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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 ­