.

In the wider field of national taxation the method of collecting the tax is precisely the same as the method of collecting it for local purposes. The land value is charged with a payment of so much in the pound of its capital value as Parliament may provide. In New Zealand the tax begins at ld. in the pound on properties above £500 in value, smaller properties being exempted, and large estates being charged at higher rates. In South Australia the tax begins at 1/2d. in the pound, without any exemptions on small properties; South Australian legislation in this respect being more in accord with principle than the legislation of New Zealand, for land values great and small are equally the product of society and not of the individual. No person can add a farthing to the value of his own land by his labour, though he put upon thousands of pounds worth of improvements. The added value thus given to a property rests in the improvements and not in the site, and if they are destroyed the added value disappears. On the other hand, the added value given to a property by increase of population, or the construction of roads or railways, which create a greater demand for land is quite independent of any improvements the owner may effect upon it; it is indestructible as it is uncreatable by the individual and attaches solely to the site. That will bring much money while there is a population which wants the land to live and work upon, though it be absolutely bare, and will bring nothing at all, though covered with factories or palaces, if the population drifts away.

Be it great or small, therefore, land value is a proper subject of taxation, and the tax upon it has many practical advantages besides the pre-eminent one of its fairness. In the first place it taps a steadily increasing fund, which expands with the expanding demands upon revenue as industry develops and society becomes more complex. In a new country land values are very small, because no one will pay a great price for land when all a man can require is to be had for nothing or a nominal price. But in new countries the revenue required is small also: Government is of the simplest description; highly paid judges, a great education system, public libraries and museums, old age pensions, a great police force, extensive prisons, asylums and workhouses would be useless and a mere embarrassment to a handful of people engaged in primary production upon land to be had for the taking. As the settlement grows in numbers, land values come into existence to provide payment for the social services demanded of the Government. New Zealand with its million inhabitants has £150,000,000 worth of land value, which increases yearly with the coming of emigrants and the natural increase of the people. The United Kingdom with its 44,000,000 inhabitants has at least' £6,000,000,000 worth of land value -- a greater potential source of revenue proportioned to its social needs. It is only by drawing upon this source that these needs can be adequately met.

Another great merit of the, tax on land values is the impossibility of its evasion, for while income may be under-stated, many kinds of property may be hidden and customs officers may be cheated, and excisable goods escape duty, land can be neither concealed nor removed from the country. Its value can be assessed, and should the owner or occupier neglect or refuse to pay the tax, it can be recovered without difficulty by renting or selling the land; and while the tax cannot be evaded, neither can it be passed on to another by the person legally chargeable. Unlike most other taxes, the tax upon land values stays where it is put. The importer who pays the tea duty at the customs house collects it again -- with something added for interest on his capital laid out on duty -- from the purchasers of his tea. Just so, it is alleged, will the land-owner, when taxed, recover from his tenants in increased rents. No doubt he would do so if he could, but it is beyond his powers. In the first place landlords now ask all that their tenants can pay; a poor landlord is not able by reason of his poverty to extort a higher rent than a rich one; and the mere fact that a tax makes all landlords poorer will not put them in a position to collect more rent from their tenants. They cannot raise rents, for instance, when their income tax is increased. When the land values tax comes into operation they will be obliged to reduce rents, because the tax will force land hitherto unused or only partially used into the market, and rents will naturally fall with the increased supply. Its effect in reducing the price of land is a peculiarity of the tax which distinguishes it from taxes on every other form of property, and this distinction results from the difference between the conditions which determine the price of commodities and the conditions which determine the price of land. Briefly put, the price of commodities made by labour is what their sellers will take; the price of land (made by nature) is what its users will give. Unless the growers of tea or the builders of houses, for example, receive a price sufficient to recompense for the cost of production, they will cease to grow tea or to build houses. As some of these people are already working at the lowest margin of profit they cannot bear the increased cost of a tax, and must therefore add it to the price which the consumer pays, or else give up their business. The producers of commodities have power to limit the supply, and will cease production when it is not profitable.

With the land it is otherwise. It is not subject to a labour cost which fixes its price. Not being made by labour, its supply cannot be limited by curtailment of production, and the artificial limitation of supply which it is now possible for owners to effect by holding land out of use, or out of full use, will become impossible when they are taxed sufficiently to make full use of all land imperative in order to meet the requirements of the tax. The price of land is, as we have said, what men will consent to pay. When the supply is artificially limited, their competition with one another for land will induce them to pay more than when the supply is enlarged and competition thereby rendered less keen. Owing to these facts the owner of land values must meet the tax upon them out of his own pocket, being unable to recoup himself from land-users by charging higher rents or prices.

In common with other direct taxes an impost upon land values has the great merit of conveying to the Treasury all the money taken from the taxypayer, and once the first valuation is made the expenses of collecting the tax are exceedingly small. Customs and excise duties which might be replaced land values taxation not only require a host of officials for their collection, but, even when levied for revenue purposes alone, put a burden on the taxpayer beyond the amount of the duty, for, as already mentioned, the importer -- and also the wholesale merchant and the retailer -- who pay the duty in the first instance, all require their trade profit from the ultimate purchaser, upon the money they have spent at the customs office as well as upon their outlay in buying goods. Thus a duty of 6d. per lb. upon tea will cost the consumer 7d., even if the profits of all the middle-men, who pay the duty and collect it from their customers, do not amount to as much as 20 per cent.

In the case of protective duties the difference between the sums paid by consumers and those received by the Treasury is vastly greater, for all protected interests within the country raise their prices and thus levy taxes which enrich them and give nothing to the State. The manufacturers and farmers who gave evidence before the late "Tariff Commission" frankly admitted that they wanted duties on imported goods, not to increase the revenue, but to enable them to charge more for what they sold.

If our reasoning thus far has been sound we have established the claim of land values taxation to justice and the efficiency of the tax as an instrument for raising revenue. The next point for consideration is the extent to which this form of taxation may be carried without committing injustice. Let us recapitulate to see what data we have before us for forming a judgment on this matter. We have found that the tax is fair; that it is more fair than any other tax; that while these other taxes all take private property for public purposes, the tax on land values draws upon a fund created not by individuals but by society. These conclusions will carry us very far. In the first place, if a tax on land values is not only fair, but the most just of all taxes, it follows that its revenue-producing capacity should be exhausted before recourse is made to taxes which are less just. Indisputably these could be justified only by necessity. Again, a fund created by society is morally the property of society, and the State should take every possible penny from this fund, should spend all that belongs to it, before demanding what belongs to others. If the State did this it would put an end to private property in land, would in effect nationalise land by taking rent for public purposes, but without making crude endeavours to administer any estates, and without interfering with the title to or the possession of a single acre. The present landowners would remain in possession, secure and undisturbed as long as they paid the tax, which would be a fair measure of the socially created land value in their possession. At the same time they would enjoy absolute ownership of all improvements on the land -- an ownership which at present is limited by the obligation to pay rates, and other burdens -- and would be able to buy and sell landed property subject to the payment of the tax. The tax would be a full ground rent; land without any improvements would, of course, lose its selling value; but the value of improved properties might be very high, for, though the site would be taxed to its full value, the improvements incorporated with it would be free from all taxation.

Not only would things attached to the land be untaxed, but so also would be incomes earned in all manners of ways, the purchases of all the goods which now pay such heavy toll at the customs house, the business transactions now penalised by stamp duties, the multifarious activities upon which in one way or another the modern State levies tribute. This new respect for private property, this release of the mass of the people from the grip of the tax collector, would become possible if land values were taken by the State, because this one tax, as we shall show later on, would yield sufficient revenue to defray all the national and municipal expenses of the country. The State and the municipality would share in the socially created value according to their respective needs. It would not be expedient or practicable to make a complete and a sudden change in the financial system of the country by causing the people to immediately resume the whole of its rightful property, the land value, which has been allowed to find its way into private hands. Long-continued wrong and injustice cannot be swept out of existence in a day, and further on in this book will be found a statement of the measure of land values taxation now practicable as a step towards the ultimate establishment of a really just fiscal system under which the land values tax would replace all other taxes.

To some people who admit that land values are a social product and that the present owners of them enjoy a special privilege, which should in justice be paid for at its full value, it nevertheless seems an injustice that those who make use of land should be taxed and that all others should get off "scot free." To such objectors it may be pointed out in the first place that there is no one who would go "scot free," since every one in a country is more or less a participant in the enjoyment of land values: the shopkeeper who rents a shop in Bond Street to a greater extent than the lessee of a similar shop in a London suburb; the lodger in a city boarding house to a greater extent than the lodger in a provincial town. All persons who use or occupy land of any value for any purpose, whether it be only a few square feet as a dwelling-place, a city block as a place of business or many acres for agriculture, will pay each their fair quota of the tax. The lodger and the lessee will pay it in their rent or board money to some one else, who will pass it on to the landlord through whom eventually it reaches the Treasury; the freeholder will pay his quota direct to the State. The tax paid by some persons will, it is true, be extremely small, because their participation in land values is extremely limited, but this is only common justice.

Those still unconvinced of the fairness of a system which gives the benefits of civilised government freely to citizens whether land-owners or not, these benefits being provided out of payments made by land-owners for privileges accorded to them alone, be helped by a homely illustration of a similar principle in the conduct of business. Food and drink are provided in a restaurant where a charge is made for these things according to their value, and no charge is made for the enjoyment of music, the opportunity of reading papers, playing games, and generally participating in the comfort of a well-appointed establishment. The profits made on the sale of refreshments meet the cost of providing all these things without charge, for the benefit of those who enter the restaurant. The guest who spends a trifle on a cup of tea, or accompanying a friend pays nothing at all, can listen to the band, and turn over the paper, as freely as the man who spends a large sum on an expensive dinner. Regard the State as a restaurant, the land values as the viands, the proceeds of which suffice to pay all expenses. Then the holder of great land values who pays much in taxation is the man who consumes much food and settles a big bill at the counter. The tenant of a single room or the rare occupant of valueless land is the customer who drinks a cup of tea or takes a seat without consuming anything. These types contribute little or nothing towards the expenses of the State in the one case and to the expenses of the restaurant in the other. Yet the State which should permit the man who used little land to enjoy all the common benefits of citizenship on these terms would be only following the usual example of a restaurant company which permitted the man who ate little food to enjoy all the common benefits of a guest on analogous terms. If the much-taxed land-holder objects that the landless man should pay for benefits of citizenship, e.g. protection to life and property, the answer is that the land-holder should also pay, for he too receives them freely. Just as reasonably might the consumer of a big dinner at a restaurant argue that the visitor who consumed little or nothing should be made to pay something for the band; and he would be met with a similar answer; that the music was provided gratis, for large customers and small alike, being paid for by the profit on the service of supplying food, just as the State's expenses are paid for out of money received for special privileges conferred on land-owners.

Following the analogy a little further, let us imagine circumstances to arise in which fair payment for land values was insufficient to med public expenditure, then it would be reasonable to make both the great and small participants in land values pay some extra sum to provide what was needed. Similarly if profits on meals at fair prices in the restaurant were insufficient to pay for a band, its expenses would be equitably met by a levy on all customers, whether they spent much or little on their food.

We have now by a logical development of the principles of taxation arrived at the conclusion that, save perhaps in cases of possible emergency, the only tax should be one upon land values, which would yield a revenue adequate for all national and municipal purposes; and we have seen that justice demands the ultimate raising of this tax to a point at which it would absorb the whole rental value and practically abolish private property in land. This conclusion is of such great importance that, though this book deals primarily with the land in its relation to taxing problems and is not intended as a treatise on general problems of land ownership, space must be found for some extraneous considerations which support the conclusion we have come to by following the dictates of just taxation whither they have led us.

Perfect taxation would abolish private property in land: there are unanswerable reasons for condemning private property in land if taxation were non-existent. The most obvious of these is that land, while limited in quantity, is a necessity of human existence, and that its ownership by one set of men makes them the arbiters of the conditions upon which the rest of humanity shall live. To put the matter in another way, let it be granted that all men have an equal right to live, and it follows of necessity that all have an equal right to land, for since they cannot live except on the land, rights to life would be unequal if one man were bound and another were not, to pay for land on which a foothold at least is a necessity of living. And this equal right to life, with its corollary an equal right to land, belongs to generations unborn as well as to those living to-day. This fact justifies two conclusions: the first is, that no sale o£ this right which might conceivably be alleged to have been acquiesced in by living people can be urged against the child to be born to-morrow, who has had no possible chance of selling his birthright; the second is, that no wild scheme of dividing the land among its inhabitants would have the support of reason or justice. Not only is it impracticable, but even if it could be done it would fail to secure the equal rights to land of persons born after the division was made; there could not be a new division every day. There is indeed only one method of giving equal rights to land to every individual, and that is to make all persons in occupation of land pay its fair rental to the State; whose duty it is; as the trustee of all its citizens, to spend its revenues for their equal benefit.

In exacting this rental to preserve the equal rights of all to the land, it will be seen that the State would be taxing land values in the manner which an independent line of inquiry led us to maintain is just and necessary. And that this method of securing human beings in their birthright is founded on common sense and example can be shown by its analogy with the procedure which sensible men would adopt when faced with a somewhat similar problem, arising, for instance, in the case of a man leaving his property equally to several sons. One of them, we will suppose, is farming the estate, and wishes to continue doing so, while the others have no desire for a country life. No need arises to cut up the land; the farmer-son can remain in possession, paying the fair rent of the land into a fund which is equally divided between himself and his brothers. Their equal rights to the land are thereby made absolutely effective, and similarly the State can allow its children to occupy land for agriculture, mining, manufacturing, or business, as the case nay be, at their pleasure, subject only to the payment of a fair rent, which it is the business of the State to spend for the common advantage of all. If it be objected that many citizens will want the best land, the answer is that competition, which makes land value, will give the best sites to those who will pay the price -- and those who do not desire to pay so much will be participants in the extra rent paid by those who do. Similarly in the case of our family with equal rights to an estate, all their claims would have been satisfied with fairness if two of the sons had desired to farm the land, and the lease had gone to him who was willing to pay the highest rent.

In earlier chapters we have endeavoured to make it clear that land obtains a value or price through the growth of population, and improved methods of production which result in increased demand, and that this value therefore cannot equitably be private property. Consequently there is no need to labour this point here; but one more argument will not be out of place to sh6w that private property in land unjust and that existing injustice can be remedied taxation. A ready assent will be given, we imagine, a person who does not scent danger in the conclusion to be drawn from it, to the proposition that equal amounts of work of equal efficiency are in justice entitled to an equal reward. This proposition, we admit, cannot be proved; its truth is axiomatic. Nature, of course, takes no heed of it, for nature is not concerned with justice, and in one year and in one spot will give a bounteous return to labour which in another year or another spot she will render barren and fruitless. But to secure equal justice to its people is the first duty of the State. If justice does demand that equal amounts of labour of equal efficiency should be equally rewarded, in so far as social action can secure equality, then it follows that where one man is working on land which yields forty bushels of wheat to his labour and another man is forced to work on land which gives only twenty bushels to the same amount and quality of labour, the State has a duty to perform in securing equality of reward. If it maintains private property in land, its hands are tied, it can do nothing; and the first man will take forty bushels for such labour, as yields his less fortunate neighbour only twenty bushels. And still later comers into a privately owned world will get some only fifteen bushels, some ten, some nothing, not even the opportunity to dig the most hungry soil in a despairing effort to grow food, while yet others in multitudes will find no opportunity of employing their labour in any way to buy a crust from those who own the land from which alone food and all good things come. This, which is the deplorable state of affairs in England to-day, can only be put right by the State taking in taxation for common purposes the excess product of the best land over the worst land which labour is obliged to use, thereby equalising the returns of equally efficient labour. In other words, it must appropriate the rent, which is paid in town and country for the use of land which owes nothing of fertility or value to its owner, at the same time leaving him in full untaxed possession 0£ any improvements which he has made, or bought from those who made them.

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