Principles of Natural Taxation
by C.B. Fillebrown (1915)
STUDENTS of Progress and Poverty are haunted by glimpses of worthies more or less ancient who, in the last century, have previsioned the doctrine of Henry George. The object of this compilation is to trace the metamorphosis of the land question into the rent question; of the equal right to land into the joint right to the rent of land; of the common use of the earth into the collective enjoyment of ground rent; of the nationalization of land into the socialization of its rent; of private property in land, including the private appropriation of its rent, into the public appropriation of that rent without disturbance of the private ownership of land. The undertaking, thus presented, is to disclose the genesis, and observe the development, of a conception of economic rent and the evolution of this concept in the minds of men, closely followed as it has been by the idea of the taxation of economic rent, and its corollaries. “Rent and the Taxation of Rent” would be accurately suggestive of the aim and compass of the book. The arrangement of its contents is intended to be in the order of importance to the reader, the studied aim being to satisfy his economic understanding with the least mental exertion.
A multitude of lawgivers and philosophers, from Moses down, have been invoked from time to time to solve the great social questions of the world by putting the superabundance of the earth within reach of its millions, but in their teaching nothing whatever is found of the nature and office of economic rent. It is only within the last hundred years that any of the authorities on the land problem appear to have been impressed with the truth that the answer to their questions is to be found in the cause, magnitude, and treatment of economic rent. It is wonderfully interesting, moreover, to note with what rapidity this truth has grown into the understanding of those who in more recent years have given it their consideration. Incidentally, this book challenges a host of economic errors and omissions, collective or individual, grave or venial, among which are: (1) that the indestructible properties of the soil are a source of rent; (2) that agricultural values should not equally with urban values be classed as site values; (3) that “to appropriate rent by taxation” means the abolition of the institution of private property in land; (4) that the joint right to the rent of land is a logical deduction from the equal right to land itself; (5) failure to emphasize Henry George’s distinct transition from common right to land to joint right to rent; (6) omission to emphasize the fact that the assessed value of land is an untaxed value; (7) that when the storekeeper’s rent is raised, he has got to raise the prices of his goods. While this volume is a revision and enlargement of A Single Tax Handbook—for 1913, which it was thought might reappear at intervals, it is issued with the idea of permanence, as representing the best authorities, early and late, upon the development of the idea.
Only those writers are given leading space in this collection who have been pioneers and specialists in this field of thought. Numerous other writers whose names have been associated, some of them intimately, with Henry George cannot claim classification with him when tested by the tenets which they have advocated. An analysis of the real views of these writers will be given in an Appendix. Much care has been exercised in trying to make this analysis just and fair, although the compiler is fully conscious that in criticism it is not easy to avoid mistakes. Those who are curious as to the proofs or doubtful of the truth of what is offered may easily assure themselves by reference to original texts. The intent has been that anything of questionable pertinence, or anything that may hinder the mind from direct approach to the subject, should find its subordinate place in an Appendix, in order that the volume proper may be reserved for the collection of what so far as possible may be relied upon as sound doctrines.
It is hoped that the student will find here most of the essential facts and principles of taxation clarified by persistent discussion and backed by the agreement of the ablest economic authorities. A very complete index serves for the ready location of even scattered references.
For many excellencies in this book, I am under lasting obligation for the suggestions of my friends who have read the whole manuscript, Mr. Bolton Hall, Mr. Charles T. Root and Mr. Alexander Mackendrick.
The proposal to obtain all public revenue from economic rent, popularly known as the single tax, is based upon the well-known theory that such rent is a social product, a form of income which arises from the growth of population and the energy and enterprise of the people as a whole, rather than from any productive energy or enterprise by the landowner who receives it.
Proposals for reform bearing a more or less remote resemblance to the “single tax,” and based upon alleged principles of justice or expediency, antedated the Ricardian doctrine of rent. Although based upon various principles and frequently bearing only a remote resemblance to the single tax, they have, nevertheless, considerable significance. In the first place, the hostility to landlordism which they generated has had much to do with the spirit and vitality, especially in various mistaken features, of the modern movement. In the second place, the defective principles upon which these propositions were based have to some extent interpenetrated the modern movement, resulting in confusion of thought even among economists of today. It is hoped that by an examination of some of these earlier proposals the distinction between them and the present fiscal proposal to obtain all revenue from economic rent may become apparent, and the aforesaid confusion may be removed.
It will be seen that those earlier reforms were suggested upon the theory that land is the heritage of the race as a whole, to which, in its original state as a gift of the Creator, all men have equal rights. In consequence of this supposed natural right of all men to all the land, some were led to deny, the right of private ownership by individuals to any of it, and to propose, as a remedy for the injustice to the disinherited, either a periodical parcelling out of the land, or state nationalization. Whatever weight may be attached to this hypothetical premise and conclusion, it is quite irrelevant to the question of natural taxation and has, unfortunately, proved a stumblingblock to many minds in the way of understanding that theory. The appropriation by taxation of economic rent to the community as their joint right is amply justified by the fact that such rent is a social product, a form of income due not to the efforts of the individual but to the joint activities of the community. This will become apparent to the reader when he studies the nature and origin of economic rent.
The complete transition from the theory of equal rights to land, to an understanding of the joint rights to rent, is extremely interesting, and repetition cannot stale it.
Much has been written in exaltation of the “visions” of dreamers who each believes himself to be a repository of a special revelation. Henry George added his quota to this record and put his seal upon the “vision” of the equal right of all men to the land. All writers have agreed, however, that the division of the benefits of equal right to land, as the generations of men proceed, is a mechanical impossibility. The benefits of rent, on the other hand, will diffuse themselves automatically and inevitably under the single tax, while the obstacles to such diffusion will decrease in proportion as economic rent increases.
In the case of “no-rent” land, the benefit on the one hand of its impossible division and on the other hand of the automatic diffusion of its rent at or near the margin of cultivation would be but trifling. For this reason there is danger of overrating the benefit to mankind (even as illustrations of the single tax) of rural settlements, such as Arden, Fairhope, Harvard, and others. Further proof of this may be found in the acknowledged failure of many experiments of a philanthropic character in making land free to the settlement of labor.
So, in retrospect, we are able to bear witness to three culminating steps, recorded almost within a single decade.
(1) Henry George presented his triumphant alternative in “the appropriation of rent by taxation.” This was the bright oasis in the desert of sterile “vision” to which (leaving out of account the equal right to land itself) he conducted us.
(2) A dozen years later, as though to clear up the charge of “nationalization,” he formally substituted for the equal right to land the common right to rent, in the following gentle rebuke: “The primary error of the advocates of land nationalization is in their confusion of equal rights with joint rights. In truth, the right to the use of land is not a joint or common right, but an equal right; the joint or common right is to rent.”
(3) Mr. Shearman, who entered the discussion in 1892, ignoring entirely the “prophecy” and the “vision” feature, and, disregarding the question of equal rights, declared the common enjoyment of rent to be Nature’s method of taxation. He began and ended where George left off with the taxation of rent.
Authorities.—Of the principal authorities whose contributions to the theory of natural taxation form the body of this volume, the first place is given to Adam Smith. His name is placed at the head of the British procession as a tribute to his great fame and achievements which were far in advance of his time.
If we were dealing merely with the nature and origin of economic rent, the next place would be given, unquestionably, to David Ricardo, who was the first economist fully to develop this important problem. But Ricardo made no notable contribution to the problem of the taxation of rent, otherwise his name would be included in this list of authorities.
John Stuart Mill (1848), an English economist, and Patrick Edward Dove (1850), an English squire, adequately cover the middle period of the nineteenth century.
Edwin Burgess (1859), a tailor from England, and Sir John Macdonell (1873), an English collegian, spanned the next quarter of the century, 1850 to 1875. Both may be new to the general reader of today, but each efficiently accomplished his task.
In the last quarter of the century the completion of the work fell to American hands. Henry George, a journeyman printer of rare insight and eloquence, and Thomas G. Shearman, one of the ablest of New York lawyers, left the doctrine of natural taxation in a form to which little has been added except by way of reiteration and illustration. Shearman, as it were, supplemented with a publicist’s bill of particulars a great moralist’s declaration of rights.
It can hardly be out of place here to present an answer to a question which naturally occurs. Why have not Mr. Shearman’s writings found a wider notice? One simple answer should be offered. A dozen years elapsed between the appearance of Progress and Poverty and Mr. Shearman’s Natural Taxation, and the confirmed Henry George “moral reformers,” with only an occasional exception, “sat down” upon Mr. Shearman, dubbing him a “mere fiscal reformer.” In a climax of practical absurdity these critics insisted upon putting him outside the orthodox pale as a “limited Single Taxer,” because in comparing the taxes and the estimated ground rent of his own day he found that, as a matter of fact, the taxes absorbed less than one-half of the ground rent. He distinctly said:
In the long run there will be no such question to decide. The honest needs of public government grow faster than population, and fully as fast as wealth itself. Local taxation will increase rapidly; and it ought to do so. … This does not imply that ground rent will not be sufficient to supply many, possibly all, of those additions to human happiness which Henry George has pictured in such glowing words. But such extensions of the sphere of government must take place gradually; or they will be ruinous failures, simply because the state cannot at once furnish the necessary machinery for their successful operation.
Instead of welcoming the reinforcement of this princely Apollos for his watering of the tree which their Paul had planted, they rejected his teaching as tainted. Single Taxers having set such a pace of disparagement themselves, what could be expected of the outer world?
Sidelights. “A Burdenless Tax” (chap. IX), expresses the effort to make clear in kindergarten fashion the old fact that a land tax ceases to be a tax. “Land: the Rent Concept; the Property Concept” (chap. X) aims to correct prevalent errors. “Taxation and Housing” (chap. xi) points out the accelerating ills of privilege. “Thirty Years of Henry George” (chap. XII) gives a resume of the principal features of the movement, whether fruitful or unfruitful. “Henry George and the Economists” (chap. XIII) is a review of Henry George’s arraignment of Herbert Spencer as “the Perplexed Philosopher.” “The Professors and the Single Tax” (chap. XIV) is radical criticism of particular positions, tempered with liberal appreciation of professors in general. It is a defense of the Single Tax against a formidable body of undigested criticism which professors as a class would not indorse. The “Catechism” (chap. XV) contains definitions of nearly all the general terms used in discussing taxation.
Appendix.—The estimate here given of physiocratic thought may provoke surprise and, possibly, temporary resentment, but it is believed that when better understood the physiocratic doctrine will be found to have little in common with the single-tax theory of today. Spence, a teacher by profession, got little if any beyond the assumption by the community of both land and improvements; while Ogilvie, a university man, though he failed to apprehend the social source of economic rent, yet failed but by a hair’s breadth. The more familiar one becomes with the story of all these men, the less is the wonder that Henry George and others have, with due acknowledgments, passed them lightly over.
The vanishing value of the Herbert Spencer chapter lies in its interpretation of his Social Statics of 1850 and his Justice of 1892. Spencer, in common with Henry George and many of his alleged disciples, asserted valiantly that private property in land was wrong. Coming later to realize that this position was untenable, he simply recanted the first six sections of his Social Statics and retired into the wilderness, while George, advancing his ground from property in land to property in the rent of land, led his people, not only to Pisgah’s height, but triumphantly into the Promised Land itself.
 George, Henry, A Perplexed Philosopher, p. 242, Doubleday, Page & Co., New York.
 Shearman, Thomas G., Natural Taxation, chap, IX, p. 133, Doubleday, Page & Co., New York.