction to the Study of Economics, 1897 . . - 57° Cairnes, J. E., Some Leading Principles ­ of Political Economy, 1874 • *35 ♦Where agriculture has been considered for other purposes than value and rent of land, it has been omitted from the comparison. The line of distinction is sometimes drawn with difficulty, and in one or two cases, where the argument has seemed to bear equally on agricultural and urban land, it has been included under both heads. In view of the liability to error in such a comparison, this list is circulated in the hope that interested parties may supply any authorities which ought not to be omitted, and note any corrections in the readings for future publication and reference. ICULTURAD Notes Total lines lines Urban Text Notes lines lines Total lines 6 809 36 36 26 5 6 is 24 39 3 573 81 7 88 26 161 172 THE A B C OF TAXATION Author and Work Carey, H. C., Principles of Political Economy, 1840 Chalmers, Thos., Political Economy, 1882 Clark, J. B., The Distribution of Wealth, 1899 • ... Ely, R. T., Socialism, 1894 . Ely, R. T., Introduction to Political Economy, 1889 Ely, R. T., Land, Labour, and Taxation, ­ 1882 . . . . Fawcett, H., Manual of Political Economy, 1874 Gide, Chas., Principles of Political Economy, 1896 Hadley,A. T., Economics, 1896. Jevons, W. S., The Theory of Political ­ Economy, 1871 .... Laughlin, J. L., Elements of Political ­ Economy, 1896 .... Malthus, T. R., Nature and Progress of Rent, 1815 McCulloch, J. R., Principles of Political ­ Economy, 1849 Macleod, H. D., The Elements of Economics, 1886 Macvane, S. M., The Working Principles of Political Economy, 1890 Marshall, Alfred, Principles of Economics, 1898 .... Mill, J. S., Principles of Political Economy, 1864 Nicholson, J. S., Principles of Political ­ Economy, 1901 .... Rae, John, Contemporary Socialism, 1884 Ricardo, D., Principles of Political Economy, 1819 Rogers, Thorold, A Manual of Political ­ Economy, 1868 .... Rogers, Thorold, Six Centuries of Work and Wages, 1884 Say, J. B., Political Economy, 1821 . Seligman, E. R. A., The Shifting and Incidence of Taxation, 1892 . Senior, N. W., Political Economy, 1863 Agricultural Text Notes Total Urban Text Notes Total lines lines lines lines lines lines 542 64 606 n3 ... ns 3>3 12 20^ 3 ’5 1 7 ... ... 1,148 69 1,217 12 12 84 84 84 84 no ... no 48 ... 48 288 ... 288 192 192 i> 8 35 S 1,840 274 374 907 16 923 117 117 240 S 245 70 70 301 301 ... 579 579 19 *9 1.7°S 45 1 >75° ... >.378 60 M3 8 ... i. 2 S7 !, 2 57 109 109 492 5 497 78 17 95 3.5S7 343 3,900 40 i3o 302 782 782 ... 20 20 2,622 203 2,825 355 9 364 920 920 2 2 2,859 111 3,971 ... 1,010 1,010 20 ... 20 562 562 207 207 442 11 453 114 114 i,3 6 5 i>3 6 5 500 6 506 4Si ... 4Si ... . . . APPENDIX D >73 Author and Work Agricultural Urban Sidgwick, H. I., Principles of Poli-Text lines Notes lines Total lines Text Notes lines lines Total lines deal Economy, 1883 . . . . Smith, Adam, Wealth of Nations, 371 35 406 3 3 1818 2.755 2 .7S5 22 . . . 22 Walker, F. A., Land and Rent, 1888 Walker, F. A., Political Economy, 4,648 254 4,902 19 12 3 1 1888 Walker, Amasa, The Science of 2,228 «S 2.3'3 tA OO 71 Wealth, 1872 228 228 38 ■■■ 38 Total ... . J 40,516 i.578 42,094 2,6ll 288 2,919 D DOCUMENT PRESENTED TO MGR. SATOLLI BY THE REV. EDWARD MCGLYNN, D.D., IN DECEMBER 1892 AND BY HIS DIRECTION EXAMINED BY A COMMITTEE OF THE PROFESSORS OF THE CATHOLIC UNIVERSITY, AT WASHINGTON, D. C. — DECLARED TO CONTAIN NOTHING CONTRARY TO CATHOLIC TEACHING All men are endowed by the law of nature with the right to life and to the pursuit of happiness and therefore with the right to exert their energies upon those natural bounties without ­ which labour or life is impossible. God has granted those natural bounties, that is to say, the earth, to mankind in general, so that no part of it has been assigned to anyone in particular, and so that the limits of private possession have been left to be fixed by man’s own industry and the laws of individual peoples. But it is a necessary part of the liberty and dignity of man that man should own himself, always, of course, with perfect subjection to the moral law. Therefore, besides the common [equal] right to natural bounties,there must be by the law of nature private property and dominion in the fruits of industry or in what is produced by labour out of those natural bounties to which the individual may have legitimate access, that is, so far as he does not infringe the equal right of others or the common rights. •74 THE A B C OF TAXATION It is a chief function of civil government to maintain equally sacred these two natural rights. It is lawful, and it is for the best interests of the individual and of the community and necessary for civilisation that there should be a division as to the use and an undisturbed, permanent, ­ exclusive private possession of portions of the natural bounties, or of the land; in fact, such exclusive possession is necessary to the ownership, use and enjoyment by the individual of the fruits and products of his industry. But the organised community through civil government must always maintain the dominion over those natural bounties, as distinct from the products of private industry and from that private possession of the land which is necessary for their enjoyment. The maintenance of this dominion over the natural bounties is a primary function and duty of the organised community, in order to maintain the equal right of all men to labour for their living and for the pursuit of happiness, and therefore their equal right of access directly or indirectly to natural bounties. The assertion of this dominion by civil government is especially necessary because, with the very beginning of civil government and with the growth of civilisation, ­ there comes to the natural bounties, or the land, a peculiar and an Increasing value distinct from and irrespective of the products of private industry existing therein. This value is not produced by the industry of the private possessor or proprietor ­ but is produced by the existence of the community and grows with the growth and civilisation of the community. It is therefore called unearned increment. It is this unearned increment that in cities gives to lands without any improvements ­ so great a value. This value represents and measures the advantages and opportunities produced by the community, and men, when not permitted to acquire the absolute dominion over such lands, will willingly pay the value of this unearned increment in the form of rents, just as men, when not permitted ­ to own other men, will willingly pay wages for desired services. APPENDIX D >75 No sooner does the organised community, or state, arise, than it needs revenues. This need for revenues is small at first while population is sparse, industry rude, and the functions of the state few and simple, but with growth of population and advance of civilisation the functions of the state increase and larger and larger revenues are needed. God is the author of society and has pre-ordained civilisation. The increasing need for public revenues with social advance being a natural God-ordained need, there must be a right way of raising them — some way that we caij truly say is the way intended by God. It is clear that this right of raising public revenues must accord with the moral law or the law of justice. It must not conflict ­ with individual rights, it must find its means in common rights and common duties. By a beautiful providence, that may be truly called divine, since it is founded upon the nature of things and the nature of man, of which God is the creator, a fund, constantly increasing with the capacities and needs of society, is produced by the very growth of society itself, namely, the rental value of the natural bounties of which society retains dominion. The justice and the duty of appropriating this fund to public uses is apparent in that it takes nothing from the private property of individuals except what they will pay willingly as an equivalent for a value produced by the community, ­ which they are permitted to enjoy. The fund thus created is clearly by the law of justice a public fund, not merely because the value is a growth that comes to the natural bounties which God gave to the community in the beginning, but also, and much more, because it is a value produced by the community ­ itself, so that this rental value belongs to the community ­ by that best of titles, namely, producing, making, or creating. To permit any portion of this public property to go into private ­ pockets, without a perfect equivalent being paid into the public treasury, would be an injustice to the community. Therefore the whole rental fund should be appropriated to common or public uses. 176 THE A B C OF TAXATION This rental tax will make compulsory the adequate utilisation ­ of natural bounties exactly in proportion to the growth of the community and of civilisation, and will thus compel the possessors to employ labour, the demand for which will enable the labourer to obtain perfectly just wages. The rental tax fund growing by a natural law proportionately with the growth of civilisation will thus be sufficient for public needs and capacities and therefore all taxes upon industry and upon the products of industry may and should be abolished. While the tax on land values promotes industry and therefore increases private wealth, taxes upon industry act like a fine or a punishment ­ inflicted upon industry—they impede and restrain and finally strangle it. In the desired condition of things land would be left in the private possession of individuals, with full liberty on their part to give, sell, or bequeath it, while the state would levy on it for public uses a tax that should equal the annual value of the land itself, irrespective of the use made of it or the improvements ­ on it. The only utility of private ownership and dominion of land, as distinguished from possession, is the evil utility of giving to the owners the power to reap where they have not sown, to take the products of the labour of others without giving them an equivalent— the power to impoverish and practically to reduce to a species of slavery the masses of men, who are compelled to pay to private owners the greater part of what they produce for permission to live and to labour in this world, when they would work upon the natural bounties for their own account, and the power, when men work for wages, to compel them to compete against one another for the opportunity to labour, and to compel them to consent to labour for the lowest possible wages—wages that are by no means the equivalent of the new value created by the work of the labourer, but are barely sufficient to maintain the labourer in a miserable existence, ­ and even the power to deny to the labourer the opportunity ­ to labour at all. This is an injustice against the equal APPENDIX D 177 right of all men to life and to the pursuit of happiness, a right based upon the brotherhood of man which is derived from the fatherhood of God. This is the injustice that we would abolish in order to abolish involuntary poverty. That the appropriation of the rental value of land to- public uses in the form of a tax would abolish the injustice which has just been described, and thus abolish involuntary poverty, is clear; since in such case no one would hold lands except for use, and the masses of men, having free access to unoccupied lands, would be able to Acert their labour directly upon natural bounties and to enjoy the full fruits and products of their labours, beginning to pay a portion of the fruits of their industry to the public treasury only when, with the growth of the community ­ and the extension to them of the benefits of civilisation, there would come to their lands a rental value distinct from the value of the products of their industry, which value they would willingly pay as the exact equivalent of the new advantages ­ coming to them from the community; and again in such case men would not be compelled to work for employers for wages less than absolutely just wages, namely, the equivalent of the new value created by their labour; since men surely would not consent to work for unjust wages, when they could obtain perfectly just wages by working for themselves; and, finally, since, when what belongs to the community shall have been given to the community, the only valuable things that men shall own as private property will be those things that have been produced by private industry, the boundless desires and capacities of civilised human nature for good things will always create a demand for these good things, namely, the products of labour — a demand always greater than the supply; and therefore for the labour that produces these good things there'will always be a demand greater than the supply and the labourer will be able to command perfectly just wages— which are a perfect equivalent in the product of some other person’s labour for the new value which his own labour produces. 178 THE A B C OF TAXATION ITALIAN ORIGINAL OF THE PRECEDING DOCUMENT Tutti gli uomini sono investiti dalla legge di natura col diritto alia vita ed al proseguimento del proprio bene e godono per conseguenza del diritto ad esercitare le proprie forze su quei doni della natura, senza i quali il lavoro o la vita sarebbe impossibile. Iddio ha dato quest! doni della natura, cioe a dire, la terra al 1’umana famiglia in genere di modo che nessuna parte di essa e stata concessa ad alcuno in particolare, e di modo che la determinazione dei limit! della possessione privata e stata lasciata alia propria industria dell’ uomo ed alle leggi dei singoli popoli. Ma appartiene necessariamente alia liberta e dignita del 1’uomo, che 1’uomo sia padrone di se stesso (sui juris), sempre, ben s’intende, con perfetta soggezione alia legge morale. Per conseguenza oltre al diritto comune ai doni della natura, vi dev’essere per la legge della stessa natura proprieta privata e dominio private nei frutti dell’ industria ossia quel che il lavoro produce da quei doni della natura ai quali 1’individuo abbia legittimo accesso, cioe a dire, in quanto egli non infrange 1’ugual diritto deglialtri ossia i diritti comuni. Una funzione capitale del governo civile si e di mantenere ugualmente saldi questi due diritti natural!. Egli e lecito non solamente ma e per il miglior bene del 1’individuo e della comunita ed e necessario per la civilta che vi sia divisione in quanto all’ uso di porzione dei doni della natura ossia della terra, e possessione privata dei medesimi, pacifica, permanente ed esclusiva; e diffatti, questa possessione esclusiva e necessaria acciocche 1’individuo possa godere il dominio e 1’uso dei frutti e prodotti della propria industria. Ma la comunita organizzata per mezzo del governo civile deve sempre mantenere il dominio sopra quei doni della natura, affine di mantenere 1’ugual diritto di tutti gli uomini a lavorare per mantenere la propria vita e per proseguire il proprio bene ’e APPENDIX D 179 conseguentemente a mantenere il loro diritto di aver accesso direttamente o indirettamente ai doni della natura. L’asserzione pratica di questo dominio per parte del governo civile, e necessaria per la ragione che col primo cominciamento del governo civile e coll’ incremento della civilta vi arriva ai doni della natura ossia della terra un valore peculiare ognora crescente, ben distinto dai prodotti dell’ industria privata esistenti su di tali terreni e senza alcun riguardo ai medesimi. Questo valore non e gia prodotto dall’ industria del possessore o proprietario private, ma bepsi e esso prodotto dall’ esistenza della comunita e cresce mano a mano coll’ aumento e colla crescente civilta della comunita istessa. Ed e percib che questo valore vien chiamato col nome d’incremento avventizio e non guadagnato. E, da questo incremento avventizio e non guadagnato che nelle citta, per esempio, deriva ai terreni senza alcun miglioramento [come case o altro] un si grosso valore. Questo valore rappresenta e misura le opportunity ed i vantaggi prodotti dalla comunita, e quando agli uomini non sia permesso di acquistare 1’assoluto dominio sopra tali terreni, volontieri pagheranno essi il valore di questo incremento avventizio nella forma del prezzo d’arfitto, precisamente come, quando agli uomini non sia permesso d’impossessarsi di altri uomini, pagheranno essi volontieri una mercede per i servigi che si richieggono. Appena nasce la comunita organizzata, ossia lo State, che abbisogna essa di entrate. Questo bisogno di entrate e tenuissimo sul bel principio mentre la popolazione e tuttora scarsissima, 1’industria e rozza e le funzioni dello Stato sono poche e semplici, ma coll’ aumento della popolazione e col progresso della civilta si aumentano le funzioni dello Stato e vi e bisogno di sempre piu grandi entrate. Dio e 1’autore della societa ed ha preordinato la civilta. Il bisogno di pubbliche entrate crescenti sempre col progresso sociale essendo un bisogno naturale divinamente ordinate, vi dev’essere una via giusta e diritta di riscuoterle, qualche vja della quale possiamo dire con verita che essa fu nella intenzione divina. E cosa chiara che questa via» THE A B C OF TAXATION 180 giusta e diritta di riscuotere le entrate pubbliche, dev’essere in accordo colla legge morale ossia la legge della giustizia. Non dovra essa stare in conflitto coi diritti dell’ individuo e dovra trovare i suoi mezzi nei comuni diritti e nei comuni doveri. Per una bella provvidenza, che pub cbiamarsi Divina (giacche e essa fondata sulla natura delle cose e sulla natura dell’ uomo della quale Dio e ii creatore), un fondo di risorse, crescente costantemente a misura della capacita e del bisogni della societa, vien prodotto dall’ istesso aumento della societa medesima, cioe a dire, le entrate da riscuotersi dai vaiori dei beni che sono puramente doni della natura, e dei quali la societa ritiene ognora il dominio. Che 1’appropriazione di questo fondo di risorse ad usi pubblici sia e giusta e doverosa, apparisce evidentemente da cib che esso nulla piglia dalla proprieta privata degl’ individui se non quello che essi pagheranno volontieri come un equivalente a quel valore prodotto dalla comunita e del quale e lasciata agl’ individui libera facolta di godere. II fondo create in questa maniera e evidentemente per la legge di giustizia un fondo pubblico, non solamente perche questo valore e un aumento non guadagnato ed avventizio ai doni di natura i quali,furono dal bel principio dati alia comunita da Dio, ma eziandio e vieppiu per la ragione che esso e un valore prodotto dalla comunita istessa, di modo che questa rendita, riscossa dal valore fondiario, appartiene alia comunita per i! piu giusto di tutti i titoli, cioe a dire, dal produrre, dal fare o dal creare. II permettere che alcuna porzione di questa proprieta pubblica vada nelle tasche di privati senza che si paghi al tesoro pubblico un perfetto equivalente sarebbe un ingiustizia contro i diritti della comunita. Per conseguenza tutto il valore fondiario dev’essere appropriate ad usi pubblici o comuni. La riscossione di questa imposta fondiaria fara si che sia giuoco forza utilizzare adequatamente i beni offerti dalla natura, esattamente in proporzione all’ incremento della comunita e della civilta, e cosi costringera i possessor! ad impiegare il lavoro proprio o d’altrui di modo che i lavoranti che si offriranno in corrispondenza alia domanda, potranno ottenere la mercede APPENDIX D 181 precisa richiesta dalla giustizia. La entrata proveniente dal 1’imposta sui valori fondiari, crescente per forza di d’una legge naturale proporzionatamente all’ incremento della popolazione e della civilta, sara percio suffciente a tutti i bisogni pubblici ed alle pubbliche capacita, e per questa ragione tutte le imposte sail’ industria e sui prodotti dell’ industria potranno essere abolite, e si dovrebbero abolire. Mentre 1’imposta sui valori dei terreni promuove 1’industria e percio aumenta la ricchezza privata, le imposte sail’ industria hanno la forza d’una multa o d’una punizione inflitta all’ industria, la impediscono, la ristringono e finalmente la strangolano. In questa condizione di cose i terreni sarebbero lasciati nella possessione privata di invidui, con piena liberta da loro parte di donate, di vendere o di lasciare agli eredi, e lo stato da altra parte riscuoterebbe per usi pubblici una rendita in forma di imposta che equivarrebbe al valore annuo dei medesimi, terreni senza aver riguardo all ’uso che ne facciano od ai miglioramenti che vi producono. L’unica utilita della proprieta privata ossia il dominio private del terreno, in quanto si distingue dalla possessione od occupazione, si e la mala utilita del dare ai proprietari il potere di mietere dove non hanno seminato, di pigliare i prodotti del 1’altrui lavoro senza dare a loro un compenso— il potere di impoverire le masse degli uomini e di ridurle a quel che e praticamente una specie di schiavitu; dacche sono essi costretti a pagare a proprietari privati la piu gran parte di quello che producono, e cio devono dare per il permesso di vivere in questo mondo e di esercitarvi il loro lavoro, quando essi vogliono lavorare direttamente sui bene naturale— il terreno— per conto proprio; ed il potere di costringere gli uomini che lavorano, per una mercede, di far a gara 1’uno contro 1’altro, per 1’opportunita di lavorare — acconsentendo cosi a lavorare per la piu tenue mercede — una mercede nullamente equivalente al nuovo valore creato dall 'opera del lavorante ma che e semplicemente ed appena sufficiente a mantenere il lavorante in una miserabile esistenza — il potere finalmente di negate del tutto al lavorante THE A B C OF TAXATION 182 1’opportunita di impiegare il suo lavoro. Questo e un ingiustizia contro il diritto uguale di tutti gli uomini alia vita ed a! proseguimento della propria felicita— un diritto fondato sulla fratellanza degli uomini, la quale e derivata dalla paternita di Dio. Questo si e la ingiustizia che noi vorremmo abolire affine di abolire la poverta involontaria. Che 1’appropriazione del valore avventizio e non guadagnato del terreno ad usi pnbblici nella forma di una imposta, varrebbe bene ad abolire la ingiustizia la quale or ora abbiamo dimostrata e per conseguenza ad abolire la poverta involontaria, apparisce chiaramente; giacche in tal caso nessuno occuperebbe dei terreni se non per utilizzarli e le masse degli uomini, avendo libero accesso ai terreni non-occupati, sarebbero in istato di esercitare il loro lavoro sui beni della natura e di godere appieno dei frutti e dei prodotti del proprio lavoro, allora solamente cominciando a pagare una porzione dei frutti della propria industria al pubblico erario quando, coll’ aumento della comunita ­ e coll’ estensione a loro dei benefizi della civilta, deriverebbe ai loro terreni un valore fondiario di rendita distinto dai prodotti della loro industria il qual valore essi pagherebbero volontieri come 1’esatto equivalente dei nuovi vantaggi a loro derivanti dalla comunita; e dippiu in tal caso, non sarebbero costretti gli nomini a lavorare per padroni per una mercede minore di quella che e assolutamente la giusta mercede, cioe, 1’equivalente del nuovo valore create dal loro lavoro; imperciocche gli uomini certamente non acconsentirebbero a lavorere per una ingiusta mercede, quando essi potessero ottenere una mercede del tutto giusta lavorando per proprio conto; e finalmente giacche quando quel che appartiene alia comunita sara stato dato alia comunita, allora le sole cose di valore che gli uomini possederanno come proprieta privata saranno quelle cose che sono state prodotte dalla privata industria, i desideri e le capacita senza limiti della incivilita umana natura, di usare e godere dei beni, creera una domanda per tali beni che sono i prodotti del lavoro, una domanda sempre maggiore del 1’offerta; e percib vi sara sempre, per quel lavoro che produce APPENDIX D 183 questi bent, una dornanda maggiore del 1’offerta e cost il lavorante potra pretendere effettivamente alia mercede veramente giusta, la quale sara un precise equivalente reso dal prodotto del 1’altrui lavoro, in contraccambio del nuovo valore che egli produce col lavoro proprio. There has recently appeared from the pen of a Catholic layman ­ a book* in which the author tries to extenuate the importance ­ of Monsignor Satolli’s decision by intimating that it represents only the simple individual opinion of the four professors. ­ Loyalty to truth dictates that this criticism should be here offset by some pertinent facts in the case. Monsignor Satolli in a former visit to the United States in 1889 and as the guest of Archbishop Corrigan, had ample opportunity for investigation of the land question from the viewpoint of the United States and of Rome. Hence he had four years of time in which he might have made a preliminary examination. ­ Monsignor Satolli was credited with having been one of those consulted when the Pope’s Encyclical, Return Novarum, of May 15, 1891, was in preparation, and was thereby the better able to judge what was in accord or in conflict with it. Among the important duties of his mission was to bring to a satisfactory conclusion what was then known as the McGlynn Controversy. Dr. McGlynn, at the request of the Apostolic Delegate, submitted to him through his counsel, Dr. Burtsell, a statement in Italian of his views on the subject of private property in land. On this statement Monsignor Satolli consulted four of the professors of the Catholic University. The decision of Moncignor Satolli that there was nothing contrary to Catholic doctrine in the opinions of Dr. McGlynn as exhibited “* Fundamental Fallacy of Socialism,” Arthur Preuss, published by B. Herder, St. Louis, Mo., 1908. / 18 4 THE A B C OF TAXATION in that statement was official, and was followed by the return of Dr. McGlynn to active duty. E A PROTEST AGAINST UNJUST TAXATION The following remarks were addressed by the author to the assessors of the City of Newton, Mass., less with the idea of securing an economic advantage through a deduction of his tax payments than by reason of a hope that he might strike a blow for the acceptance of single tax principles of taxation. “Gentlemen— I am assessed on my house lot, Newtonville Avenue and Bellevue Street, 20,264 square feet, at fifteen cents a foot; on additional land, less desirable, facing on Lewis Terrace, 17,496 feet, valued at ten cents a foot, in all — On land, $4,750 at $16.20 per thousand $76.95 Onhouse,$9,oooat$i6.zoperthousand 145.80 Personal estate and water tax . . . . . . . 74-4° Total $297.15 “To the valuation of the land, which is fair and reasonable, I make no objection. Against so large a tax upon my house I desire to protest, and I respectfully ask its abatement not only because the actual cost of the house was fictitious and exaggerated ­ beyond any true market value, but because its selling value is greatly depreciated by the surroundings, which to-day would not justify a house of much more than half its pretensions. Not only have I by building my house contributed liberally to create the value of my neighbours’ land, but the best part of my substance has in the last ten or a dozen years been largely wasted in trying, by private improvement and adornment of both house and land, to counteract the adverse influences of coal yards and freight yards and steam whistles. I have thus attempted to rescue and protect my neighbours’ land values just APPENDIX E 185 as much as my own, and mine have rapidly perished in the attempt. “I think we are all agreed that the value of the land of Newton is created by the whole community of Newton, with its improvements, ­ character, activity, and its industry. Are we not also agreed upon the fact, equally important and more patent perhaps to the casual observer, viz., that this land value is maintained from year to year by the public expenditure of Newton’s ­ taxes ? When yoijr public service ceases or languishes, when you stop the care of streets, the water supply, fire department, ­ or the schools, land values respond almost instantly. All these public expenditures of the people’s money add nothing to the value of a house—which value is ultimately the cost of building another house as good— but they do add to or rather maintain the value of my neighbours’ land and mine, which otherwise would rapidly depreciate in value. Why should you tax the decaying value of my house, to help maintain the augmenting ­ value of hundreds of other men’s vacant acres, standing unused, just like so many idle mills supplied with the main shafting from nature’s power house with a great city’s lavish supplies on tap ? “There would be far more reason to ask me and others to pay taxes on our houses, if public service were at all limited to the needs of these houses, instead of being, as it is, vastly in excess, if not indeed double, that need. This public service costs the same for a vacant lot as it does for the adjoining similar lot with a $20,000 house on it. 1 object to being taxed to pay for the other man’s share of this public service. “Thus I am asking abatement of a tax that is H upon improvements and personal property and fa upon land, because it is in violation of the requirements of the constitution of the State of Massachusetts that all assessments shall be ‘proportionate ­ and reasonable’; because it is more than my proportionate ­ and reasonable share of the total assessment—unequal taxation for equal benefits. “Now for what purpose do you lay taxes except for public 186 THE A B C OF TAXATION i service ? What more reasonable than to lay these taxes in proportion to public service rendered, in proportion to benefits bestowed; that is, in proportion to special privileges enjoyed f The land value is a perfect reflection of this constant service. The same is not true of houses or other improvements or personal property. “Thus I am constrained to ask by what canon of taxation do you tax me so far beyond the public service that I enjoy as indicated in the market value of my land ? Surely it is not taxation ­ according to ability, but rather according to a spendthrift disposition. My house adds not a dollar to the city’s expense on my account. That expense would be the same if my house should burn down. The same is true of my personal estate. So large a tax cannot be on account of special privilege. It is no special privilege to me to border on a coal yard and a freight yard and a railroad. It is no special privilege to me that while the woods of Newton are full of concrete sidewalks, I have lived twenty-four years in the vain hope of access to either the Newton or Newtonville station over a clean sidewalk. It is no special privilege that until within a very few years the sidewalk to Newtonville has been at seasons impassable because of mud and surface water ankle deep, or that to-day the sidewalk to the Newton station, one-half plank and the other half gravel, is only wide enough to accommodate people Indian file. “The land value is the balance or equilibrium between these public advantages and disadvantages. If assessed according to my proportionate and constitutional share of the public expense,my tax would be determined in this wise: as $20,927,850 (the total land value of Newton) is to $4,750 (the value of my land), so is $895,915 (the total tax of Newton) to $203.35 (my proportionate share of that tax). I am taxed to-day $297.15, or $93.80 in excess of this fair amount. It is the abatement of this excess that I respectfully ask your honourable board to grant.” APPENDIX F 187 F AGREEMENTS IN POLITICAL ECONOMY* [The following address, delivered at a Round Table Conference of The American Economic Association is thought worthy of inclusion here, because it is believed that the plan proposed, defended, and adopted is bound to prove fruitful in advancing every good cause the promotion of which depends upon the widespread knowledge and acceptance of sound economic opinion.] I feel highly honoured in having been called to the chairmanship ­ of a Round Ta£)le of the American Economic Association ­ for the discussion of Agreements in Political Economy, a topic that has long appealed to me as of the very greatest interest and importance. I have been engaged for several years in a sort of probationary work, known to many, perhaps to most of you — that of trying to elicit from economists agreement upon certain definitions and statements of principles, touching land value and land taxation. Perhaps the best illustration I can give of the plan I have in mind is a statement of the present fruits of this effort, imperfectly indicated by the following recorded canvass of opinions: 1902. i. Definition: Ground rent is what land is worth yes no for use . . • - • • • 135 0 1902 1. Definition: Public Franchises are exclusive free privileges granted to one or several persons incorporated, ­ from which the mass of citizens are excluded. These franchises usually pertain to land, including as they do (to use the language of the New York Legislative Ford Bill) all “rights, authority, ­ or permission to construct, maintain, or operate, in, under, above, ypon,or through, any streets, highways, or public places, any mains, pipes, tanks, conduits, or wires, with their appurtenances, ­ for conducting water, steam, heat, light, power, gas, oil, or other substance, or electricity for telegraphic, telephonic, or other purposes” Hence their classification, by the above Act, as “land values ” maybe confirmed as correct, and their annual values properly classed as ground rent . 103 25 * Paper presented at a Round Table Discussion at the Annual Meeting of the American Economic Association, Madison, Wis., December 28, 1907. 188 THE A B C OF TAXATION 1902. 1902. 1902. 1904. 1904. 1906. 3. A tax upon ground rent is a direct tax and cannot be shifted ....... 4. The selling value of land is, under present conditions in most American states, reduced by the capitalised tax that is laid upon it . . . . . 5. Hence the selling value of land is, to the same extent, an untaxed value, so far as any purchaser, subsequently ­ to the imposition of the tax, is concerned 6. Definition: Monopoly: Control, absolute or substantial, temporary or permanent, of the supply end hence of the price of any commodity or service, ­ whether maintained (1) through control of of natural resources, (2) through some special and exclusive right or privilege conferred by law, (3) through combination or concert of action, or (4) by any other means which are not available to similar capital and skill in competitive hands. 7. It would be sound public policy to make the future increase in ground rent a subject of special taxation. 8. The Selling Value of Land is an Untaxed Value (Illustration No. 19) YES NO 108 26 ioj 17 9 5 2 4 86 3 77 10 59 2 The concrete suggestion I would here offer is that, with the work already done for a nucleus, the same method be extended, corrected, improved, and adapted to include, as experience may justify, other, and finally perhaps all points of economic theory, and the practical economic rules and principles to be deduced from them. I would emphasise the great importance of such a step as a means of securing agreement on economic principles, and not as a method of advancing any particular programme of reform. Let it be supposed, for instance, that the association itself should see fit to adopt a resolution somewhat as follows: Whereas: This association, recognising the value of substantial ­ agreement upon the largest possible number of definitions of common terms and of economic principles, commends effort toward the establishment and general enlargement of such agreement and favours response and cooperation from the members of the association, therefore Resolved: That the President is authorised to appoint a general committee of not more than twelve members, upon whose recommendation definitions and statements of principles APPENDIX F 189 may be submitted to the full membership of the association for approval or criticism; the progress of such agreement to constitute an available subject of annual discussion and report in the proceedings of the association, and be it further resolved that this general committee may appoint or confirm working committees in various departments to conduct the necessary correspondence and report partial or preliminary agreements to the general committee.* An incident of such a concerted movement, as above outlined, might be an enthusiast^ equal to or exceeding that of the recent Columbus Conference on Taxation, an interest that promises to be permanent and increasing. Work of this nature, which must of course be a growth, might afford pleasure as well as profit, and might readily enlist the interest of those who would make of themselves centres of agitation and development in the various fields of Capital, Labour, Rent, Wages, Interest, Taxation, Population, Production, Distribution, etc. If such a race is worth the running, what more appropriate than that the American Economic Association should set the pace ? It is not expected that agreements like these will be new discoveries, but simply old discoveries brought into stronger light, formulated, and subjected to continuous correction and perfection, through reconciliation of differences and re-statement ­ of old agreements to conform to the latest thought. Such an assembly and exposition of essential principles can but be of inestimable profit to the student, the teacher, the university, and the State, compassing, as it must eventually, an accepted body of principles — principles that may be taught fearlessly by teachers old and young, experienced or inexperienced, leading or led, and with a confidence and satisfaction akin to that pervading the domain of exact science. On the relatively solid ground of such accepted doctrine the * Professors Hollander, Carver, Seager, Fetter and others spoke in approval of the plan as presented, Professor Carver expressing the opinion that its adoption ­ would mark a new epoch. At a subsequent business meeting of the association the executive committee unanimously recommended, and the association adopted, the resolution without dissent. 190 THE A B C OF TAXATION college graduate will take with him to his home and into the concerns of life something that will be to him an armour and a weapon always at hand — an economic code that shall be as a handbook to the publicist, politician, and statesman—that shall make of the college men in Congress and Legislature not dreary followers of a groping public sentiment, or the confident advocates of exploded economic opinion, but instructors and leaders of their time. G DETAILS OF ONE HUNDRED AND TWENTY BOSTON PROPERTY SALES* Number of Assessed Valuation Assessed Valuation Estate of Land of Buildings I $67,200 $75,000 2 43 >5°° 15,000 3 245,000 85,000 4 65,000 10,500 5 77,600 22,400 6 89,500 17,5°° 7 196,000 60,000 8 42,000 11,000 9 10,800 4,000 10 101,500 24,500 11 17,000 3*°°° 12 33,700 2,300 •3 6,000 2,700 14 21,200 15,000 *5 S9>50° 16 21,50° 10,500 17 22,400 8,000 1$ i35>7oo 75,ooo >9 492,000 232,400 20 10,800 5, 100 21 49,50° 9,000 22 90,000 17,000 *3 14,30° 2,700 24 48,000 7,000 *5 68,800 10,000 26 164,600 120,400 27 1,800 2,100 28 167,000 100,000 Total Price Indicated by Revenue Percentage ot Selling Price Represented ­ by Assessed Stamps Valuation on Deeds Valuation $142,200 $165,000 86 58,500 75>°°° 78 330,000 625,000 75.5°° 75*5°° 100 100,000 120,000 83 107,000 130,000 82 256,000 280,000 9 1 53,000 75,OOO 70 14,800 20,000 74 126,000 175,000 7 2 20,000 28,000 71 36/300 45,000 80 8,700 8,500 102 36,200 42 poo 86 175,000 290,000 60 32,000 35*500 92 30,400 46,000 66 210,700 210,000 100 724,400 925,000 7 S 15,900 30,000 53 58,500 46,500 I2 S 107,000 136,000 78 17,000 21,000 80 55,OOO 85,000 64 78,800 94,000 83 285,000 425,000 67 3*9°o 3*500 in 267,000 333*00° 80 ♦ For comments see page j6. APPENDIX G igr Number of Assessed Valuation Assessed Valuation Estate of Land of Building's i 9 $14,200 $7,000 3° 39>3°° 11,50° 31 4,200 3,100 3» 105,000 25,000 33 29,000 6,000 34 34,too 7,000 35 79,300 7,000 3 6 10,000 3,000 37 79>3°° 20,000 38 54,000 8,000 39 25,900 12,000 40 131,000 28,000 41 14,000 a3>5°° 4» 7,7°° 14,900 43 8,600 8,400 44 2,000 7,500 45 27,500 26,500 46 9,200 11,800 47 14,000 20,000 48 11,000 9,000 49 9,200 10,300 5° 11,50° 56,000 5' 6,000 17,000 S 1 4*4°° 6,100 53 14,300 22,700 54 26,000 5,000 55 5,900 12,100 S* 3,200 6,500 57 17,000 27,000 58 16,200 10,800 59 I 3»3°° 14,000 60 3,600 5,200 61 9,200 11,800 61 8,300 29,200 63 4,000 6,700 64 18,000 18,000 65 7,600 20,900 66 13,300 20,700 67 3,600 4,200 68 30,000 31,000 69 63,000 20,000 70 18,000 13,000 71 7,800 17,000 7» 4,800 16,000 73 18,000 11,500 74 6,300 10,700 75 8,800 8,200 Total Price Indicated by Revenue Percentage of Selling Price Represented ­ by Assessed Stamps Valuation on Deeds Valuation $21,200 $23,500 90 50,800 60,000 84 7>3°° 9,50° 76 130,000 160,000 81 35,000 35,000 loo 41,100 55,ooo 74 86,300 122,000 70 13,000 12,500 104 99,300 135, 000 73 62,000 69,500 89 37,900 57,000 66 159,000 200,000 79 37,5°° 39,000 96 22,600 29,000 77 17,000 16,500 103 9>S°° 10,000 9S 54,000 65,000 8j 21,000 22,000 95 34,000 47,50° 71 20,000 21,000 95 19,500 22,000 88 67,500 75,000 90 23,000 33,ooo 69 10,500 10,000 IO S 37,000 42,000 88 31,000 38,000 81 18,000 23,500 76 9,700 9,500 102 44,000 47,000 93 27,000 25,000 108 27,300 27,000 101 8,800 9,000 97 21 /XX) 22,000 95 37,5°° 42,000 89 10,700 9,500 112 36,000 32,000 112 28,500 35)00° 81 34,000 33,000 i°3 7,800 9,000 86 61,000 80,000 76 85,000 91,000 93 31,000 38,000 81 24,800 28,000 88 20,800 25,000 83 29,500 27,000 109 17,000 1 5»5°° 109 17,000 22,000 77 193 THE ABCOF TAXATION Assessed Assessed Total Price Indicated by Revenue Percentage of Selling Price Represented ­ by Number of Valuation Valuation Assessed Stamps Estate of Land of Buildings Valuation on Deeds Valuation 76 $14,700 $12,300 $27,000 $25,000 108 77 6,200 15,000 21,200 25,500 83 78 18,800 11,200 30,000 29,000 I03 79 10,800 10,200 21,000 25,000 84 80 6,400 II,600 18,000 18,000 IOO 81 3»7°° 6,800 10,500 10,500 IOO 82 3,600 4,500 8,100 10,000 81 83 4,500 1,200 5,700 6,500 87 84 1,30° 2,500 3,800 4,000 95 85 4,800 8,200 13,000 •s.s°° 83 86 1,000 3,500 4,500 5,000 90 87 4,200 10,000 14,200 17,000 83 88 2,900 3,600 6,500 8,500 76 89 2,800 5,000 7,800 7,800 IOO 90 1,600 2,600 4,200 4,500 93 9 1 12,500 64,000 76,500 70,000 109 92 1,600 3,600 5,200 5,800 89 93 4,000 6.500 10,500 12,000 87 94 3.5°° 4,800 8,300 7,000 ll8 95 8,400 25,000 33,400 25,000 •33 96 1,000 1,5°° 2,500 2,300 108 97 2,400 2,900 5,300 4,000 132 98 5,800 7,200 13,000 15,000 86 99 3,200 5,200 8 ,400 9,300 90 IOO 3,100 6,000 9,100 8,000 113 IOI 6,000 5,200 11,200 12,000 93 102 3,600 5,500 9,100 10,000 9' IO3 2,700 6,000 8,700 10,000 87 IO4 30,000 14,500 44,50° 45,000 98 i°5 15,700 8,000 23,700 20,000 118 I06 6,300 7,700 14,000 12,000 ll6 107 4,300 7,700 12,000 13,000 92 IO8 5,400 5,000 10,400 11,000 94 109 3,000 4,000 7,000 8,000 87 no 25,200 2,500 27,700 29,000 95 III 3,900 9,000 12,900 15,000 86 IIZ 6,200 9,800 16,000 16,000 IOO ”3 8,000 16,000 24,000 27,000 88 114 5,600 9,500 15,100 12,000 125 ”5 4,000 5,000 9,000 10,000 90 ll6 4,800 6,000 10,800 10,000 108 117 1,600 5;4°° 7,000 5,500 127 118 2,000 1,600 3,600 3.675 97 119 9,000 13,000 22,000 27,000 81 120 8,000 6,000 14,000 14,000 IOO Totals $3,758,600 $2,079,700 $5,838,300 $7,29 I >37S 80 H DETAILS OF SEVEN HUNDRED AND FIFTY-ONE BOSTON RENTALS* A B O D 1 Total Assessed Assessed Net Rental I Assessed Valuation Valuation after Paying Valuation. of Land. of Buildings. Taxes. I $914,000 $339,000 $575,000 $75,000 2 8,000 3,600 4400 902 3 1 3>5°° 6,500 7,000 1,600 4 28,600 6,600 22,000 3> x 77 s 133,000 112,000 21,000 10,000 6 185,200 149,200 36,000 10,000 7 13,400 7,40° 6,000 802 8 77,300 54>3°° 23,000 3, 100 9 66,800 47,800 19,000 4,500 10 21,800 20,300 1,500 i,i77 11 5,900 2,900 3,000 260 E r 6 n 1 Less 10 per Cent on Buildings for Interest, Insurance, Repairs, and Net Income Per Cent .of Net Income on Assessed , Valuation What the User Pays for the Use of the Land, i. e., the Net Ground Rent Gross Value of Land, the User’s Rent Capitalised at 5 per Depreciation. from Land. of Land. Plus the Tax Cent. $57.5°° $17,500 5- 1 $22,517 $450.34" 440 462 12.8 515 10,300 700 900 13.8 996 19,920 2,200 977 14.8 W! 2I,5°° 2,100 7,900 7-1 9.557 191,140 3,600 6,400 4-3 8,608 172,160 600 202 2.7 3 11 6,220 2,300 800 1.4 1,604 32,080 1,900 2,600 5-4 3>3°7 66,140 150 1,027 5-•>3 2 7 26,540 30° —40 —13 3 60 * In each of these cases there is deducted from the net rental (column D) 10 per cent of the assessed valuation of buildings (column C) for interest, depreciation, insurance, and repairs, leaving a balance of income (column F)to be credited to the land. The valuation of the land (column 3), expressed as thousands of dollars and fractions thereof, multiplied by Boston’s tax rate ($14.80) plus the net rent (column D) gives what the user pays for the use of the land {net rent plus taxes, column H). This gross ground rent which the user pays (column H) multiplied by twenty, i. e., capitalised at 5 per cent, gives the gross capitalised ground rental value of the land (column I). N 3« 37 3* 39 ¥> 41 4* 43 44 45 v 46 47 48 49 5° S* 5 2 53 54 57 58 59 60 61 62 63 64 6j 33,500 24/500 18,500 7,200 150,700 118,700 155,000 123,000 117/500 26,500 98,500 76,500 141,000 111,000 34,800 30,600 56,800 51,800 57,300 45,3°° 127,700 104,200 6,500 4,300 6,000 3,300 7,500 4,300 5,800 3,800 54°° 2,800 12,500 6,500 5,900 3,700 5,500 3,700 13,200 10,200 20/500 10,100 15,500 8,600 9,900 5,90° 27/500 13,800 103,300 80,300 5,800 2,800 67/X50 27/500 3',S°° 30,000 54400 35,4°° 6,700 4,200 9,500 1,964 11,300 1,826 32,000 8,500 32,000 74x50 90.500 20,268 22,000 6,442 30,000 11,013 4.200 i,94S 5,000 34»° 12,000 4,000 23.500 4,97° 2.200 79 2 2,700 595 3.200 7°7 2/500 446 2,600 555 6,000 775 2.200 537 1,800 519 3,000 1,489 9.900 2.4.04 6.900 1,115 4,000 754 13.200 2,600 23,000 8471 3,000 635 40/500 5,608 1.500 574 19/500 3,595 2.500 4°° 95° 1,014 4.2 1,13° 696 9.6 3,2°° 5>3°° 4-4 3,2°° 3,800 3-9>°5° 11,218 42.3 2,200 4,242 5-5 3,ooo 8,013 7-2 420 •>525 5-5<--> 2,500 4.8 1,200 2,800 6.2 *>35° 2,620 V 2. S 220 572 *3-3 270 325 9.8 32° 387 9-200 246 6.4 260 295 10.5 600 !75 2.7 220 317 8.6 180 339 9.2 30° 1,189 11.7 990 1,414 14-690 425 4.9 400 354 6. 1,320 1,280 9.2 . 2,300 6,171 7.6 300 335 12. 4,000 1,608 6. 150 424 1-4 1,900 1,695 4.8 250 150 3.6 I. 369 27,380 802 16,040 7/556 141,120 5,620 112400 II, 610 232,200 5,374 107,480 9,656 193,120 1,978 39,560 3,266 65,320 3,470 69400 4,162 83,240 63s 12,700 374 7480 450 9/500 302 6,040 336 6,720 2?I 5*20 371 7,420 393 7.86o 1,340 26,800 I,56l 11,260 552 11,040 441 8,820 1,484 29,680 7,359 147,180 376 7,520 2,007 40,140 868 17*360 2,^19 44,38o ^ 212 4,240 THE A B C OF TAXATION APPENDIX H e JS a A Total Assessed B Assessed Valuation 0 Assessed Valuation D Net Rental after Paying £ Less 10 per Cent on Buildings for I nterest, Insurance, * Repairs, and z Valuation. of Land. of Buildings. Taxes. Depreciation. 66 $32,500 $13,800 $18,700 $2,099 $ 1,870 67 128,000 112,000 16,000 9>5°5 1,600 68 48,800 38,800 10,000 4,278 1,000 69 20,900 15,400 57500 804 550 70 12,500 6,900 5,600 715 560 71 9,800 7,000 2,800 695 280 72 15,900 12,400 3,500 76s 350 73 13,000 7,000 6,000 1,008 700 7+ 124,000 113,800 10,200 6,000 1,020 75 12,500 7,100 5,400 775 540 76 100,000 46,000 54,000 6,834 5,400 77 20,500 6,900 13,600 1.977 1,360 78 317,000 269,600 47,400 15,000 4,740 79 58,000 I 3^5°° 44,500 9> I 4 I 4,450 80 57,000 34,000 23,000 4,214 2,300 81 61,500 55>5°o 6,000 2,300 600 82 200,000 170,000 30,000 9,940 3,000 8 3 220,000 1 99,500 20,500 8,744 2,050 84 56,400 47,900 8,500 7,365 850 85 2,000 1,300 700 210 70 86 36,30° 22,000 14,30° 1 >963 2,200 87 77,5°° 70,500 7,000 3,000 700 88 28.000 12,900 15,100 1,983 1,510 89 41,900 23,900 18,coo 4,780 I,800 P G PerCent of Net Income on Assessed H What the User Pays for the Use of the Land, i. e., the Net Ground I Gross Value of Land, the User's Rent Capitalised ON : Income Valuation Rent at 5 per n Land. of Land. Plus the Tax Cent, $229 i .6 $433 $8,660 -1 7,905 7-9,5*> 2 191,240 I! 3,278 8-5 3>85 2 77,040 254 1.6 482 9,640 •55 2.2 2 57 5,140 > 4'5 5-9 518 10,360 w 4iJ 3-4 598 11,960 308 4-4 411 8,220 0 4,980 2.4 6,664 133, 2 8o O 2 35 3-3 34° 6,8oo -n *,434 3-i 2 ,”5 42,300 . 1 6l7 8.8 719 14,380 > X > 10,260 3-8 14,250 285,000 4,691 34-7 4,891 97,820 1,914 5-6 *417 48,340 H 1,700 3-2 >5 21 50,420 6,940 41 9,45 6 189,120 O 6,694 3-4 9,646 192,920 z MIS 3 - 2 2,224 44,480 140 1.08 i59 3,180 m 1. 88 1,760 2,300 33 3,343 66,860 473 3-7 664 13,280 2,980 I2 -5 3,333 66,660 90 9 X 22,200 8,200 14,000 35/doo 28,000 7,000 9 2 24,zoo 19,200 5,000 93 17,500 14,000 3,5°° 94 27,900 26,400 1,500 95 1 3>5°° 10,500 3,000 96 4,000 2,100 1,900 97 4,500 2,500 2/300 98 4,900 3,200 1,700 99 9,300 6,300 3,000 100 6,000 3,700 2,300 101 6,300 4,000 7,300 102 24,600 20,700 3,900 103 9,100 7, io ° 2,000 104 7, 200 6,000 1,200 1Q 5 8,300 6,000 2,300 106 8,300 6,coo 2,300 107 7,900 5,60° 2,300 108 6,900 4,3°° 2,600 109 7,600 5,300 7,300 no 7,5°° 4,700 2,800 in 7/300 4,700 7,300 112 6,300 3,5°° 2,800 113 4,700 2^00 2,300 114 4,700 2,400 7,300 115 7,300 4,700 2,600 116 5,i°° 3,3°° 1,800 117 5, 200 3,4°° i,Soo 118 2,800 1,600 1,200 H9 3^00 1,500 1,700 2,311 Moo 911 11.1 7,°95 700 1,395 5-2,147 500 1,642 8.6 1,173 35° 823 5-9 587 150 437 1-7 640 300 340 3-7 420 190 230 11. 353 200 153 6.1 57° 170 400 12.5 Si 2 3°° 212 3-4 33i 230 !0. v 2.7 377 230 97 2.4 236 39° — 154 345 200 145 2. 743 120 173 2. 417 230 IS? 3-i 417 230 IS? 3-i 363 230 133 2.3 378 230 I48 3-4 368 230 I38 2.6 369 280 89 i-9 316 230 86 1.8 567 280 287 8.2 350 230 120 5-35° 230 120 5-372 260 112 7-4 785 180 105 3-7 283 180 i°3 3-199 120 79 4-9 311 170 141 9.2 ,037 20,640 ,809 36,180 ,976 38,520 i°3° 20,600 827 16,540 495 9,900 261 5,220 190 3,800 447 8,940 3°5 6,100 i55 3,100 > i5 6 3,120 IS 2 3,040 750 5,000 tT? >71 212 4,740 z, 276 5,S7o D 276 5,570 X 216 4,37o 211 4,220 X 216 4,320 158 3,16° 155 3,100 339 6,780 i55 3,100 155 3,!00 181 3,620 i54 3,080 •S3 3,060 102 2,040 \Q 163 3,260 JJ 1 E 2 120 IZI 122 123 124 125 126 127 128 I29 i j° 13 1 132 >33 >34 >35 136 137 138 >39 140 >4> 142 >43 A B 0 Total Assessed Assessed Assessed Valuation Valuation Valuation. of Land. of Buildings. $9,900 $5,900 $4,000 64,000 29,000 35,000 12,000 5,500 6,500 40,500 3>,S°° 9,000 7,600 3,600 4,000 3,500 1,500 2,000 631,300 331,300 300,000 8,300 3,3°° 5,000 33,000 9,000 24,000 7,700 2,500 5,200 23,000 10,000 13^00 25,800 16,600 9,200 II,8oo 5,800 6,000 17,5°° 7,500 10,000 8,800 4,800 4,000 6,600 2,600 4,000 11,200 5,000 6,200 8,300 2,400 5>9°° 4,600 2,900 1,700 6,700 3,000 3 >7oo 11,500 3,900 7,600 11,500 3,900 7,600 »,5oo 3,900 7,600 16,000 8,000 8,000 D E F Net Rental after Paying Less 10 per Cent on Buildings for 1 nterest, Insurance, Repairs, and Net Incom% Taxes. Depreciation. from Land. $754 $400 $354 7,963 3>5°° 4,463 822 6 50 172 2,800 900 1,900 >,3°3 400 9°3 298 200 98 50,000 30,000 20,000 777 500 277 54112 2,400 2,6l2 486 520 —34 1,810 i,3°o 5 IQ 1,500 920 580 ',325 600 7^5 1,121 1,000 121 670 400 270 502 400 102 938 620 3*8 597 59° 7 674 170 504 789 37o 419 1,030 39° 640 >4330 390 640 14330 390 640 >,363 800 563 6 H 1 What the User Gross Value PerCent of Pays for the of Land, Net Income Use of the the User’s on Land, i.e.,the Rent Assessed Valuation Net Ground Rent Capitalised of Land. Plus the Tax Cent. 6. $441 $8,820 >5-4 4,892 97,840 31 253 S,°6o 6. 2,366 47,320 25-956 19,120 6.5 120 2,400 6. 24,903 498,060 8.4 325 6,500 29. 2,745 54>9°° —>-3 3 60 S> 658 13,160 3-5 825 16,500 >2.5 810 16,200 1.6 232 4,640 5.6 34> 6,820 4-140 2,800 6.3 392 7,840 •3 42 840 >7-3 547 10,940 >4-463 9,260 16.4 697 *3>94° 16.4 697 I 3>94° 16.4 697 13,940 7-681 13,620 vO CO >44 32,500 27,300 145 8,300 3>3°o 146 7,000 3,70° 147 12,200 7,800 148 28,800 21,800 >49 6,900 5,100 iS° 11,500 8,500 151 11,000 5,000 152 19,000 10,800 >53 11,100 3,900 >54 8,200 5,200 >55 8,200 5,200 >5 6 10,200 5,20° >57 14,400 6,90° 158 21,000 16,000 >59 5,60° 2,800 160 25,500 11,200 161 16,500 9,5°° 162 14,000 9400 163 17,400 14400 164 13, 000 6,000 165 39,000 20,000 166 39,S 00 21,000 167 29,500 21,600 168 84,000 29,500 169 23,50° II poo 170 4,5°° 2,200 171 6,500 3,300 172 176*0° 6,300 173 6,300 3,!00 5,200 1,119 520 56*0° 767 5°o 3,300 SS 6 33° 4400 7>4 440 76*00 >,774 700 1,800 448 180 36*00 670 3°o 6,000 >6*37 boo 8,200 1,559 820 74oo 736 720 36»o 479 3°° 36*00 599 300 56>oo 849 500 7,5°° 1,287 75° 56*0° 1,639 S°° 2,800 542 280 14,300 2,523 >43° 76*0° 93 6 700 4,600 >493 460 3,000 1422 300 7,000 2,208 700 19,000 2423 1,900 18,500 2415 1,850 7,900 2,643 790 54,500 >0,557 545° 12,500 3452 >45° 2,300 353 130 3,200 786 320 10,700 1,602 1,070 3400 447 320 599 2.1 >6»3 267 8. 3>5 226 6.1 280 274 3-5 389 >6*74 4-9 1,396 268 5-3 343 37° 4-3 495 437 8.7 S'* 739 6.8 898 16 ■4 73 >79 3-4 256 299 V 5-7 376 349 6.7 426 537 7-7 639 1439 7 • 1 J,375 262 9-3 3°3 1,093 9-7 1,258 236 2-5 376 833 8.8 972 1,122 7-7 i,335 1,508 25-1,596 523 2.6 819 565 2.7 875 1,853 8-5 2,172 S,'°7 17.3 5-543 2,202 20. 1,364 123 5.6 155 466 >4-1 5i4 S3 1 8.4 625 i*7 4« 172 20,060 6,300 5,600 7.780 27,920 6,860 9,900 10,220 17,960 1,460 5,120 7.520 8.520 12.780 27.500 6,060 25,160 7.520 19.440 26,700 3 >,920 16,380 17.500 43.440 110,860 47.280 3>>°o 10.280 *2,500 >5 3,440 VO ■■ THE A B C OF TAXATION APPENDIX H s Total Assessed 3 Assessed Valuation z Valuation. of Land. 174 $6,500 $4,000 175 5,5°° 4,000 176 6.400 4,000 177 21,700 14,700 178 34,ooo 25,30° 179 42,900 27,900 180 39,800 37,3°° 181 80,000 25,000 182 32,000 21,000 183 31,300 22,300 184 30,100 21,600 185 44,ooo 21,700 186 23,500 5>5°° 187 25,800 17,800 188 52,000 39,000 189 104,800 86,800 190 44,000 37,000 •91 45,200 37,200 192 140,000 64,000 •93 91,000 77,7oo •94 99,000 84,400 •95 23,800 15,800 196 19,300 15,800 197 9,900 6,400 o Assessed Valuation of Buildings. $2,500 1,500 2,400 7,000 8,700 15,000 2,500 55,000 11,000 9,000 8,500 22,300 18,000 8,000 13,000 18,000 7,000 8,000 76,000 13,300 14,600 8,000 3>S°° 3*5°° D E Less ia per Cent on Buildings for Interest, Net Rental Insurance, after Paying Repairs, and Taxes. Depreciation. $504 $250 519 *5° 5°5 240 3,179 700 i,997 870 12,115 1,500 i,66i 250 6,816 5>5°° 1,926 1,100 2,537 900 1,955 850 i,949 2,230 1,800 1,800 1,618 800 3,150 1,300 10,449 1,800 2400 700 2,300 800 8,750 7,600 6,403 I >33° 5,135 m6o 748 800 614 350 700 35° F O PerCent of Net Income Net Income Assessed Valuation from Land. of Land. $254 6-3 369 9.2 265 6.6 2,479 16.8 1,127 4-4 10,615 38. MU 3-8 1,316 5-3 826 3-9 1,637 7-3 1,105 5-i —281 —1-3 818 4.6 1,850 4-7 8,649 10. 1,700 4-6 i,5°° 4-1,150 1.8 5.073 6.5 3,675 4-3 -5 2 —-3 264 i-7 350 5-5 H What the User Pays for the Use of the Land. i. e., the Net Ground Rent Plus the Tax 428 324 2,696 1,501 11,028 1,963 1,686 1.137 1,967 M 2 4 40 81 1,081 2,427 9.934 *.*47 2,050 6,223 4,9 2 4 182 498 445 1 Gross Value of Land, the User’s Rent Capitalised at 5 per Cent. $6,260 8,560 6,480 53>9 2 ° 30,020 220,560 39,260 33>7 2 o 22,740 39>34° 28.480 800 1,620 21,620 43 >540 198,680 44.940 41,000 41.940 124,460 98.480 3,640 9,960 8,900 to O O K m > CO o o n > X > H O z I98 9,900 x 99 15- 000 200 11,200 201 74,200 202 85,600 203 45,800 204 50,000 205 22,000 206 102,300 207 8,000 208 107,000 209 40,900 210 60,000 211 42,000 212 25,800 213 46,900 214 157,000 «S 117,50° 216 49,000 217 22,000 218 21,000 219 56,800 220 25,200 221 32,50° 222 75,000 223 134,700 224 36,300 2:5 97,500 226 20,000 227 238 6,400 3»5°° 7,600 7,400 9,200 2,000 66,700 7,50° 63,600 22,000 37,800 8,000 45,000 5,000 12,000 10,000 58,300 44,000 5,000 3,000 102,000 5,000 30,900 10,000 40,000 20,000 36,000 6,000 21,300 4,50° 28,900 18,000 123,50° 33’5°° 57>5°° 60,000 33>9°° 15,100 17,000 5,000 17,000 4,000 51,800 5,000 19,200 6,000 19,50° 13,000 55,000 20,000 99,700 35,000 23,300 13,000 69,900 27,600 11,000 9,000 229,500 8,500 600 978 814 4.500 SfiOO 1,722 2,600 1,360 7.53 6 602 4,916 2 ,755 2,612 1,378 1,618 3.431 8,476 3.76i 3,000 1,500 1,000 3.000 i,S°o 1,969 4,39° 10,406 2,163 5,557 1,904 10,000 35° 250 4-740 238 3-i 200 614 5.6 75° 3 >7 5° 5.6 2,200 2,800 4-4 800 922 2.4 500 2,100 4-7 1,000 360 3-4r4°° 3,136 5-4 3 00 302 6. 5°° 4,416 4-3 1,000 1,755 V 5-7 2,000 6l2 i-5 600 778 2.1 450 I,l68 5-5 1,800 1,631 5-6 3 >3 5° 5,126 4 2 6,000 —2,239 -3.9 i,S i0 M9° 4-4 500 1,000 6. 400 600 3-5 5°° 2,500 4.8 600 900 4-7 I ,3°° 669 3-4 2,000 2,390 4-3 3>5°° 6,906 7-300 1,863 8. 2,760 2,797 4-900 l,°°4 9-i 850 9>' 5° 4-345 6,900 35° 7,000 750 15,000 4,737 94,740 3,74i 74,820 M81 29,620 2,766 55,320 537 10,740 3,999 79,980 376 7,520 5,925 Il8,500 > 2,212 44,240 "d 1,204 24,080 *0 i,3“ 26,220 m M83 29,660 z 2,059 41,180 0 6,954 139,080 >< 1,388 27,760 1,992 39,840 3; 1,252 25,040 851 17,020 3,267 65,340 1,184 23,680 957 19,140 3,204 64,080 8,381 167,620 2,208 44,160 3, 8 3i 76,620 I,l66 23,320 0 12,546 250,920 1 ▲ Total B Assessed O Assessed D Net Rental E Less io per Cent on Buildings for Interest, Insurance, W e PerCent of Net Income on Assessed H What the User Pays for the Use of the Land, i. e., the 1 Gross Value of Land, the User’s Rent Capitalised at 5 per Cent. i Assessed Valuation Valuation after Paying Repairs, and Net Income Valuation Rent S5 Valuation. of Land. of Buildings. Taxes. Depreciation. from Land. of Land. Plus the Tax 228 $12,800 $9,800 $3,000 $1,211 $300 $911 9-3 $1,056 $21,120 129 84,900 64,900 20poo 6,943 2,000 4,943 7.6 5,9°3 118,060 23O 141,900 116,900 25,000 7P°° 2,500 4,500 3.8 6,230 124,600 23I 127,700 104,200 23,500 4,970 *,35° 2,620 *•5 4,162 83,240 232 59,40° 34,400 25,000 3,5°° 2,500 ipoo 2.8 1,509 30,180 *33 54,900 40,900 14,000 4,75° 1,400 3,350 8.2 3,955 79,10° *34 54,600 50400 4,200 1,192 420 77* >•5 1,518 30,360 *35 98,50° 76,500 22pOO 6,442 2,200 4,241 5-5 5,374 107,480 236 141P00 m,ooo 30,000 IPI3 3,000 8,013 7.2 9,656 >93,>*6 *37 163,200 130,200 33,0°° 7poo 3,300 3,700 2.8 5,6*7 112,540 238 >49,°oo 136P00 13,000 11,000 1,300 9,700 7-> 11,713 234,260 *39 305,000 146,500 158,500 24,000 >5.850 8,150 s-s 10,318 206,360 240 269,000 189P00 80,000 20,000 8,000 12,000 ®-3 >4,797 *95,94° *41 11,800 9,300 2,500 3°S 250 55 .6 >93 3,860 *4* >3,3°° 10,600 1,700 223 270 —47 —•4 no 2,200 *43 *S,70o 25,*00 500 1,370 20 >,350 5-4 >,7*3 34,460 *44 14,100 11,300 2,800 »7« 280 —9 —.1 >5® 3,160 *45 13,30° 11,300 2pOO 803 200 603 5-3 770 15400 246 15,600 12,600 3 P°o *49 300 —5> —•4 >35 2,700 *47 13,000 11,700 1,300 288 130 >5® >•3 331 6,620 248 18 poo 8,500 9,5oo >,33® 950 388 4.6 5>4 10,280 *49 9,300 6,300 3 Poo 402 300 102 1.6 >95 3,900 250 9,300 6,300 3,ooo 402 300 102 1.6 >95 3,900 *5* 7,800 3,400 4400 4«S 440 45 >•3 95 1,900 *5* *53 2 54 *55 256 *57 *58 *59 160 161 162 263 164 *65 266 267 268 269 270 *71 272 *73 *74 *75 276 *77 278 *79 280 281 9,300 6,300 10,500 7,5°° 184P00 104 poo 140 poo 134,000 3,5°° 1,300 1*4,50° 91,500 5,600 3,900 8poo 5,5°° 9P°o 3,5oo 7,800 5 P°o 10,300 7,3°° 10,300 7,300 10,300 7,3°° 10,300 7,3°° 10,300 7,300 10,300 7,3°° 10,300 7,300 249,000 179 P°° >3,3°° 10,500 7P°° 4,5°° 54oo 3,*oo 5400 2 poo 6,600 1,600 6,600 1,600 540° 1,600 6,600 *,300 8,900 3400 12,500 5400 16,500 6,200 10,300 5-3°° 3,000 4°* 3 poo 1,345 80,000 6 poo 6poo 7P°° 2,200 100 3 3 poo 10 poo 1,700 *77 2.500 14* 5.500 7°7 2,800 *69 3 poo 3°4 3poo 3*® 3poo 3*® 3 poo 35* 3P00 35* 3P00 35* 3 poo 3*® 7opoo i$poo 2.800 4°3 2,500 *34 2 poo 4°3 34°° 460 5 poo 5°* 5 poo 502 3.800 5*° 4,300 622 5,500 668 7,100 9*5 10,300 956 5 poo 74® 300 300 8poo 600 220 33,000 170 250 55° 280 300 300 3°° 300 300 300 300 7poo 280 250 200 340 500 500 380 430 55° 710 1,030 5oo 102 1.6 l«S >4-—2poO 1.9 6,400 4.8 —120 —3.4 6,700 7.3 107 2.7 —108 —1.9 157 45 — II —.2 *® V -4 28 .4 5* -7 5* -7 5* -7 28 .4 8poo 4.5 123 1.2 —16 —2.8 203 6.3 120 6. 2 .1 2 .1 140 8.8 17* 8.4 >>® 3.5 205 3.8 —74 — >-» 248 4-7 >95 3,9°° 1,156 *3,**° —461 —94“ 8,383 167,660 —101 —2p20 ®P54 161 p8o 165 3,300 *7 540 20Q 4,180 63 1,260 112 2,240 136 *,7*o 136 2,790 160 3,*oo 160 3,*00 160 3,200 136 2,700 10,649 212,980 278 S,56o 5° 1 poo 250 SPOT 15° 3,000 26 5*0 26 5*0 164 3,*8° 226 4,5*° 168 3,36o 285 5,700 17 340 3*6 6,5*0 202 THE ABCOF TAXATION APPENDIX H 306 94,000 78,800 15,200 3> io 9 1,520 2,589 2. 2,755 55,200 307 54.10° 45» IO ° 9,000 >.999 900 1,099 2-4 2,766 35,320 308 9,500 9,000 500 699 5o 649 7-2 782 25,640 309 4,400 2,400 2,000 300 200 200 4.2 i35 2,700 310 51,000 43,000 8,000 2,321 800 2,522 3-5 2,257 43,240 3” 176,800 146,800 30,000 i4.3 8 3 3,000 22,383 7-7 13,555 271,100 312 64,500 34,400 30,too 3.245 3,0!° 23 s •7 744 14,880 3<3 23,500 11,400 12,100 1,652 1,210 442 3-8 620 12,200 3 1 4 150,300 120,300 30,000 7,296 3,000 4,296 3-5 5,976 119,520 3'5 32,500 28,200 4,30° 1.919 43° 2,489 5-3 1,906 38,120 316 30,200 15,200 15,000 3> I 53 i,S°° 2.653 20.8 1,878 37,560 3>7 11,900 9,400 2,500 924 2 50 674 7-1 823 16,260 318 39, 100 31,100 8,000 3^21 800 2,222 7-1 2,68l 53,620 3 J 9 9,000 3>9°° 5,100 1,067 5 IQ 557 ■4-3 6*5 12,30° 320 7,100 3,600 3>5°° 675 35° 325 9-378 7,560 3 11 80,000 49,700 3°,3°° 6/500 3 >°3° 2,970 6. 3,7°5 74,100 322 44,500 15,800 28,700 5> I 4 I 2,870 2,272 24.4 2,505 50,100 3 Z 3 68,000 60,000 8,000 2,160 800 2,36° 2-3 2,248 44,960 3 2 4 74,200 66,700 7,500 2,902 75° 2,252 3-2 3>’39 62,780 3 2 S 100,000 65,400 34,600 4,670 3,460 2,220 2.8 2,278 43,560 326 72,000 60,000 12,000 2,434 1,200 1,234 2. 2,122 42,440 327 98,000 82,400 1 5,600 4,926 1,560 3,356 4-4>575 92,50° 328 119,000 100,000 19,000 9,3°9 1,900 7,409 7-4 8,889 177,780 329 138,000 73,000 65,000 22,458 6,500 4,958 6.8 6,038 120,760 330 86,500 83,000 3>5°° 4,720 350 4,370 5-3 5,598 III,96o 33 1 40,400 24,400 16,000 3402 1,600 2,802 7-4 2,163 43,260 332 116,000 51,000 65,000 10,283 6,500 3,783 7-4 4,537 90,740 333 8,500 3>3°° 5,200 594 52° 74 2.2 I2 3 2,460 334 7,800 2,000 5,800 785 580 205 20.2 234 4,680 335 8,000 3,too 4,900 602 490 112 3.6 258 3,260 the a b c of taxation appendix h ▲ 1 1 ▲ Total B Assessed Assessed Valuation. Valuation of Land. 336 $9 poo $4,800 337 10,000 3,300 338 11,000 6,900 339 30.500 13.90° 34° 6,800 5,400 34i 10,000 7.5°° 342 14,800 11,800 343 11,300 5.7oo 344 16,600 11,000 345 18,100 10,100 346 19,600 7,100 347 20,000 15,500 348 36,500 7,800 349 33.500 9.900 35° 34,000 18,000 35' 34,5oo 25.700 352 37.ooo 31/300 353 42,500 16,500 354 50,000 13.000 _ 355 45,5oo 11,600 356 57POO 34poo 357 54,400 35.400 358 20,000 15/300 359 21,500 19.300 Assessed Valuation of Buildings. $4,200 6,700 S>*oo 6,600 1,400 1,500 2,000 6.600 4.600 8,000 12,500 4,500 28,700 13,600 16,000 8,800 6,000 26,000 3 7 P°o 33.9°° 23,000 19 P°° 5poo 3 P°o Net Rental after Paying Taxes. $587 691 821 1,849 379 331 38. 1,30° 754 1,600 1,660 i.5°4 1,580 3.59° *.797 1,689 2,202 5.3* 1 3.58o 5.1*7 3.956 4^95 704 713 ■ Less xo per Cent on Buildings for Interest, Insurance, Repairs, and Depreciation. $420 670 510 660 140 25° 200 660 460 800 iPS° 45° 2,870 2,360 1,600 880 600 1,600 3.7oo 3.39o 2,300 '.9°o 500 320 F O PerCent of Net Income on Net Income Assessed Valuation from I-and. of Land. $167 3-5 11 •7 312 4-5 1,189 5-239 4-4 81 1.1 181 1-4 640 11. 294 *■4 800 8. 410 6. 'P54 6.8 —290 —3-7 1.230 12.4 'P97 6.6 809 3* 1,601 J.i 2,721 16.1 —120 —-9 '.737 «S-1,656 4-9 *,995 8-4 204 •-4 403 1. H 1 Net Ground Rent Plus the Tax Capitalised at s per Cent. $238 $4,76o 71 'P*o 414 8,180 '.543 30,860 3*9 6,380 '93 3,860 370 7,400 724 14,480 47' 9*20 949 18,980 5'5 10,300 1,283 25,660 —175 —3.500 ',376 27,520 ',463 29,260 1,189 23,780 2,061 41,220 2,965 59.300 T 2 1,440 1,908 38,160 *•'59 43,'8o 3.5*9 70,380 426 8,520 688 13,760 K> a 360 '5,600 11,600 3Poo 369 300 69 S *SS 5,100 361 7 Poo 4,700 1,300 376 *3° I46 3-* 216 4,3*0 362 11,500 6,300 S.200 1,116 52° 606 9.6 699 13.980 363 22/300 7,800 14.200 1,614 1420 194 2-5 309 6,180 364 7.700 5,200 2,500 426 250 176 3-4 253 SP60 365 7,700 SPoo 2,500 426 250 176 3-4 *53 5P6o 366 9.200 4,600 4,600 664 460 204 4-4 171 SP40 S 6 ? 19,000 8,000 11/300 1,800 1,100 700 8.7 818 16,360 368 42 poo 35.700 6,500 2,447 650 1,797 S-2.325 46,500 369 66,500 56,500 10,000 3,100 1,000 2,100 3-7 2,936 58,7*0 370 37,700 23,700 14,000 3.042 1 poo 1,642 k 6.9 i,99* 39,840 371 140,000 134P00 6,000 8,500 600 7.9°° 5-9 9.883 197,660 372 9 5 Poo 77,000 18,000 4.850 1,800 3P5° 3-9 4,189 83,780 373 17/300 11/300 6,000 1.468 600 868 7-9 1,031 20,620 374 21/300 17/300 4/300 1P79 400 879 5-2 1,130 21,600 375 196,000 86,100 109,800 9/300 10,980 1,980 -1.3 —704 —14,080 376 29,400 14,100 15.300 i,8oo 1.530 270 i-9 478 9,560 377 98,000 79.600 18,400 5.600 1,840 3.760 4-7 4,938 98,760 378 64,500 44 P°o 10,100 2,845 2/310 835 1.1 1,492 29,840 379 25,000 19/300 6/300 1,790 600 1,190 6.1 1P7' 29,420 380 51.500 42,500 10,000 4,500 1/300 3.500 8.2 4.1*9 82,580 381 115.90° 65,900 60,000 9.600 6/300 3,600 5-4 4,575 91.500 382 71,600 41,600 30/300 5.540 3,000 2,540 6.1 3.155 63,100 383 425POO 317/300 108/300 16/300 10,800 5,200 1.6 9.891 197.820 384 73/30° 65/300 8/300 3.900 80O 3,10° 4-7 4,061 81,240 385 49 poo 38,500 10,500 4.000 1P50 2,95° 7.6 3.5*0 70,400 386 13 poo 11,700 1,300 288 I30 •58 i-3 331 6,620 387 51,000 27,400 14,600 3P30 2,460 570 1. 975 19.500 388 160/300 156,000 104/300 IS. 000 lO^OO 4,600 29 6,909 138,180 389 9/300 5/300 4/300 467 400 67 i-3 141 2,820 the a b c of taxation appendix h A B 390 39' 39* 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 4U 412 4*3 Total Assessed Valuation. $S,6oo '85,50° 39,300 7,000 9,000 13,000 3 2 ,Joo 169,400 65,500 31,000 370,000 84,000 243,000 lOj ,600 218,000 77 f ooo 180,000 19,000 227,000 32,000 105,400 286,000 1,760,000 205,000 Assessed Valuation of Land. $6,100 125,500 34,300 1,900 3,000 5,700 25,900 150,000 39,5°° 23.800 337.500 67.800 224,000 83,600 191.500 60,000 133,000 15,000 197,000 _ '2,400 90,400 263,600 1,460,000 118,000 o Assessed Valuation of Buildings. $2,500 60,000 5,000 5, 100 6,000 7,300 6,600 19,400 26,000 7,200 32.500 16,200 19,000 20,000 26.500 17,000 47,000 4,000 30,000 19,600 15,000 22400 300,000 87,000 D Net Rental after Paying Taxes. $ 2 9 3 11,580 3*18 396 62 3 1,168 1,619 6,750 3.531 '.54i 20,000 7,500 9454 3,300 l^fioo 7,000 12,000 619 10,000 2,026 4,000 9,500 100,000 H7772 £ Less 10 per Cent on Buildings for Interest, Insurance, Repairs, and Depreciation. $ 2 S° 6,000 500 510 600 73° 660 1,940 2,600 720 3> 2 5° 1,620 1,900 2,000 2,650 1.700 4.700 400 3,000 1,960 1,500 2,240 30,000 8.700 r Net Income from Land. f+3 5,580 2,918 —114 2 3 438 959 4,810 93' 821 16,750 5,880 7,554 1,300 10,350 5>3°o 7,3°° 219 ipoo 66 2,500 7,260 70,000 6,072 6 PerCent of Net Income on Assessed Valuation of Land. •7 4- 4 85 — .6 •7 7-7 3-7 3.2 2 - 3 3- 4 5-8.7 3-3 '•5 5-4 8.8 5-5 '■4 3- 5 •5 2 -7 2 -7 4- 7 5' Wiat the User «ys for the Use of the Land i, e „ the Net Ground Rent Plus the Tax 7437 3425 —86 67 522 1,342 7,030 '-5'5 ','73 2I >737 6,883 10,869 2 ,537 13484 6,188 9,268 441 9,915 249 3,838 11,161 91,608 7,8i8 Gross Value of Land, the User’s Rent Capitalised at 5 per Cent. $2,660 148,740 68,500 —1,720 1,340 10,440 26,840 140,600 30,30° 23460 434.740 137,660 217,380 50.740 263,680 123.760 185,360 8,820 198,300 4,980 76.760 223,220 1,832,160 156,360 to o 00 H X m CO n o i> X > H O 414 131,500 81,500 50,000 8,054 Si 000 3>°54 3-7 4,263 85,260 415 6,500 6,500 racant 480 480 7-4 576 11,520 416 9»3°° 6,300 3,000 282 300 —18 — 75 1,500 417 9,300 6,300 3,000 402 300 102 1.6 '95 3,900 41$ 9,800 6,300 3>5°° 395 35° 45 ■7 138 2,760 419 I 3>5°° 5,800 7,700 1,000 770 230 4-316 6,320 420 20,200 11,700 8,500 1,700 95° 850 7-3 1,023 20,460 421 16,200 6,200 10,000 560 1,000 —440 —2.8 —348 —6,960 422 9,800 3>3°° 6,500 655 650 5 .2 54 1,080 423 27,000 22,500 H>5°° 1,600 1,450 '5° ■7 483 9,660 424 28,000 11,200 16,800 1,586 1,680 -94 i— 8 72 1,440 425 28,000 17,100 10,900 1,586 1,090 496 2.9 749 14,980 426 23,500 10,000 13,500 1,652 ',35° 3°2 3-450 9,000 427 20,000 11,000 19,000 1,904 1,900 4 — •6? 3,340 428 34>5°° 16,500 18,000 1,989 1,800 189 1.1 433 8,660 429 20,000 7,000 13,000 ',S°4 1,300 204 2,9 307 6,140 430 i5>5°° 6,500 9,000 1,271 900 37i 5-7 467 9,340 431 15,000 7,000 8,000 1,178 800 378 5-4 482 9,640 432 18,000 8,300 9,700 ',534 970 564 6.8 687 13,740 433 43,000 17,000 26,000 2,364 2,600 —236 — '■4 16 320 434 9,000 3,9°° 5,!00 867 S'° 357 9.2 415 8,300 435 7,200 3,300 3,90° 613 390 223 6.7 372 7,440 436 18,400 14,900 3>5°° 808 35° 458 3' 678 13,560 437 9,100 7,100 2,000 665 200 465 6.5 570 ",400 438 10,500 4,700 5,800 ',245 580 665 14.1 735 14,700 439 7>5°° 3,300 4,200 689 420 269 8.2 318 6,360 440 22,500 13,900 8,600 2,167 860 1,307 9-4 1,512 30,240 44i 8,300 2,900 SA00 777 54° 237 8.2 280 5,600 442 9,200 6,200 3,000 464 300 •6 4 2.6 256 5,'20 +43 46,900 26,900 20,000 1,106 2,000 —894 —3.3 —496 —9,920 APPENDIX H Total Assessed Valuation. hsp°° 25,000 48,000 26,000 34/300 22,000 47,000 22,000 27.500 26.500 31/300 25/xo ^.JOO 23.500 20/300 26,000 22,200 19/300 40/300 24,000 20.500 7,5°° 7.700 17^00 Assessed Valuation of Land. {14,600 10,000 3*.S°o 12.300 19/300 11.700 22,500 11,200 17,100 12,600 14/500 10,000 6.300 10/300 11/300 15,100 12,100 10,300 19,3«> ' 8/300 15,800 4,100 2.700 10/300 Assessed Valuation of Buildings. {20,400 15/500 15.500 13.700 15/300 10,300 24.500 10,800 10.400 13.900 17/300 15/300 7/300 13.500 9,000 10.900 10,100 8.700 20,700 16,000 4.700 3.400 5/300 7/300 Net Rental after Paying Less 10 per Cent on Buildings for Interest, Insurance, Repairs, and Depreciation. Net Income from Land, Per Cent of Net Inconte on Assessed Valuation of Land. What the User Pays for the Use of the Land, l.e., the Net Ground Rent Plus the Tax Gross Value of Land, the User’s Rent Capitalised at 5 per Cent. { 158 { 3,160 278 5,560 721 14,420 627 12,540 1,278 25,560 1/317 20,340 —313 —6,260 260 5,200 606 12,120 504 io/>8o -252 5,040 478 9,560 96 1,920 —50 —1,000 1,267 25,340 448 8,960 540 10,800 501 10,020 —176 —3,520 363 7,260 1,805 36,100 410 8,200 226 4,520 396 7,920 +68 18,500 12,300 469 43/3°° 14/300 470 16,000 8,800 471 14/300 4,800 472 13,800 5,3°° 473 15,500 8,000 474 7,000 2,700 475 8,300 3>3°° 476 13,300 6,300 477 12,700 9,100 478 9,500 3,000 479 9,400 4,400 480 8,300 3>3°° 48. 5,200 a,600 482 30,600 12,500 483 5>5°° 3,000 484 6,200 1,300 485 5,400 1,200 486 4,800 2,000 487 124,000 106,000 488 3,400 i,5°° 15,000 9,000 9,50° 9,500 22.500 7/300 6/300 13.500 8/100 3,900 3.900 2.900 19,500 2/300 2,300 5,800 3,600 9,760 53/420 3,460 2,880 4,480 10,780 6,120 5,560 3,920 15,740 1,860 6.520 3,320 8.520 —9,560 149 5-193 3,860 18 1.5 37 740 40 3 -3 S« 1,160 129 6.4 •59 3,180 7,365 6.9 8,934 178,680 192 12.8 214 4,280 168 i-9 300 6,000 357 9-4*5 8,300 199 5-257 5,140 199 5-257 5,140 s 6 ? 3-856 17,120 46 2.3 76 1,520 126 55 160 3,200 530 9-616 12,320 19 •5 7* 1,44(7 210 THE A B C OF TAXATION APPENDIX H Total Assessed Valuation. $11,200 11,800 12.400 13,100 12,000 22,000 19,600 13.400 9>5°° 7,500 8,coo 21,000 9,000 9,000 9,000 3.700 8.700 11,700 9,000 8,200 11,500 6,000 10,000 *9»5°° Assessed Valuation of Land. $7,cco 6,8co 6.700 7.600 5.800 5,400 13,600 8.600 3>9°o 3,200 3»3°° 4,000 3,300 3400 3,000 1,900 2.700 5.700 ' 4.800 4,000 7>5°° 1.800 3»°oo 10,500 0 D E F 6 H Assessed Valuation of Buildings. Net Rental after Paying Taxes. Less 10 per Cent on Buildings for Interest, Insurance, Repairs, and Depreciation. Net Income from Land. PerCent of Net Income on Assessed Valuation of Land. What the User Pays for the Use of the Land, i. e., the Net Ground Rent Plus the Tax Gross Value of Land, the User's Rent Capitalised at 5 per Cent. $7,160 6,520 3,700 9,440 3,760 2,800 18,620 28,980 5**40 2,120 2,820 —800 7,92° 8,140 5 >4 20 4,260 620 24,480 5,880 14,360 11,940 1,54° 7,920 11,320 522 9,000 5>3°° 3,700 737 370 367 6.9 445 8,900 5 2 3 6,300 4>3°° 2,000 w 200 1,207 2 9-1,271 2 5,420 5 2 4 50,00° 21,900 28,100 4,560 2,8lO 1.75° 8. 2,074 41,480 5 2 5 52,700 36,200 16,500 4,320 1,650 2,670 7-4 3. 206 64,120 5 2 6 27,400 10,900 16,500 I.S94 1,650 -56 - 1 ■ 9 105 2,100 527 68,500 41,400 27,100 6,986 2,710 4> 2 76 10.3 4,889 97,780 528 19,900 9,600 10,300 2 ,3°5 1,030 l, 2 75 •3-3 1417 28,340 5 2 9 3,100 1,600 1,500 410 I S° 260 16.3 284 5.680 53° 8,000 6,400 1,600 492 160 33 1 5- 2 427 8,540 S3 1 11,500 4,900 6,600 93° 660 270 5-5 342 6,840 53 2 11,500 4,900 6,600 1,030 660 370 7.6 442 8,840 533 I5i4°° 10,900 4,500 i,°43 45° 593 5-4 754 15,080 534 194,500 168,500 26,000 5.3 21 2,600 2,72! 1.6 5415 104,300 535 9,500 7poo 2,50° 859 2 5° 609 8.7 713 14,260 53 6 9,000 5,5°° 3>5°° 371 35° 21 ■4 102 2,040 537 9,500 5>4°° 4,100 859 410 449 8.3 5 2 9 10,580 538 13,000 5,900 7,100 808 710 98 1-7 185 3,700 539 580,000 516,000 64,000 42,000 6,400 35,600 6.9 43> 2 37 864,740 54° 454,0° 437,300 16,700 18,000 1,670 16,330 3-7 22,802 456,040 54* 216,000 192,000 24,000 11,803 2 .4°° 9.403 4-9 I 2 ,245 2 44,9°° 54 2 150,700 118,700 32,000 8,500 3,200 5,300 4-5 7PS7 141,140 543 106,500 81,500 25,000 8,299 2,500 5.799 7-i 7,oo5 140,100 544 325,000 315,000 10,000 6,000 1,000 5,000 1.6 9,662 193,240 545 425,000 317,000 108,000 32,000 10,800 21,200 6.6 25,892 517,840 546 61,500 20,800 40,700 57390 4,070 1,020 4-9 1,328 26,560 547 22,000 5,400 16,600 1.574 1,660 —86 • —1.6 6 120 548 13,600 8,200 5*4°° 819 540 2 79 3-4 400 8,000 549 11,000 4,600 6400 787 640 *47 3- 2 2 *5 4,300 55° 9,900 3,900 6,000 1,200 600 600 '5-4 658 13,160 55* 44,300 16,300 28,000 4. 2 44 2,800 *r444 8.8 1,685 33,700 212 THE A B C OF TAXATION APPENDIX H sim ms ’aa a a a a a m'ssmsaa ss a ^ S,.£'iS'2 -5 'o o- o"® ^ 3” IflllfilWlWWwmiwrii ItlttilliiiliiliiWiltflfitlll ►I _ M .lb -Ij M M v> O' >-< W w +■ oo Cv ®'4k O -K M M « W >0 W ^ W W 4k OCLSI 0 W 04 Oi - +■ -^ w V) 4* H W M w _ M M +. M M "—I O'*** O W _CTv + wtAW 00 OOW 'ovOx S> M 1-1 WWW+bWWw'M'oOOO^'b^J^J <£ 9 "■£ 45 Hifl4k 0"0 W oo OOsO VO VO o P VO 4v 4* O' ^ Q -4*- OO Q vfi Q OO 00+ Q -+* m +. so oo\o ►< *-. oo oo+b T> t-> +. ov O oo oo O w O 'J w O >-< aifmllaaammltllllalaaalili KU1 » *» 2* J* 2 j^ 5 f + w“ „ „ * t “|£V§$ =22^* ‘ O' O"-^ --a •-> 'O bi U O Jb, -lb M t>4 O' H + VO VO • • boil 4 « ’o"5» OMii O"^ «« ♦ ** 00 °" O b-> Ovv^> o* S° Z* ^ S ~Ov^ W O 'oo 4*- *■ i iH-’sS**** s s^ss2£§k=§ () H M W W WW OvO''4 4v u ^ Ox l-rx |J O 4> O v) OO OOt-m vn (J vO + 111 I i ?i Fnf^ I c § WuU *% Vffn % n»;ju,u, w o> 4* 4 1 4* 4* t Sic H XICINSddV l»lOt(AlAl«UlOjOlVt^VxUi(AOiOiVn g;.? S' ? £ 1^1 4a 1>I ui w\ Irt «r. L so oo-4 ovo> -»b u» w Number*. 5 §t S^g'S.S 3 I, oof 2 Sso-. ?||g i$r§i WiirrgmWrrni^ flli!li''lW§ W 8 8 §K^ ^8 8 ?■ ° WBM MW W Ol M W> MM WEc? M>4bOOO')MOiUivo«5 w * 1 wia\04kOO W M m « -»3 ■§lr§w§r§r§w&i8i r § §^ ti-« >* 8 - Ov^ oiia On O K> O M -4 T> Q *-> oj -4 OO n la (a cow oow'S*^ v 3.» v6CC44‘C'«ON5h00H5iaMONQ0»JHiaNONsl0 a 5f W O' w O OJ 0-4 o 0-+ O O O •-. i^, \5 o *- 0 Ox -+• v-a O 0 ^ flfiiif N WWw. Ot*- W m m o* S'i 3 ?3»'*o ^ W-K^'b'fcO'jJ W O'&x 'O •-. "b «-. UWlai 4> « W W M M S.fi“3«g„ 88'S8 t 388og'8 l S8S8888S 5 8S > 888S 5 pt rt *sr1 M > w W W ^ 'W I M OO W M M M w > O M U, OOW ^ W O' h b "b *-+• M N O ^ 4 ~b ON M —4* - „ vo oo o + h oo 0"0 -+ mso 0 o* w ocao 4i m >4 m cv -4 w P‘2 W O' W O w O'-!© O O' O o O HiaiO O m 0<a + «a O O n «Ov-+ w ww w Ov«-r» W W W W O' oo Ove + Ov ?? W <-ai C>M m Cv»- Mll'OlnW >10U1 O' M »< O' Ovw W ^ P’S °> So g m w m ^ O. {2 *3 5t “■4- y “4* -S “r4* r wfaj'-s,?? a O >■ -1 O CNCn WtOOO 44-4 w W -1 4N 4* *- b-iO >x-4W & "2 O „ * n m -+- ONVoi Mvfi -4 W On -+■ W COW ►-. W Ca -4 CJV W O Vox -4 Q\ -4 H g- Crttr* O « + OnOnOnOS OM h |4 M O Cvw -4 OO W oo O' o O' -4 g p.g. rt n ^ NOliVXVi do D a V 3HI *« A 1 1 Total Assessed Valuation. 606 $4,9°° 607 4,100 608 1,800 609 4,7°° 610 7,000 6u 4,700 612 3,000 613 3,300 614 5,9°° 615 14,600 616 13,200 617 14,800 618 11,800 619 8,700 620 6,000 621 •3.3°° 622 11,000 623 11,200 624 3,000 625 3,000 626 3.SOO 627 1,900 628 88,000 629 12,000 B c Assessed Assessed Valuation Valuation of Land. of Buildings. $1,400 $3,500 1,500 2,600 1,300 500 1,30° 3,400 2,500 4,500 1,300 3,400 2,500 500 1,30° 2,000 3^00 2,500 9,100 S,5°° 5,200 8,000 6,800 8,000 5,800 6,000 3,200 5,5°° 1,500 4,500 4,100 9,200 2,500 8,500 2,700 8,500 800 2,200 800 2,200 1,700 1,800 900 1,000 10,200 77,800 2,600 9-4°° D £ F Net Rental after Paying Less 10 per Cent on Buildings for I nterest, Insurance, Repairs, and Net Income Taxes. Depreciation. from Land. $287 $35° $—63 203 260 —57 189 5° *39 410 340 70 186 45° —264 35° 34° lo 280 5° 230 251 200 51 393 250 >43 924 55° 374 621 800 —179 589 800 —211 533 600 —67 47i 55° —79 1,in 45° 661 1,243 920 3 2 3 7i3 850 —137 566 850 —284 244 220 24 196 220 24 236 180 56 212 100 112 10,378 7,780 2,598 1,262 940 322 PerCcnt of Net Income What the User Pays for the Use of the Gross Value of Land, the User's on Assessed Valuation of Land. Land, i. e., the Net Ground Rent Plus the Tax Rent Capitalised at 5 per Cent. —4-5 $42 $840 —3.8 35 700 10.7 158 3,160 5-4 s 9 1,780 —10. s 227 4,540 .8 29 580 9.2 267 5,340 3-9 70 M°o 4-2 >93 3,860 4-1 S°9 I0,l80 —3-4 102 2,040 —3.1 110 2,200 — 1.1 29 380 —2.4 32 640 44-1 683 13,660 7-9 384 7,680 —5-4 100 2,000 —10. 5 244 4,880 3-36 720 —3-12 240 3-3 81 1,620 12.4 125 2,500 2 5-5 2,749 54,980 12.4 360 7,200 to 630 8,800 5,800 631 12,800 6,000 632 16,400 5,200 633 111,000 13,500 634 6,700 2,400 *35 5,700 1,700 636 9,000 4,400 637 8,200 4,000 638 3>9°° 900 639 42,300 6,300 640 10,900 1,900 641 3,900 2,400 642 5,000 3,200 643 2,900 2,400 644 5,200 700 645 2,700 500 646 36,100 16,100 647 8,50° 1,500 648 6,100 1,100 649 5,9°° 2,400 650 74»o 2,200 651 3,700 900 652 21,400 8,000 «53 10,500 6,500 654 3,000 900 655 119,000 96,600 656 11,300 4,700 6 57 16,300 i3,S°o 658 18,100 10,100 659 14,000 4,700 3,000 570 300 6,800 2,011 680 11,200 M57 1,120 97,500 16,676 9-75° 4,300 681 43° 4,000 576 400 4,600 818 460 4,200 1,175 420 3,000 3+2 300 36,000 5,812 3,600 94300 1,003 900 1,500 182 150 1,800 370 180 500 139 5° 4,500 571 45° 2,200 476 220 20,000 2,3 !° 2,000 7,000 694 700 5,000 39O 500 3,500 393 35° 4,800 616 480 2,800 137 280 13,400 1,103 1,34° 4,000 709 400 2,100 366 210 22,400 5,359 2,240 6,600 1,333 660 2,800 639 280 8,000 632 800 9,300 993 930 270 4-7 356 7,120 1,331 22.2 1,420 28,400 337 6.5 414 8,280 6,926 Si-3 7,126 142,520 *5* 10.5 287 5,74° 176 10.4 201 4,020 358 8.1 423 8,460 755 19-814 516,280 42 4-7 55 1,100 2,212 3S-i 2,305 46,100 103 5-4 131 2,620 3 2 i-3 67 1,34° 190 5-9 237 4,74° 89 3-7 125 2,500 121 17-3 131 2,620 2,56 51.2 263 5,260 31° 1.9 548 10,960 ■—6 — .4 16 320 —no —10. 9+ 1,880 43 1.8 78 1,560 136 6.2 168 3,360 —143 —15-9 130 2,600 —237 —2.9 119 2,380 309 4-8 4°S 8,100 15 6 17-3 169 3,380 3,119 3-2 4,549 90,980 673 14.3 743 14,860 359 i-7 559 n,180 —168 —1.6 19 380 63 1-3 133 2,660 THE A B C OF TAXATION APPENDIX H X 660 661 66 i 663 664 665 666 667 668 669 670 671 671 673 674 *7 S 676 677 678 679 680 681 68* 683 A Valuation. l7,9<» S',000 5 3-000 36,50° 11.500 9.700 8,000 5,S°o 6,000 5>S°o 24,000 15.500 27,1000 20,000 50,000 20.500 20,000 8.700 12.700 8.700 11/300 11,000 12.500 40,400 B O Assessed Assessed Valuation Valuation of Land. of Buildings. $3/200 $4,700 28/300 13,000 28,000 25,000 17,200 19,300 5,700 5,800 3,700 6/300 5/300 3/300 1/400 3,100 2,200 3,800 2,000 3,5oo 11,500 12,500 5,800 9,700 15,500 11,500 11,900 8,100 37/300 13/300 14,300 6/100 12,000 8/300 5,500 3,200 4,800 7,900 3,900 4,800 7,700 3,300 6,000 5/300 7,S°o 5/300 24,900 15,500 B E Less to per Cent on Buildings for I nterest, let Rental Insurance, ter Paying Repairs, and Taxes. Depreciation. $720 $470 1,945 2,300 2,8 16 1,500 1,860 1,930 930 580 756 600 602 300 1,369 310 5" 380 639 350 1,245 1,250 970 970 1,900 1,15° 1,504 810 2,760 1,302 i,297 620 424 800 771 320 812 790 771 480 557 33° 2,300 500 2,300 s°o 1,800 1,550 F 6 Per Cent .of Net Income on Assessed Net Income Valuation from Land. of Land. $250 7-8 —355 —1.2 316 1.1 —70 —•4 350 6.1 156 4-1 302 6. 1/159 44.1 131 6. 289 14.4 “5 — — — 750 4.8 694 5-8 1,460 4-677 4-7 —376 —3.1 4Si 8.2 22 •4 291 7-S 227 2.9 i,8oo 30. 1,800 24. 25° 1, H I What the User Gross Value Pays for the of Land, Use of the the User's Land. i. e.. the Rent Net Ground Capitalised Rent Plus the Tax at 5 per Cent. $297 $5,940 59 1,180 730 14,600 •85 3,700 434 8,680 211 4,220 376 7,520 i/>55 21,900 164 3,280 319 6,380 165 3,300 86 1,720 979 19,580 870 17,400 2,008 40,160 889 17,780 I98 3,960 532 10,640 93 I,86o 349 6,980 34i 6,820 1,889 37,780 1,911 38,220 619 12,380 K) 5) 8.100 6.800 9.400 23,000 17,000 24,000 17/300 16,000 4.500 20/300 17.500 26,500 25.500 11.800 I23/3OO 182/300 64.400 71/300 I4I/DOO 165,400 52.500 30/300 30.100 61.500 104.800 58,800 48.400 48/00 77,500 136,800 5>3°0 3,900 3,900 11,800 11,000 10,700 8.600 9.200 2,300 18.600 8/300 10.800 11.200 5/300 106/X3O 172/300 38.400 52/300 120.800 151.400 37,50° 21.500 21,600 53/”° 53.800 40.800 34,4oo 36/300 62.500 121.800 2,800 680 280 2,900 679 290 5,5°° i/>6i 55° 11,200 1,260 1,120 16/00 1,600 1,600 13,300 845 1,33° 8,400 1,348 840 6,800 1,163 680 2,200 934 220 U/400 1,356 1,140 9,500 1,244 95° 15,700 2,108 1,57° 14,300 1,323 1,43° 6,800 1/325 680 18,000 19>l65 1,800 10,000 10,000 1,000 26/300 3,547 2,600 19,000 3,*49 1,900 20,200 9,"3 2/320 14,000 9,627 M°o 15/30° 1,723 1,500 8,500 2,556 850 8,500 2,555 850 8,500 3,59° 850 51,000 8/300 5,ico 18,000 4,130 1,800 14/300 3,284 1,400 12/300 3,500 1,200 15,000 5,853 1,500 IS/ 1 ®® 4,725 1,500 400 7-5 478 3*9 10. 447 5” 131 569 140 1.1 3'5 — — 163 -485 —4-5 327 508 6. 635 4*3 5'2 619 7H 3'-748 216 1.2 49« 294 3-7 412 538 5-698 —107 —•9 59 345 6.9 *19 7,365 6.9 8.934 9,000 5'1 :1,546 947 2-5 v -ij i,949 3-7 ; : 5 9 7/393 !■ 9 8,881 8,227 5’4 10,468 1,223 3’3 1.778 1,706 8. 1/24 1,7°S 7.9 2,024 2,740 5-2 3,524 2,900 5'4 3,696 2,33° 5-7 2,934 1,884 S'5 *,393 2,300 6.4 *>833 4,353 7' S, 1 ?* 3,n5 2.6 5/328 9.5* 8,940 11.380 6.300 3,260 6,54° 12,700 12.380 14.960 9,820 8,240 13.960 1,180 8,380 178,680 230,920 30.300 54.380 177,620 209,360 35.560 40,480 40,480 70^80 73,910 58,680 47,860 56,660 105.560 100.560 THE A B C OF TAXATION APPENDIX H 714 7'5 716 717 718 719 720 721 722 723 7*4 725 726 727 728 729 730 731 732 733 734 735 736 737 ■4 B Total Assessed Assessed Valuation Valuation. of Land. $19,500 $14,500 47.600 29,600 5> IO ° 1,100 5,'°° 1,100 5,000 1,000 5,100 1,100 7,000 2,500 3 >200 2,600 3, 000 1,100 2.800 800 4.900 1,800 7,000 3,000 5.800 1,300 6.900 900 24,500 7,500 22,400 6,400 4.600 1,200 4j8oO 1,200 4,600 1,200 4,600 1,200 4>5°° 1,100 4,600 1,200 4,600 1,200 5>4oo MOO c D Assessed Valuation of Buildings. Net Rental after Paying Taxes. $5,000 $1,351 18,000 9.936 4,000 417 4,000 417 4,000 418 4,000 417 4,500 712 600 *33 1,900 172 2,000 151 3,100 263 4,000 544 4,500 490 6,000 34i 17,000 1,857 16,000 i,88S 3*00 332 3,600 329 3,400 S3* 3.400 S3 2 3.400 333 3.400 332 3,400 332 4.000 412 E F 6 Less 10 per Cent on Buildings for Interest, PerCent of Net Income Insurance, on Repairs, and Depredation. Net Income from Land. Assessed Valuation of Land. $500 $851 5.9 1,800 8,136 27.5 400 17 1.5 400 17 1.5 400 18 x.8 400 17 *•5 450 60 262 73 IO -5 2,8 190 —18 —1 6 200 —49 —6. 310 —47 — 2. 6 400 144 4-8 450 40 2. i 600 —259 —28.7 1,700 157 2.1 1,600 288 4-5 34° —8 —. 7 360 —31 —2. 6 340 —8 — *7 340 —8 — .7 34° —7 — .6 340 —8 — *7 340 —8 —. 7 400 12 .8 B 1 What the User Pays for the Use of the Land, I. e.. tlie Net Ground Rent Plus the Tax $1,066 8.574 33 33 33 33 *90 in 2 37 20 238 59 246 268 383 10 '3 10 10 9 10 10 33 Gross Value of Land, the User's Rent Capitalised at 5 per Cent. $21,320 171,480 660 660 660 660 5,980 2,220 40 740 400 3,760 I,l8o 4,9 2 0 SjS^O 7,600 200 260 200 200 l8o 200 200 660 738 5-100 1,100 4/300 417 400 17 i-5 33 660 739 S.100 1,100 4,000 ♦•7 400 17 i-5 33 660 740 S,ioo 1,100 4/300 417 400 17 '•5 33 660 741 5,100 1,100 4,000 417 400 17 i-S 33 660 742 5.100 1,500 3,600 297 360 -63 —4.2 41 820 743 45,700 8,200 37,500 4,124 3,750 374 4 6 493 9,900 744 44,800 7,300 37,5°° 4.137 3,750 387 5-3 495 9,900 745 l,3«» 700 600 317 60 *57 36-7 267 5,340 746 4,900 4,300 600 527 60 467 IO.9 S3‘ 10,620 747 7,ooo 2,200 4,800 6l6 480 136 6.2 I69 3,380 748 I,8CO 500 1,300 189 130 59 II 8 00 M 20 749 7,700 2,400 5,3oo 636 530 I06 4 4 142 2,840 750 6,900 900 6,000 34i 600 —259 —28, 7 2v 4,920 751 1,90c 400 1,300 167 150 17 V 42 2, 460 $35,808,801 25,067,800 $10,741,000 $2,277,222 $1/371,800 $1,205,422 At. 4 8 $1,577,4 $31,548,5°° K> K) the a b c of taxation appendix h INDEX Absorption of taxes on rent, 4 1 - Access to land, equalisation of, 9, xo. Adams, H. C., on rent a social product, 30. Adams, John Quincy, building ­ on site of home of, 21. Agricultural rent, 129, 171-I73-. Ames Building, Boston, taxes on, 74. Ames estate, assessed valuation ­ of, 73. Amortisation, principle of, 47, 48. Andrews, E. Benjamin, on taxation of rent, 12 (ftn.); on rent a social product, 29; in the Saratoga discussion, ­ 102. Aquinas, St. Thomas, on natural law, 104. Assessed valuations, of buildings ­ in M assachusetts, 62; of land in Massachusetts, 62; in Suffolk County, 63; in twelve cities and towns, 63; in seventeen cities and towns, 64; of Washington Street, Boston, ­ 67-68; of Ames estate, ­ Boston, 73; of buildings ­ and land in Boston ­ in 1887, 73; of Howland ­ Street, 73; estate at Cambridge and Charles streets, 73; defined, 112; in Lawrence, Scituate, Clinton, Whitman, compared ­ with actual rental values, 126, 127. Atkinson, Edward, on the single tax, 73; on absolute ­ ownership, 100; opponent of the Henry George theory, 101, 102. Bascom, John, on impossibility ­ of shifting rent taxes, 34. Bastable, C. F., on selling value of land an untaxed value, 47. Berkshire farmers, buildings and land of, 124. Blackstone, defines land, 109. Boston, ground rent of, 15-20; gross land value of, 18; life of buildings in, 21; Hotel Boylston, 22; assessed valuations of buildings and land in, 23; total taxes in 1907, 23, 26; under single tax, 27, 91-92; appreciation of values in, 52; demand for land in, 52; object lessons ­ drawn from, 55-65, 66-78, 79-92; Winter 225 226 THE A B C OF TAXATION i Street, 55-65, 124; land affected by subway in, 57, 71; Shepard, Norwell Company, 58; Tremont Building, 59; Exchange Building, 59; Washington ­ Street, 66-78; number ­ of buildings in, 68; Old Corner Bookstore, 69; total ground rent of, 72; estate at Cambridge ­ and Charles streets, 73; Howland Street valuations, 73; assessed ­ valuation of Ames estate, 73; Sears and Ames buildings, 74; Boylston Building, 75; Masonic ­ Temple, 75; Public Library, 75; taxes in, 76, 161-163; Cornhill and the single tax, 79-92; unassessed ­ property in, 85; St. Paul’s Church, 86-88; land values and taxes in, 161-163; records of property ­ sales in, 190-192; records of rentals in, 193-221. Boston & Maine, railroad merger, 134, 135. Boston Transit Commission, land taken by, 57, 71. Boulevards, Boston, 77. Boylston Building, Boston, destruction of, 75. Boylston Hotel, Boston, 22. Bryan, W. J., on unjust taxation, ­ 150. Buildings, values of, in Boston, ­ 16-17, 21-23; taxation ­ of, 43, 44; results of decadence of, 51; values of, compared with land values, 55-64; valuations of, on Winter Street, Boston, 56-57; 59; results ­ of improving, 57; on State Street, 59; on Tremont Street, 59; assessed ­ valuations of, in Massachusetts, 62; in Suffolk County, 63; taxation ­ of, unsatisfactory, 65 ;on Washington Street, 66-68; average life of, 68; economic crop, 68; Boston’s cuticle, 68; number of, in Boston, 68; worthlessness of Washington ­ Street, 70; when to replace, 75; on Cornhill, 79-83; condemnation ­ of, 80; of insurance companies, 82; in Berkshire ­ farming district, 124. Bullock, C. J., on rent a social product, 29. Burtsell, Dr. R. L., in the McGlynn case, 183. Capital, in Winter Street, 58; ready and watching, 77; investment of, retarded by present method of taxation, 82; and railroads, ­ 145; proper return to, in public utilities, 146, 147. Capitalisation of the land tax, 49, in; illustration of, 49-52. Capitalised tax defined, in. Carnegie, Andrew, the unearned ­ increment, 152. Garret, J. R., author of tax formula, 72 (ftn.). [INDEX 227 Carver, T. N., on selling value of land an untaxed value, 48; on plan to secure agreement among economists, ­ 189 (ftn.). Catholic Church and single tax, 105; attitude on land question, 173-184. Cause and effect, applied to ground rent, 5. Charles Street, Boston, estate at corner of Cambridge Street and, 73. Clark, John B., on rent a social product, 10; in the Saratoga discussion, 102. Clews, Henry, on evils of syndicates and public service corporations, I3S-Clinton, Mass., assessed valuations ­ in, 126. Commission, to regulate public ­ utilities, 133,135. Commodities, tax on, transferable, ­ 34. Compensationists, theory of, 120. Confiscation vs. taxation, 90; in Boston, 91; Henry George on, 101; single tax not, 116. Constitution of Massachusetts, ­ relation to single tax, 121. Cornhill, Boston, and the single tax, 79-92; income from buildings on, 80; disproportionate amount of street for buildings, 81. Cost of living not affected by ground rent tax, 42. Cottmg, Uriah, builder, 79. Dead hands, land held by, 52, Discrimination against the farmer, 124. Distribution favourably affected ­ by rent taxation, 9, 11, 108, 148. Double taxation, 76. Economic Club, discussion of, on the single tax, 91. Economic rent, defined as ground rent, 41; applied to public expenses, 50; of Old Corner Bookstore, 70; expression of social ­ activities, 151. See also Rent and Ground rent. Economists, opinions of: on rent a social product, 28-30; on impossibility of shifting tax on rent, 33-35; on selling value of land an untaxed value, 45-48; disproportionate treatment of agricultural rent by, 171-173; plan to secure agreement among, 187-190. Economy, absence of, in tax affairs, 15. Ely, R. T., answer to singletax ­ argument, 48; on the principle of amortisation, 48-49; objections of, considered, ­ 49-52. England, effect of abolishing land tax in, 45; existing land tax in, 46. English common law, on ownership ­ of land, 103. Equal opportunities and single ­ tax, 86. 228 THE A B C OF TAXATION Equalisation of taxation, the office of ground rent, 9; relation to depreciation of building values, 21; and distribution of wealth, 86; how to effect, 66,116,117. Estate in land, 103. Estate, rentals, in Boston, 17, 193-221. Eviction, tenant, 101. Exchange Building, Boston, 59-. Exemption, resulting from the single tax, 24; of assessed values, 24-25; of last purchaser, 36; land owners and, 40-41. Farmer, tax on economic rent not transferable to, 35; functions of, compared with landlord, 19; and the single tax, 122-131; wages of, 122; his own municipality, 123; classified, ­ 124; doubly discriminated ­ against, 124; land and buildings of Berkshire, 124; and taxation ­ on fertility, 128. Farm land, assessed valuations ­ in Massachusetts, 129,130. See also Land. Fertility, taxation of, 128. Feudal tenure, 100. Ford Amendment, 138, 142. Ford Franchise Act, 8, 141, 154-Formula, for amount of ground rent, 18; for cost of government, 72; for valuation based on income, ­ 125. France, kinds of taxes in, 46. Franchise, taxation of, 8, 30, 137, 140; place in single tax theory, 109; law governing, in New York, 141; compared to land, 142, 187. Franchise value, defined, no, 142. Generic peculiarities of land, 3-3°) 31-35. 36-52,.ISS-George, Henry, doctrine of followers of, 48-50; on error concerning land nationalisation, 95; interpretation ­ of doctrine of, 96, 97; on confiscation ­ of land, 101; theories ­ of, opposed by Edward ­ Atkinson, 102-103; an omission by, 104 (ftn.); on method of securing ­ single tax, 107; defines single tax, 153; on equal right to use of land, 154; doctrine of taxation, 167, 168; Tolstoy ­ and, 168-171. Germany, municipal housing of the poor in, 77. Giffen, Sir Robert, on selling value of land an untaxed value, 45. Glasgow, ownership of public utilities in, 132. Graft, extermination of, 138. Gross rent, defined, 16, 112. See also Rent. Gross value defined, 112. Ground rent defined, 3-4, 31, 70-71,187,188; the value of “ proximity,” value of rights and privileges INDEX 229 stipulated in title deed, 4, 156; as defined by Mr. Shearman, 4-5; relation of, to public expenditures, ­ S; true theory of, 6-7; operation of, 7-8; office of, 9-11; increase of tax on, 9; private appropriation ­ of, a special privilege, 11; and land values, 10-11; cause of, 11-14, Ij6; E. Benjamin Andrews on, 12 (ftn.), 29; source of, 14; maintenance ­ of, 14-15; a social ­ product, 15; of Boston, ­ 15-20; volume of, x6; exemplification of income ­ tax, 25; Adam Smith on, 28; John Stuart ­ Mill on, 29; Adams on, 30; determined by demand, 31; views of economists on shifting of, 33-35; and the landlord, ­ 35, 47; cannot be shifted, 35, 85, 157; “what land is worth for use,” 38; a governing factor, 41; cannot be increased ­ or decreased, 41; tax on, affects neither wages nor cost of living, 42; the same homogeneous ­ thing, 42; comparison ­ of building rents with, 61; of Old Corner Bookstore, 70; of Boston, ­ 72, 130, 161; a reflected ­ value, 83; of St. Paul’s Church, 87; evils of private appropriation of, 99; right of landowners ­ to, 100; result of a self-operating social law, x 15; nature of, 115; consideration ­ of agricultural, 130; of New York, 130; of United States, 130; a great Mississippi, 131; relation to unjust fortunes, ­ 152. Hoffman, on incidence of rent taxation, 34. House lots, what is involved in purchasing, 37-38; hypothetical ­ cost of, 39, 40. See also Land. Houses, hypothetical purchase ­ of, 43-45; value of, affected by mortgage, 43; rent of, not affected by taxation, 44; for the poor, 77; taxation of, 159. See also Buildings. Howland Street, Boston, assessed ­ valuations of, 73. Income tax, a form of single tax, 25; discussed, 148-152; President Roosevelt ­ on, 151; as a death rate, 152. Increment, future, 91. Incumbrances. See Mortgage ­ and Taxes. Individual and the state, relation ­ affected by the single tax, 8. Immunity from taxation, of landowners, 90. Inheritance tax, and income tax, 148-152; Congressional ­ plan concerning, 148; evils of, 151; as a death rate, 152. 230 THE A B C OF TAXATION Insurance companies, single tax and, 82; buildings of, 82. Intangibles, 41, 83. Johnson, the Rev. R. J., on the relation of the Catholic ­ Church to the single tax proposal, 104-105. Labouchere, on taxing land values, 170. Labour, taxed on basis of its own construction, 22. Land value of a social produce ­ 3-30; rights and privileges pertaining to, 3, 4; distinction between land values and, 9; indestructibility ­ of, 11; disposition ­ of taxes on, 12; nonshiftability of tax on, 31-35; ultimate burdenlessness of, 36-52; selling value of, an untaxed value, 36-52, 155, 158, 159; selling price of, 39; relation of man to use of, 39; inequality of taxation of, in United States, 49; demand for, in Boston, 52; on Winter Street, 58; title to, defined, ­ 83; unassessed, in Boston, 85, 90; private ownership vs. private possession ­ of, 96; defined, 109, 170; source of all wealth, 109; contrasted with wealth, no; overvaluation ­ of agricultural, 125; undervaluation of village and urban, 125; defined in the Ford Franchise ­ Act, 141, 142; equal rights to use of, 154; a public franchise, 154; site value of, a social ­ product, 155; tax on, cannot be shifted, 155; selling value of, defined, 188. Land improvement companies, ­ effect of single tax on, 82. Land nationalisation and single tax, 89; Henry George on, 95. Landowners, exempt from taxation, 36, 40; benefited ­ by improvement to buildings, 58; of Winter Street property, 60; justice ­ of exemption of, 90; not entitled to all ground rent, 98, 100, 103. Land tax, affected by change of ownership, 36; effect of abolishing in England, 45; amount of, in England, ­ 46; capitalisation of, in United States, 49; defined, 112-113. Land values, affected by public improvements, 5; vs. monopolies and special ­ privileges, 8; present and past, 9-10, 12; a social product, 10, 28-30; agencies enhancing, 13; determinant of, 14; in Boston, 16-20, 23; gross, in Boston, 18; and decay of buildings, 21, 22-23 i an untaxed value, 36-52; effect of mortgage interest and taxes on, 37; INDEX 231 relation of “rights and privileges thereto pertaining” ­ on, 38; relation of, to building values, 55; increase of, in Winter Street, 59; in Washington ­ Street, 67; in Massachusetts ­ towns and cities, 87; defined, 97, 170, 187; franchise values, no; vs. new values in Boston, 90; land valuations, 111,112, 113, 114; and the public schools, 118; of Boston and the Berkshires compared, ­ 124; imperishable by public conservation, 152-Landlord, function of, 19; effect of ground rent on, 20, 24, 33, 34. 35. 47; John Stuart Mill on, 29; as owners of both houses and land, 41 (ftn.); in England, 46; “no burden” ­ for, 59. Lawrence, Mass., land of, undervalued, 126. Legislative regulation of public ­ utilities, 134. Leo XIII, Pope, Labour Encyclical, ­ 104, 183. Long, John D., on social discontent, 149. Management of public service ­ corporations, 145. Manhattan, wealth of, 152. Market value of land, how affected by taxation, 32. Masonic Temple, Boston, 75-Massachusetts, land valuations ­ of towns and cities of, 62, 87; relation of constitution of, to single tax, 121; valuations of farm lands of, 129, 130. See also Boston, Clinton, Lawrence, etc. Massachusetts Single Tax League, 55, 56, 66 (ftn.). McGlynn, the Rev. Edward, in defence of single tax, 105-106, 173-184. Mill, John Stuart, on taxation ­ of land value increment, ­ 23; on rent a social product, 29; on impossibility of shifting ground rent tax, 34; on selling value of land an untaxed value, 46, 47. Monopolies, taxation of, 7, 8, 27-28, no; source of evils of, 135; defined, 188. Mortgage, effect of, on selling value of land, 24 (ftn.), 39, 43; effect of, on rent, 32; effect of, on land, 37, 39; a part of ground rent, 39; paid out of gross income, ­ 40. Multiple tax, arguments for, 75-Murhard, on incidence of rent taxation, 34. Nationalisation of land. See Land nationalisation. Natural resources, taxation of, 8. Natural tax, natural basis for, 83. Net rent, compared with gross rent, 16, 17. See also Rent, Net value. 2j2 THE A B C OF TAXATION Net value vs. gross value, 112. See also Land values. New tax, defined, 39 (ftn.); effect of, 90. New York, Ford Franchise Act, 8, 141, 154; regulation ­ of public utilities in, 133; Ford Amendment, ­ 138, 142; reduction ­ of overcapitalisation ­ in, 140; Public Utilities ­ Commission in, 141. Newton, Mass., tax rate in, 184; letter to assessors of, 184-186. Nicholson, J. S., on impossibility ­ of shifting a tax on rent, 35. O’Connell, Archbishop, on social discontent, 149. Old Corner Bookstore, Boston, ­ 69. Old tax, defined, 39; effect of, on price of land, 39. Overcapitalisation, reduction of, in New York, 140. Overvaluation of agricultural land, 125. Ownership of land, defined, 96, 97, 98, in; Henry George on, 100. See also Land and Landowners. Personal property should be exempt from taxation, 116. Philadelphia, Pa., land value, 1686,9. Politics and public utilities, 140. Population and land privileges, ­ 4; a cause of ground rent, 13. Possession, defined, 96, 97; vs. ownership, 97. Post, Louis F., on the single tax, 154. Preuss, Arthur, on the Satolli decision in the McGlynn case, 183. Private appropriation of rent, explosion of theory of, 9. Private expenditure, a source of rent, 13,136. Private ownership, nr, 144. Private property in land, 95-107; not inconsistent with single tax, 96, 169, 174; definition of, 97-98; John Z. White on the two meanings of, 99 (ftn.); abolition of, 101, 102. Privilege, essence of, 88, 148; one part of wealth goes to, 148; taxation of, 150. See also Special privilege. “Proximity,” in land values, 4-Public expenditure, a source of rent, 13,15. Public franchise, classified as land, 142, 154; defined, ? 8 7-Public functions vs. private functions, 138. Public improvements, and land values, 5; and ground rent, 14-15. Public Library, Boston, 75. Public ownership of public utilities, 132. Public schools and land values, ­ 118. Public service corporations and the public, 136. Public utilities, regulation by taxation, 132-147; put INDEX 233 He ownership of, in Switzerland ­ and Glasgow, 132; dangers of public ownership of, 132; regulation ­ of, in New York, 133, 141; true system of regulating, 133; public regulation of, vs. public ownership of, 133; regulation ­ by legislature, 134-135; regulation by commission, ­ 135-137; the Boston & Maine, 134; Henry Clews on regulation ­ by commission, 135; and politics, 140; regulation ­ of, by rates and taxation, 137-147; definition ­ of, 138; advantages ­ of regulation of, 141; railroads, 145-146. Public Utilities Commission, New York, 141. Quasi-public expenditure, a source of rent, 13, 156. Railroads, the Boston & Maine, 134, 135; regulation ­ of, 137, 138, 144-147; and schedule rates, r 43-Rates, regulation of, 143,144. Real estate, taxation confined ­ to, 20, 21. See also Land. Regulation of public utilities. See Public utilities. Rent, a natural tribute, 7; for special privileges, 8; socially maintained, 10; relation to distribution of produce, li; for public service, 15; a social product, 29, 30; conditions determining amount of, 35; agricultural, ­ 129, 171-173; described ­ as flour coming from the public mill, 151. See also Ground rent. Agricultural rent. Economic ­ rent. Rerum Novarum, the Pope’s Encyclical, 183. Ricardo, David, on impossibility ­ of shifting ground rent tax, 33, 34; law of rent, 171. Right of way to buildings, 97. Rights and privileges, title to, 97; and ground rent, 156. Rogers, Thorold, on impossibility ­ of shifting a tax on rent, 34. Roosevelt,Theodore, 141,150, I5U IS 2 - Saratoga, New York, discussion ­ at, 101. Sartorius, on the incidence of rent taxation, 34. Savings banks and the single tax, 82 (ftn.). School tax, justice of, 117. 118. Scituate, Mass., land of, undervalued, ­ 126, 127. Sears Building, Boston, taxes on, 74. Seligman, E. R. A., on impossibility ­ of shifting a tax on rent, 34, 35; on special taxation for future ­ increase in ground rent, 91-92; in the Saratoga ­ discussion, 102. 234 THE A B C OF TAXATION Selling value of land, contrasted ­ with assessed valuations, ­ 16-17; effect of mortgage on, 24, (ftn.), 39, 43; an untaxed value, 36-52, jS-48, 188; the “rump, 85; definition of, 188. Shearman, Thomas G., defines ­ ground rent, 4; on impossibility of shifting a tax on rent, 33; on effect of present taxation, 108; on sufficiency of the single tax, 116; on overvaluation of agricultural ­ land, 125, 127. Shepard, Norwell Company, Boston, improvement in property of, 58. Single tax, a natural tax, 4, 41, 83, 115; effect of, 8; calculation of, for Boston, ­ 18; resulting exemptions, ­ 24; as an income tax, 25-26; applied ­ to Boston, 27; Federal action on, 30; objections to, answered, 48-52, 89-91, 119; illustrated, ­ in Winter Street, Boston, 55-65; effect of, on buildings, 57, 69, 75, 77, 80, 82; illustrated in Washington Street, Boston, 66-78; Edward Atkinson on, 73; based on a scientific principle, 76, 84, 175; not really a tax, 76, 113; explained 76, 91, 153-163; illustrated ­ in Cornhill, Boston, ­ 79-92; and the “land improvement companies,” ­ 82; cure for special privilege, 86; not land nationalisation, 89; defined, 91-92; equal freedom under, 99; origin in justice, 102; justice of, 108-121; and franchises, 109; and wages, 1x3; effect on distribution 113, 176; as a natural tax, 116; and socialism, 118; obstacles to a thorough ­ consideration of, 119-120; and the Massachusetts ­ constitution, 121; and the farmer, 122-131; Credo, Argument, Conclusion of, 153-163; defined byHenry George, 153; doctrine, catholic, 154, 167; legs on which it stands, 155; the polestar, 163; ethics of, 167, 168; loadstone, 168; a religious philosophy, 168. Single tax tripos, three legs of, 3-3°> 31-35. 36-52, . J55-Smith, Adam, on rent a social ­ product, 28-29; on impossibility of shifting a tax on ground rent, 33. Social discontent, 149. Social product, ground rent a, 9, II, 25-30; land values a, 10, 28-30. Socialism and the single tax, 118, 167. Socialisation of rent, 167-168. Special privilege, taxation of, 7, 8, 27, 86, 109, 150; renting, 8; elimination of, 8; value of, 9; income from, 26; absorbs taxes. INDEX 235 27; cause of unequal division of wealth, 84; single tax a cure for, 86; source of inequalities, 109, 148; result of abolishing, ­ 114. Spencer, Herbert, on private property in land, 95, 99. St. Paul’s Church, Boston, value of property, 87. St. Thomas Aquinaj^ on natural law, 104. Statutes of taxation, inconsistency ­ of, 30. Stowell & Company, Boston, ­ rental of estate of, 61. Subway, Boston, land taken for, 57; affecting land Values, 6$; affecting Washington Street, 69, 71-Suffolk County, Mass., assessed ­ valuations in, 63. Supply and demand, determining ­ interest, jo. Switzerland, ownership of public utilities in, 132. Tangibles, 41-45. Taxation, natural, 4, 41; source of rent, 5; of special privileges, 8, 27; equalisation of, 9; of ground rent and access to land, 10, 115; and distribution, 11, 108, 148; absence of economy in present method of, 15, 74, 81; of real estate only, 20; imposed by time, 21; inequalities in present system, 23, 162; compared with mortgage, ­ 24 (ftn.), and the income tax, 25; of monopoly,27; ­ proportionate and reasonable 27; natural ­ law of, 30; effect of, on tenant’s rent, 31; does not determine ground rent, 31; of buildings. ­ 43. ,44. 6 S; effect: of, on building development, ­ 58, 65, 70, 7s, 77, 80, 82; in Boston, 72; for Boston boulevards, 77; natural basis of, 83; vs. confiscation, 90; relation to property, 98; and distribution of wealth, 108; double discrimination ­ against farmers, 124; on regulation of, 13 2-147; of franchises, 137, 140, 144; the hope of graft extermination, 138; of incomes and inheritances, ­ 148-152; Boston’s ­ system of, 160-163. Taxes, defined in terms of ground rent, 4; relation of ground rent to, 5, 6; illustration of Mississippi River, coffee mill, circulation ­ of the blood, 6; increase ­ of, on ground rent, 9; and net rent, 16; of Boston, 18, 26, 72; effect of, on depreciation of land, 23; as liens, 24 (ftn.), definition of, 31, 32; effect of, on net and gross rent, 3,2; not transferable ­ to tenants, 33; shifted to tenants, 41 (ftn.); natural,in Boston, 72; unnatural, in Boston, 236 THE A B C OF TAXATION / 72; capitalisation of, 111; vs. ground rent, 115; justice of school, 117, 118; likened to wheat in public hopper, 151; and unjust fortunes, 150. Tax rate, in Boston, 90. Tenant, taxes and rent of, 31; how affected by ground rent tax, 33, 34; injustice of taxation to, 59; eviction, 101. Tolstoy, on private property in land, 99; his single tax doctrine, 168-171. Tremont Building, Boston, _ S9-Tremont Street, Boston, 86. Tripos, Single tax, 3-30, 31-35,36-52,155. Undervaluation of urban land, 124,125. Unequal distribution of wealth, 108, 109; John D. Long on, 149; Archbishop ­ O’Connell on, 149. United States, unequal taxation ­ in, 49. Unprivileged fortunes, 151. Unprivileged men, 149. Urban land. See Land. Usufruct, in. Vacant land, 8r. See also Land. Valuation. See Value and Land values. Value, assessed and selling, contrasted, 16; of land and buildings, compared, 62-64; and valuation, 56-57, in; net, 112. See also Land values. Vested right, 91. Visibles, xi6, 117. Wages, increased by just taxation, ­ ix, 113, 122; not affected by tax on ground rent, 42; the single tax tenet, 86, 113; of the farmer, 122; a part of wealth, 148. Walker, Francis A., on impossibilities ­ of shifting ground rent tax, 34. Washington Street, Boston, and the single tax, 66-78; assessed valuation of, 67. Wealth, equalisation of taxation ­ and, 86; division of, 108; land the source of, 110; divided into wages and privilege, 148; derived ­ from savings, 148; evils of unearned, 149, 150; of Manhattan, 152. White, John Z., on the meaning ­ of “private property in land,” 99 (ftn.). Whitman, Mass., land of, undervalued, 127. Wilson, Woodrow, on the right attitude of corporations ­ toward the public, 135; on legislators ­ and executive regulations, ­ 137. Winn, Henry, on the multiple tax, 75. Winter Street, Boston, and the single tax, 55-65; diagram of, 55; improvement ­ of, 57-58. <s / STHE COUNTRY LIFE PBEM GARDEN CITY, N. Y. the scale towards inheritance and income taxes *49 I 1 ;-n accumulate five hundred dollars to his one, but cause, through the operation of this special privilege, f is at his, the poor man’s, expense that the rich man’s ^-.cumulation is made. Ex-Governor Long says that ere will be discontent just so long as certain comforts ; d possessions are within the reach of one class and *; yond the reach of another class. This discontent chbishop O’Connell calls the “tumultof theenvious.” r; it unprivileged men, whether unprivileged rich or : -.privileged poor/ have not far to look to find that ^: .content and envy start only where skill and enterprise ; ive off and special privilege begins. You are not vious of Edison or Marconi or Bessemer or railroad C ignates, or captains of industry; you gladly accord em princely rewards as public benefactors. It is si-.ly when the people are called upon to provide an Hson fortune for every city and town in the country j; rough privileged exaction that your discontent is aused. It is only when they are required to super-:■ pose upon an unprivileged steel fortune of three or f: Jr millions a privileged fortune of a thousand millions, :-.sed upon economic rent, that the shoe begins to tch. It is only when the ore baron, the coal baron, i! e oil baron, the railroad baron, and the land baron J: 2 privileged to take ten dollars or a hundred dollars L >m their wages and add it to the monopoly price of :■ al and iron and oil that men are swayed by the f-umult of the envious.” j: Legislation has been busy constituting criminal _ ences. The air is charged with criminal prosecution ' d conviction where fortunes have been swelled rough violation of law. But is it not true that neither 'islatures nor courts have seriously addressed 3: