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, with 
out 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 incum 
brances 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