Chapter I Of the Effect upon the Production of Wealth

The elder Mirabeau, we are told, ranked the proposition of Quesnay, to substitute one single tax on rent (the impôt unique) for all other taxes, as a discovery equal in utility to the invention of writing or the substitution of the use of money for barter.

The elder Mirabeau, we are told, ranked Quesnay's proposal as a discovery equal in usefulness to the invention of writing, or to the replacement of barter by money. The proposal was to replace all other taxes with one single tax on rent (the impôt unique).

To whomsoever will think over the matter, this saying will appear an evidence of penetration rather than of extravagance. The advantages which would be gained by substituting for the numerous taxes by which the public revenues are now raised, a single tax levied upon the value of land, will appear more and more important the more they are considered. This is the secret which would transform the little village into the great city. With all the burdens removed which now oppress industry and hamper exchange, the production of wealth would go on with a rapidity now undreamed of. This, in its turn, would lead to an increase in the value of land—a new surplus which society might take for general purposes. And released from the difficulties which attend the collection of revenue in a way that begets corruption and renders legislation the tool of special interests, society could assume functions which the increasing complexity of life makes it desirable to assume, but which the prospect of political demoralization under the present system now leads thoughtful men to shrink from.

Anyone who thinks the matter over will see this saying as a sign of penetration, not extravagance. The more one considers the advantages of replacing the many taxes that now raise the public revenue with a single tax on the value of land, the more important they appear. This is the secret that would turn the little village into the great city. With every burden removed that now oppresses industry and hampers exchange, wealth would be produced at a speed we can hardly imagine. That in turn would raise the value of land, a new surplus that society might take for general purposes. Collecting revenue now breeds corruption and makes legislation the tool of special interests. Freed from that, society could take on functions that the growing complexity of life makes desirable, but that thoughtful men now shrink from for fear of political demoralization under the present system.

Consider the effect upon the production of wealth.

Consider first the effect on the production of wealth.

To abolish the taxation which, acting and reacting,432 now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. Imbued with fresh energy, production would start into new life, and trade would receive a stimulus which would be felt to the remotest arteries. The present method of taxation operates upon exchange like artificial deserts and mountains; it costs more to get goods through a custom house than it does to carry them around the world. It operates upon energy, and industry, and skill, and thrift, like a fine upon those qualities. If I have worked harder and built myself a good house while you have been contented to live in a hovel, the tax-gatherer now comes annually to make me pay a penalty for my energy and industry, by taxing me more than you. If I have saved while you wasted, I am mulct, while you are exempt. If a man build a ship we make him pay for his temerity, as though he had done an injury to the state; if a railroad be opened, down comes the tax-collector upon it, as though it were a public nuisance; if a manufactory be erected we levy upon it an annual sum which would go far toward making a handsome profit. We say we want capital, but if any one accumulate it, or bring it among us, we charge him for it as though we were giving him a privilege. We punish with a tax the man who covers barren fields with ripening grain; we fine him who puts up machinery, and him who drains a swamp. How heavily these taxes burden production only those realize who have attempted to follow our system of taxation through its ramifications, for, as I have before said, the heaviest part of taxation is that which falls in increased prices. But manifestly these taxes are in their nature akin to the Egyptian Pasha’s tax upon date-trees. If they do not cause the trees to be cut down, they at least discourage the planting.

To abolish the taxation that, by action and reaction,432 now hampers every wheel of exchange and presses on every form of industry would be like lifting an immense weight off a powerful spring. With fresh energy, production would start into new life, and trade would get a stimulus felt in the remotest arteries. Our present taxes work on exchange like artificial deserts and mountains. It costs more to get goods through a custom house than to carry them around the world. They work on energy, industry, skill and thrift like a fine on those qualities. Suppose I have worked harder and built myself a good house while you have been content to live in a hovel. The tax-gatherer comes every year to make me pay a penalty for my energy and industry, by taxing me more than you. If I have saved while you wasted, I am penalized and you are exempt. If a man builds a ship, we make him pay for his daring as though he had injured the state. If a railroad is opened, down comes the tax-collector on it as though it were a public nuisance. If a factory is built, we levy on it every year a sum that would go far toward a handsome profit. We say we want capital, but if anyone accumulates it or brings it among us, we charge him for it as though we were granting him a privilege. We punish with a tax the man who covers barren fields with ripening grain. We fine the man who puts up machinery, and the man who drains a swamp. Only those who have tried to follow our system of taxation through its ramifications realize how heavily these taxes burden production, for, as I have said, the heaviest part of taxation is what falls in higher prices. But plainly these taxes are akin to the Egyptian Pasha's tax on date-trees. If they do not make people cut the trees down, they at least discourage planting.

To abolish these taxes would be to lift the whole enor433mous weight of taxation from productive industry. The needle of the seamstress and the great manufactory; the cart-horse and the locomotive; the fishing boat and the steamship; the farmer’s plow and the merchant’s stock, would be alike untaxed. All would be free to make or to save, to buy or to sell, unfined by taxes, unannoyed by the tax-gatherer. Instead of saying to the producer, as it does now, “The more you add to the general wealth the more shall you be taxed!” the state would say to the producer, “Be as industrious, as thrifty, as enterprising as you choose, you shall have your full reward! You shall not be fined for making two blades of grass grow where one grew before; you shall not be taxed for adding to the aggregate wealth.”

To abolish these taxes would be to lift the whole enormous433 weight of taxation off productive industry. The seamstress's needle and the great factory, the cart-horse and the locomotive, the fishing boat and the steamship, the farmer's plow and the merchant's stock would all go untaxed. All would be free to make or save, buy or sell, with no fines and no tax-gatherer to annoy them. Now the state says to the producer, “The more you add to the general wealth, the more you shall be taxed!” Then it would say, “Be as industrious, as thrifty, as enterprising as you choose, and you shall have your full reward! You shall not be fined for making two blades of grass grow where one grew before. You shall not be taxed for adding to the total wealth.”

And will not the community gain by thus refusing to kill the goose that lays the golden eggs; by thus refraining from muzzling the ox that treadeth out the corn; by thus leaving to industry, and thrift, and skill, their natural reward, full and unimpaired? For there is to the community also a natural reward. The law of society is, each for all, as well as all for each. No one can keep to himself the good he may do, any more than he can keep the bad. Every productive enterprise, besides its return to those who undertake it, yields collateral advantages to others. If a man plant a fruit-tree, his gain is that he gathers the fruit in its time and season. But in addition to his gain, there is a gain to the whole community. Others than the owner are benefited by the increased supply of fruit; the birds which it shelters fly far and wide; the rain which it helps to attract falls not alone on his field; and, even to the eye which rests upon it from a distance, it brings a sense of beauty. And so with everything else. The building of a house, a factory, a ship, or a railroad, benefits others besides those who get the direct profits. Nature laughs at a miser. He is like the squirrel who buries his nuts and refrains434 from digging them up again. Lo! they sprout and grow into trees. In fine linen, steeped in costly spices, the mummy is laid away. Thousands and thousands of years thereafter, the Bedouin cooks his food by a fire of its encasings, it generates the steam by which the traveler is whirled on his way, or it passes into far-off lands to gratify the curiosity of another race. The bee fills the hollow tree with honey, and along comes the bear or the man.

And would the community not gain by refusing to kill the goose that lays the golden eggs, and by not muzzling the ox that treads out the corn? It would leave industry, thrift and skill their natural reward, full and unimpaired. For the community has a natural reward too. The law of society is each for all, as well as all for each. No one can keep to himself the good he does, any more than the bad. Every productive enterprise, besides its return to those who undertake it, yields side benefits to others. A man who plants a fruit-tree gains by gathering the fruit in its season. But the whole community gains as well. Others besides the owner benefit from the larger supply of fruit. The birds it shelters fly far and wide. The rain it helps to attract falls not only on his field. Even to an eye resting on it from a distance, it brings a sense of beauty. So it is with everything else. Building a house, a factory, a ship or a railroad benefits others besides those who get the direct profits. Nature laughs at a miser. He is like the squirrel who buries his nuts and does not dig them up again.434 They sprout and grow into trees. The mummy is laid away in fine linen, steeped in costly spices. Thousands of years later the Bedouin cooks his food over a fire of its wrappings, or they generate the steam that whirls the traveler on his way, or they pass into far-off lands to satisfy the curiosity of another race. The bee fills the hollow tree with honey, and along comes the bear or the man.

Well may the community leave to the individual producer all that prompts him to exertion; well may it let the laborer have the full reward of his labor, and the capitalist the full return of his capital. For the more that labor and capital produce, the greater grows the common wealth in which all may share. And in the value or rent of land is this general gain expressed in a definite and concrete form. Here is a fund which the state may take while leaving to labor and capital their full reward. With increased activity of production this would commensurately increase.

The community may well leave the individual producer everything that moves him to exertion. It may well let the laborer have the full reward of his labor, and the capitalist the full return of his capital. The more labor and capital produce, the greater grows the common wealth in which all may share. And in the value or rent of land this general gain takes a definite, concrete form. Here is a fund the state may take while leaving labor and capital their full reward. As production grows more active, the fund would grow in proportion.

And to shift the burden of taxation from production and exchange to the value or rent of land would not merely be to give new stimulus to the production of wealth; it would be to open new opportunities. For under this system no one would care to hold land unless to use it, and land now withheld from use would everywhere be thrown open to improvement.

Shifting the burden of taxation from production and exchange to the value or rent of land would do more than give new stimulus to the production of wealth. It would open new opportunities. Under this system no one would want to hold land unless to use it, and land now withheld from use would be thrown open to improvement everywhere.

The selling price of land would fall; land speculation would receive its deathblow; land monopolization would no longer pay. Millions and millions of acres from which settlers are now shut out by high prices would be abandoned by their present owners or sold to settlers upon nominal terms. And this not merely on the frontiers, but within what are now considered well settled districts. Within a hundred miles of San Francisco would be thus thrown open land enough to support,435 even with present modes of cultivation, an agricultural population equal to that now scattered from the Oregon boundary to the Mexican line—a distance of 800 miles. In the same degree would this be true of most of the Western States, and in a great degree of the older Eastern States, for even in New York and Pennsylvania is population yet sparse as compared with the capacity of the land. And even in densely populated England would such a policy throw open to cultivation many hundreds of thousands of acres now held as private parks, deer preserves, and shooting grounds.

The selling price of land would fall. Land speculation would receive its deathblow, and land monopolization would no longer pay. Millions and millions of acres from which settlers are now shut out by high prices would be abandoned by their present owners or sold to settlers on nominal terms. This would happen not only on the frontiers but within what are now considered well settled districts. Within a hundred miles of San Francisco, enough land would be thrown open to support,435 even with present methods of cultivation, a farming population equal to that now scattered from the Oregon boundary to the Mexican line. That is a distance of 800 miles. The same would be true of most of the Western States, and to a great degree of the older Eastern States. Even in New York and Pennsylvania the population is still sparse compared with what the land can hold. Even in densely populated England, such a policy would open to cultivation many hundreds of thousands of acres now held as private parks, deer preserves and shooting grounds.

For this simple device of placing all taxes on the value of land would be in effect putting up the land at auction to whomsoever would pay the highest rent to the state. The demand for land fixes its value, and hence, if taxes were placed so as very nearly to consume that value, the man who wished to hold land without using it would have to pay very nearly what it would be worth to any one who wanted to use it.

This simple device of placing all taxes on the value of land would in effect put the land up at auction to whoever would pay the state the highest rent. Demand for land fixes its value. So if taxes were set to consume nearly all that value, a man who wanted to hold land without using it would have to pay nearly what it would be worth to anyone who wanted to use it.

And it must be remembered that this would apply, not merely to agricultural land, but to all land. Mineral land would be thrown open to use, just as agricultural land; and in the heart of a city no one could afford to keep land from its most profitable use, or on the outskirts to demand more for it than the use to which it could at the time be put would warrant. Everywhere that land had attained a value, taxation, instead of operating, as now, as a fine upon improvement, would operate to force improvement. Whoever planted an orchard, or sowed a field, or built a house, or erected a manufactory, no matter how costly, would have no more to pay in taxes than if he kept so much land idle. The monopolist of agricultural land would be taxed as much as though his land were covered with houses and barns, with crops and with stock. The owner of a vacant city lot would have to pay as much for the privilege of keep436ing other people off of it until he wanted to use it, as his neighbor who has a fine house upon his lot. It would cost as much to keep a row of tumble-down shanties upon valuable land as though it were covered with a grand hotel or a pile of great warehouses filled with costly goods.

Remember that this would apply not only to agricultural land but to all land. Mineral land would be thrown open to use just as agricultural land would. In the heart of a city, no one could afford to keep land from its most profitable use. On the outskirts, no one could demand more for it than its present use would warrant. Wherever land had gained a value, taxation would no longer act, as now, as a fine on improvement. It would force improvement. Whoever planted an orchard, sowed a field, built a house or erected a factory, however costly, would pay no more in taxes than if he kept the same land idle. The monopolist of agricultural land would be taxed as much as though his land were covered with houses and barns, crops and stock. The owner of a vacant city lot would pay as much for the privilege of keeping436 other people off it until he wanted to use it as his neighbor with a fine house on his lot. It would cost as much to keep a row of tumble-down shanties on valuable land as if it were covered with a grand hotel or a pile of great warehouses filled with costly goods.

Thus, the bonus that wherever labor is most productive must now be paid before labor can be exerted would disappear. The farmer would not have to pay out half his means, or mortgage his labor for years, in order to obtain land to cultivate; the builder of a city homestead would not have to lay out as much for a small lot as for the house he puts upon it; the company that proposed to erect a manufactory would not have to expend a great part of their capital for a site. And what would be paid from year to year to the state would be in lieu of all the taxes now levied upon improvements, machinery, and stock.

So the bonus that must now be paid, wherever labor is most productive, before labor can be exerted would disappear. The farmer would not have to pay out half his means, or mortgage his labor for years, to get land to cultivate. The builder of a city home would not have to lay out as much for a small lot as for the house he puts on it. The company that proposed to erect a factory would not have to spend a great part of its capital on a site. And what would be paid to the state from year to year would take the place of all the taxes now levied on improvements, machinery and stock.

Consider the effect of such a change upon the labor market. Competition would no longer be one-sided, as now. Instead of laborers competing with each other for employment, and in their competition cutting down wages to the point of bare subsistence, employers would everywhere be competing for laborers, and wages would rise to the fair earnings of labor. For into the labor market would have entered the greatest of all competitors for the employment of labor, a competitor whose demand cannot be satisfied until want is satisfied—the demand of labor itself. The employers of labor would not have merely to bid against other employers, all feeling the stimulus of greater trade and increased profits, but against the ability of laborers to become their own employers upon the natural opportunities freely opened to them by the tax which prevented monopolization.

Consider what such a change would do to the labor market. Competition would no longer be one-sided, as it is now. Laborers would no longer compete with each other for work and cut wages down to bare subsistence. Employers would compete everywhere for laborers, and wages would rise to the fair earnings of labor. For the greatest of all competitors for the employment of labor would have entered the labor market, a competitor whose demand cannot be satisfied until want is satisfied: the demand of labor itself. Employers would have to bid not merely against other employers, all feeling the stimulus of greater trade and higher profits. They would have to bid against the ability of laborers to become their own employers on natural opportunities freely opened to them by the tax that prevented monopolization.

With natural opportunities thus free to labor; with capital and improvements exempt from tax, and exchange437 released from restrictions, the spectacle of willing men unable to turn their labor into the things they are suffering for would become impossible; the recurring paroxysms which paralyze industry would cease; every wheel of production would be set in motion; demand would keep pace with supply, and supply with demand; trade would increase in every direction, and wealth augment on every hand.

With natural opportunities free to labor, with capital and improvements exempt from tax, and exchange437 released from restrictions, willing men would no longer be unable to turn their labor into the things they suffer without. The recurring paroxysms that paralyze industry would cease. Every wheel of production would be set in motion. Demand would keep pace with supply, and supply with demand. Trade would increase in every direction, and wealth would grow on every hand.