On the boundary line between the Canadian provinces of Alberta and Saskatchewan lies the town of Lloydminster. Half of it is in Alberta and half in Saskatchewan. The boundary line runs down the middle of the main street. There is the same taxable area on each side. Local improvements requiring revenue - paving, sidewalks, fire protection, etc. -- are the same. No better situation could be made to order to give example of two tax systems side by side.

Alberta permits her cities, towns, and villages an unlimited freedom of the taxing power. Saskatchewan does not. Her restraint is very slight, but she does not trust local experience and knowledge to the full as Alberta does. She prescribes a few subjects of taxation for her towns, and among them are real- estate improvements, to be assessed at 60 per cent of their value.

Lloydminster, Saskatchewan, therefore, among other taxes, levies against improvements. Lloydminster, Alberta, on the other hand, taxes nothing that can move. She taxes only her land values.

Hence everything that can move without sacrificing more than the advantage in taxation comes to, moves over to the Alberta side. The Saskatchewan town was started two years before the other, and many considerable investments remain there for the present ; but even the men who own the businesses on that side are building their residences in Alberta. Men like Mr. Bell, Mr. Cumming, and Mr. Scott, who conduct respectively the largest hotel, general store, and hardware business in Lloydminster, reside on the Alberta side. New business locates in Alberta, as a matter of course. Mr. Ashton, whose business is in Alberta, tells me that if his building and stock (now exempt) were on the other side of the street, it would make a difference of about $12,000 in his assessment. I submit Lloydminster as a concrete showing of the effect of natural taxation upon prosperity.

The Whence and Whither of Prosperity

Well, you say, all this is rather to be expected. Prosperity depends largely on industry and industry depends on population. Population naturally gravitates toward free homes and untaxed labor, and these are the result of the land-value tax. We know this already.

Yes, but here is a point that is sometimes overlooked. If population and industry follow the land- value tax, as they do, they must follow it somewhere away from somewhere else. If population streams toward an economic situation that permits free industry and free homes, it must stream away from situations where these are not free.

Lloydminster shows in miniature the tendency that is operating very powerfully just now between British Columbia and the neighboring States of Washington and Oregon; between Western Canada and the Eastern provinces as a whole; between cities like Calgary or Lethbridge and Edmonton or Vancouver; and, finally, between the province of Alberta and the rest of the Dominion.

Mayor Gaynor had us all dipping into Epictetus a little last winter, so there can be no pedantry in recalling what Epictetus says about the advantage of the natural way of doing anything. If you once get hold of that, you can defy competition from those who are doing it in an unnatural way. Alberta has gotten hold of the method of natural taxation, and communities that try to compete with her on any other basis are out of the running.

Hence, sooner or later, she makes them toe the mark. Self- preservation finally forces them into line. Sometimes the day of reckoning comes far sooner than one would think. Even after all I saw of the land- value tax in British Columbia cities, I was amazed when only the other day Victoria, the old, staid, conservative capital city, which everyone says is more purely English than London, voted in the land- value tax by a majority of eight to one.

Why did she do it? Because she could not compete with the other cities in her own province unless she did. She could not stand competition with Vancouver, Prince Rupert, Nanaimo, any more than Lloydminster, Saskatchewan, can stand competition with Lloydminster, Alberta.

Put the question to yourself. Other things being equal, would you subject your industry to conditions in the State of Washington where taxation covers everything but fruit-trees and credits, where assessed valuations are so discriminatory and capricious as to demand a local rate of three to seven per cent., if you could exercise it in the comparative freedom and equity of British Columbia?

Or, again, if you were in Canada, other things being equal or nearly so, why should you try to offset even the slight burden of provincial taxation on your industry in a British Columbia city or rural municipality, if you could settle in Alberta and escape it altogether?

How Washington Stands from Under

More and more are people realizing this situation. Here is a significant fact: For one year past, Vancouver, the largest city of British Columbia, has wholly exempted real-estate improvements. It was told - in fact, it amounts to a general understanding- that during the last six months an average of five families a week had moved from Seattle to Vancouver. I cannot vouch for this absolutely, for the figures are not official, but I am so far from doubting it that I only wonder there are not fifty. The Immigration Office at Ottawa, however, does inform me officially that nearly as many immigrants have left the State of Washington of Canada during the last year as during the three years preceding.

The doubling of immigration, at figures of that size, from one year to the next, is certainly interesting. Washington and Oregon together have in four years, since 1906, sped 43,979 citizens into the larger liberty of the Dominion of Canada.

Alberta's Lode stone

But going back to the conditions that chiefly make for Alberta's prosperity, we find that of the 329,409 who have emigrated from the United States to Canada in the past four years (and incidentally, that means also a minimum of $329,409,000 that went with them), 106,626, or approximately one third, settled in the province of Alberta. The tide of immigration to Alberta is swelling each year. Now Alberta has some natural advantages, it is true, but none that I know of over Saskatchewan, for instance, at the present stage of settlement. When population becomes more dense. Alberta may be found a little better off than her sister province, but even that is doubtful and certainly not to be considered at the present time. But the inexorable economic advantage is with the province of Alberta and will remain with her, operating powerfully against her competitors, until such time as they all fall into line.

How the Farmer Pays City Taxes

The average farmer is under the impression that the taxing of improvements in cities is a matter in which he is not interested, and to tell him that the taxes levied on such things as buildings and business takes money out of his pocket, and in fact, is largely paid by him, would appear to him absurd. Yet it is a fact that every dollar of taxes levied upon buildings, or businesses in cities takes more than one dollar from farmers.

Let us give the matter a little consideration. There are only two classes of things which are taxed to-day; land is one, and labor products the other. Let us consider the effects of taxing each of these things in cities and towns with special reference to the effects upon farmers.

A tax upon buildings decreases the revenue derived from buildings rented. Thus, a tax rate of 20 mills on the dollar, a common one in towns, will necessitate an increase in the rent of 2 per cent, per annum over and above what is required to give the ordinary return to capital. That is to say, if a man ordinarily was content with the return of 6 per cent, on his money invested in buildings he would require to collect 8 per cent, from his tenant in order to have 6 per cent, left when taxes are paid.

The tenant of a store where farm produce is handled must get this extra rent out of his business in increased margin for doing business; in other words, out of his customers. This means he cannot afford to pay the farmer so much for his products. But that is not all. In all other businesses, a tax on buildings being added to the rent increases the cost of doing business, and so increases the cost of goods to the consumer. This reduces the demand for goods and the number of men employed in the manufacture, and consequently the market for the farmer.

The tax being added to the rent of all dwelling houses reduces the amount of a man's income by the amount of the tax, and so reduces the purchasing power of the people for the goods of the manufacturer and farmer. This re-acts on the farmer again in higher prices for things that he needs to buy and less demand for what he has to sell. Thus, a tax on buildings in the city is largely borne by farmers in the country.

Now let us consider the effects of taking the tax off buildings and industry and placing it wholly on land values in the cities. It is a notorious fact, that over one-half of the area of every city and town in Ontario is vacant land. Now this land is vacant, not because no one wants it, but because the owner is not willing that it should be put to use unless he is first paid a price, which in his judgment is sufficient to tempt him to stand aside to let someone use it. Often this price is four times what it cost him, and double what it is worth for anyone to use, but until he gets his price he can stand in the way of industry and those who could and would use it at a fair price are compelled to pay what amounts to a heavy fine, before they are allowed to produce wealth and employ labor, or else remain idle.

The exemption of buildings from taxation and the levying of all taxes upon land in proportion to its value, would probably increase the rate in towns and cities to 4 per cent, of the selling price. In the case of improved property, the exemption of the building would usually more than compensate the owner, except where poor buildings are standing on very valuable land, in which case it would be an inducement' to replace the poor buildings with others more suited to the locality. It would also be a very powerful incentive to the owners of vacant land, either to build or to sell.

Now with taxes of four per cent on the capital value, no one would buy land unless he was prepared to build upon it. Two results would follow. First, the selling price of the land would fall probably one-half, that is to say, the speculator finding that the change in the system of taxation had spoiled his chance of holding up industry for the increase in value which increase in population confers upon land, he would sell at any price he could get if he could not use it to advantage himself. Second, there would be immediately a great increase in the demand for labor and building material, so as to utilize the land released by the speculator and bought by the improver.

Other results would follow. The increased demand for; labor would raise the wages in the building trades. The increased number of stores and dwellings would reduce rent, and both of these together would increase the ability of the people to buy the produce of the farmers. This increase in demand would be further increased by a portion of wages of every additional workman employed as a result of the new industrial conditions.

Let us sum up. The effect would be by reducing the taxes upon buildings to reduce the rent by at least that amount. The fall in the price of land by the destruction of the profits of land forestalling, would still further reduce the rent required to pay the ordinary return to capital and the increase in the supply of buildings would force rent down to that point, so that rent would be based upon the reduced value of land and the cost of the buildings. Other results would be higher wages, more men employed, and a larger amount of wages left to the workers after rent was paid; smaller cost of selling farm produce, allowing of better prices to farmers and reduced prices on goods bought by farmers.

We think we are well within the limits when we state that a sum equal to the whole of the tax imposed on buildings in cities or towns is taken from the farmers in increased cost of handling farm produce; lower prices for what they sell and higher prices on what they buy, as a result of the taxing of buildings and businesses.

That is why the tax reform in the cities means increased income for the farmers.

Tax Reform in Ontario

Speculation has been gradually discouraged and industry encouraged in Ontario as follows:

• 1819 - Vacant land in cities and towns assessed 4s. as wild land, or 20s. per acre as meadow land. All buildings, improvements, and personal property assessed.
• 1837 - Assessment on vacant land in towns increased to £10 an acre. Assessment on personal property reduced nearly one-half.
• 1888 - Assessment of farm stock abolished.
• 1904 - Personal property tax abolished. Business assessment substituted for personalty. Separate assessment of lands and buildings.
• 1910 - Farm lands exemption, allowing under-assessment of lands in cities abolished. Income exemption increased to $900 for non-householders, and $1,200 for householders.
• 1911 - City of Toronto allowed to expropriate 200 feet on either side of proposed street extensions and improvements to secure increased value caused by improvement or extension of street.