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  —