Richard T Ely:
Outlines of Economics, pp 461
Fifth edition, 1930
Criticism of the Single Tax
- Ely’s own critisism
- From the pen of Voltaire
- A positive view…
1. The Practical Aspects of the Single Tax.
—Perhaps the greatest obstacle in the path of those who would like to see the Single Tax applied would be the difficulty, or even impossibility, of separating the value of the bare land from the value of the improvements on it, improvements due to capital invested and to the toil of man. We have seen that it is impossible clearly to separate the “indestructible powers of the soil” from man’s labor and his efforts to make land utilizable. Any attempt to distinguish bare land values from the value of improvements would most certainly result in unjust assessment. Other practical disadvantages with regard to the Single Tax are pointed out in the chapter dealing with Public Revenues.
It will suffice to notice here a few of the main points relating to the practical aspects of Henry George’s system of taxation*.
*See also E. R. A. Seligman. op. cit., Chap. III, on which the following observations are largely based.
One of the cardinal defects of the Single Tax would be its lack of elasticity. In every source of taxation there should be a reserve on which to draw in case of emergency or sudden need. If the total value of bare lands were taxed (assuming that this value could be ascertained), to the exclusion of all other taxation, there would be no reserve power on which to draw. The single tax could not be increased. Where nothing has been left, nothing can be taken. Even if the entire value of the land were not taken, the single tax would inevitably intensify inequalities resulting from unjust assessments, inequalities already apparent in the standards of assessments applied to real estate taxes in the United States, which frequently vary from county to county, and even from property to property in the same county. As a fiscal measure, the income tax is far less susceptible to abuse and inequality of burden.
The single tax would be a precarious source of public revenue. Henry George’s assumption that land values continually increase has not always been borne out by experience, either in this country or in Europe. While it is true that, in large cities, land values increase in certain localities, it is equally true that they decrease in other sections of the city.
2. The Effect of the Single Tax on Farmers.
—The most caustic criticism of the Single Tax ever written came from the pen of Voltaire, who was familiar with the Physiocrats’ idea of the impot unique. The Physiocrats arrived at the same conclusions as Henry George, though by a different route. Holding that agriculture was the only “productive” occupation, the French economists of the eighteenth century advocated that it alone should be taxed. The land, when man’s labor was expended upon it, produced a peculiar surplus over and above the rewards of labor and capital. This surplus, known as the “net product,” included all the available revenue of the nation. All taxation, therefore, should fall on the land.
Voltaire replied to this by describing the lot of a French peasant who toils laboriously to make a scanty living and suffers from untold hardship during years of agricultural distress. His piece of land would be worth an income of 40 crowns to him if it were not taxed at all. Under the single tax system he is asked to pay 20 crowns in taxation. When he fails to find this sum, he is thrown into prison. After his release he meets an old acquaintance, originally poor but now rolling in wealth and living in proud style, for he has inherited an income of 400,000 crowns a year. The peasant says to him: “You pay, of course, 200,000 crowns to the State, for I, who have only 40 crowns, must give up half of that sum!” Voltaire’s irony is well displayed in the answer he attributes to the rich man*:
*(Euvres Complètes de Voltaire, Tome 57, L’Homme á Quarante Écus. De l’Imprimerie de la Soceté~ Littéraire-Typographique, s. I., 1785, pp. 128-131. This apt quotation was brought to our attention by E. R. A. Seligman, op. cit., p. 79.
“I contribute to the needs of the State?” he said. “You are joking, my friend. I inherited my fortune from an uncle who had made 8 millions … I have not one square inch of land; my whole wealth is in securities and in money. I owe nothing to the State. It is for you to give half of your substance. You, who are a landowner. Don’t you understand that, if the minister of finance called upon me to assist in supporting the State, he would be a fool who couldn’t even make a simple calculation. … If, after having imposed a single tax … I should still be asked for money, don’t you see that this would be double counting? . . .
“You pay, my friend, you who peacefully enjoy a clear, net revenue of 40 crowns. Serve your country well, and come and dine sometimes with my lackeys.”
The moral Voltaire wished to point is still applicable today; what grounds of justice or ethics shall the landowner be singled out for taxation?
3. Effect of the Single Tax Movement.
—One of the beneficial aspects of the single tax movement in this country lies in the fact that the followers of Henry George have been active in pointing out the theoretical and practical defects of the general property tax in the United States. “So far as the destructive side is concerned, single-taxers and other tax reformers may go hand in hand. The modern single-tax movement has done much to pave the way for a more equitable distribution of taxation.
Furthermore, the writings of Henry George proved stimulating and awakened a renewed interest in economic questions. As the present writer stated some years ago: Now, one may object to Henry George’s teachings – as I do most decidedly – and yet rejoice at the good which his works are doing in stimulating the and promoting the generous aspirations of the people. lt would, indeed, not be an easy matter to overestimate the educational value of that work Progress and Poverty. A not inconsiderable part of the wholesome growth of interest in economics is due to its publication.