Explanatory and Illustrative Notes



    The headings and reference figures correspond to those of the text.

  1. The word "tax" is used comprehensively in the United States for local as well as State or national levies for public revenue, except that custom-house exactions are usually called "tariffs" or "duties." In Great Britain, however, the word "tax" is usually understood to designate Imperial levies, local taxes being called "rates." In this volume the words "tax" and "taxation" are used indiscriminately for fiscal exactions, whether national or local, direct or indirect, tariff, duty, excise, or license.

  2. In the city of New York, according to the report of the Tax Department for 1914, the value of improvements was stated to be $2,855,932,518, whereas the value of the land alone was $4,602,832,107. As the tax rate that year in New York was about 1.8 per cent, it may be computed that improvement taxes amounted to about $50,000,000, while the taxes on land values amounted to about $82,000,000. By reference to the fourth edition of this book, at page 69, note 2, it may be seen that the increase in improvement values since 1910 was in round numbers only $366,000,000, whereas the increase in land values was $602,000,000. The former increase spells more building, the latter less room for building. None of the foregoing figures include either the value of special franchises, $404,420,311 in 1914, or the value of the land and improvements of corporations, which was $186,654,976 in that year.

  3. "The general property tax" is common in the United States and Canada; but there is a tendency in both countries toward modification, it being generally conceded that this form of tax is a bungling fiscal method and hopelessly unfair in operation. To the general property tax in the United States there are often added inheritance taxes, franchise taxes, occupation taxes, and other forms, some of which might be included in the theory of the general property tax.

  4. The real estate tax, as part of the general property tax, is universal in the United States: until recently it was likewise universal in Canada, where it is still general. In both countries, however, it is everywhere supplemented with other taxes in greater or less variety and degree, some of which belong in the category of the general property tax and some do not. Although personal property is not exempt in the United States, personal property taxes are extensively "dodged." For an excellent presentation of this subject see the American Magazine (New York) for December, 1910, and January, 1911, et seq. in a series of articles by Albert Jay Nock, under the title of "The Things That Are Caesar's."

  5. The nearest actual approach to this system is in some of the municipalities of New Zealand, Australia, and Canada. In Canada the city of Vancouver is conspicuous, although other Canadian cities, notably Edmonton, Victoria, and New Westminster, are making successful experiments of the same kind. British Columbia has long had laws permitting municipalities to use their own discretion in taxing different classes of property. Under those laws it has been common for municipalities in that Canadian Province to value land for taxation at 100 per cent, of its market value and improvements at less, thereby establishing a tendency toward "the single tax limited." Vancouver was among these. In 1896 that city reduced improvement valuations to 50 per cent of market value, leaving land at 100 per cent; the valuation of improvements was reduced in 1906 to 25 per cent; and in March, 1910, to zero. As there are no taxes of moment in Vancouver now but those upon land values (except Provincial and Dominion taxes), Vancouver may be said to be operating, as a municipality, under the principle of "the single tax limited."

  6. The Single Tax, unlimited by governmental needs, has not been adopted anywhere. But in some countries—notably Germany and Great Britain—taxation of the "unearned increment," as it is called, has been adopted in moderate and varying forms. It seems to be attaining popularity elsewhere. An "unearned increment" is an increase of the capitalized value of the rental possibilities of a given piece of land (over its previous capital value at a given time or under given circumstances), in consequence of social growth or other cause apart from the owner's improvements, which enhances demand for it and therefore augments its market price. The British (Lloyd George) budget of 1909 imposed a tax of 20 per cent on "unearned increments." For example: A holding officially valued in 1909 at £100,000, if it were sold in 1924 for £120,000 (or, in certain circumstances, were then revalued at that amount), would have an "unearned increment" of £20,000, and upon this the tax would be 20 per cent. The owner would therefore keep £16,000 of the increased social value, and the government would get £4,000. Some Singletaxers object to taxation of the "unearned increment," as being a process of division between society and successful investors in land, and as having no tendency toward the destruction of landlordism, but rather a tendency to encourage land speculation with the state for a partner in the profits. This criticism does not seem to me valid; its effect would most likely be to discourage efforts at promoting the single tax in places where movements for the taxation of "unearned increments" offer the only present leverage, or the best, for practical single tax work. True enough, unearned increment taxes do not take the entire rental value, nor enough of the capital value to deprive the owner of an unearned profit. Neither would any kind of land-value tax, short of the "single tax unlimited." But it does take a part of the land value of properties on which it falls, which is certainly better than taking none; and, what is probably more important with this and all other kinds of land value taxation than the mere fact of the tax, is the nature of the agitation. Everywhere opposed as confiscation of private interests in land, it is everywhere defended as the taking for the community of what belongs to the community. Such agitations are especially promotive of the full single tax idea. That "unearned increment" taxes do not discourage speculation in land, and therefore fall short of the principal object of the single tax unlimited, is doubtless true; but it is as certainly true that, defective though they may be in forcing vacant land upon the market, they do relieve industry from tax burdens, which is another prime object of the single tax. Their chief value, however, is their tendency to develop an appreciation in public opinion of the fundamental fact that land values are community values and belong to the community. For a lucid explanation of the complex law for the taxation of "unearned increment" in Germany, see an article by Robert C. Brooks, of the University of Cincinnati, in the Quarterly Journal of Economics for August, 1911. Professor Brooks characterizes the German law as "one of the largest and most significant practical applications of the single tax idea that has ever been attempted;" and to the objection that the "unearned increment" tax of that law "has 'no teeth in it,'" he says that "a fairer statement would be that it has simply cut its milk teeth and may be expected to develop mature molars and incisors later."


  7. Progress and Poverty, book viii, ch.ii.

  8. In Progress and Poverty, book viii, ch.iv, Henry George speaks of "the effect of substituting for the manifold taxes now imposed, a single tax on the value of land;" but the term did not become a distinctive name until 1888. The first general movement along the lines of Progress and Poverty began with the New York City election of 1886, when Henry George polled 68,110 votes as Labor candidate for mayor, and was defeated by the Democratic candidate, Abram S. Hewitt, by a plurality of only 22,442, the Republican, Theodore Roosevelt, polling but 60,435. Following that election the United Labor Party was organized on State lines, and at the Syracuse Convention in August, 1887, it came to represent the central idea of Progress and Poverty. Coincident with the organization of the United Labor Party the Anti-Poverty Society was formed; and the two bodies, one representing the political and the other the religious phase of the idea, worked together until President Cleveland's tariff message of 1887 appeared. In this message Mr. George saw the timid beginnings of that open struggle between Protection and Free Trade to which he had for years looked forward as the political movement that must culminate in the abolition of all taxes save those upon land values, and he responded at once to the sentiment of the message. But many Protectionists who had followed him, now broke away from his leadership, and the United Labor Party and the Anti-Poverty Society were soon dissolved. Those who understood Mr. George's real position regarding the land question readily acquiesced in his views as to political policy, and a considerable movement resulted, which, however, for some time lacked an identifying name. This was the situation when Thomas G. Shearman, Esq., wrote for The Standard an article on taxation in which he illustrated and advocated the land value tax as a fiscal measure. The article had been submitted without a caption, and Mr. George, then editor of The Standard, entitled it "The Single Tax." This title was at once adopted by the "George men," as they were often called, and has since served as the name of the movement it describes. Though "the single tax" is the English form of l'impot unique, the name of the French physiocratic doctrine of the eighteenth century, the names have no historical connection. See Life of Henry George, by Henry George, Jr., chapter ix, p.496 and 496 n.

  9. "Land-value taxation" is the almost exclusive term in Great Britain. There are special reasons, one of which is that in that country, unlike the United States, there was no Imperial real estate taxation of importance until the adoption of the Lloyd George Budget of 1909. Prior to this the only real estate taxes were (1) survivals of the land-value tax of the time of William and Mary, based upon valuations of 200 years ago and very much reduced by commutations, and (2) "rates" (local taxes) based not upon capital values regardless of use but upon actual rentals. Occasion was thereby furnished for that British agitation for the taxation of land values of which the Lloyd George Budget was the first triumph.

  10. When it is remembered that some land in cities is worth millions of dollars an acre, that a small building lot in the business center of even a small village is worth more than a whole field of the best farming land in the neighborhood, that a few acres of coal or iron land are worth more than great groups of farms, that the right of way of a railroad company through a thickly settled district or between important points may be worth more than its rolling stock and trackage, and that the value of workingmen's cottages in the suburbs is trifling in comparison with the value of city residence sites, the absurdity of the plea that the Single Tax would discriminate against farmers and small home owners and in favor of the rich is apparent. The bad faith of this plea is evident when we consider that under existing systems of taxation the farmer and the small home owner are compelled to pay in taxes upon improvements, food, clothing, and other objects of consumption, much more than the full annual value of their bare land.

  11. The difference between site value and improvement value is much more definite than it is often supposed to be. Even in what would seem at first to be most confusing cases, it is easily distinguished. If in any example we imagine the complete destruction of all the improvements, we may discover in the remaining value of the property—in the price it would after such destruction fetch in the real estate market—the value of the site as distinguished from the value of the improvements. This residuum of value would be the basis of computation for levying the Single Tax. The distinction is frequently made in business life. Whenever in the course of ordinary business affairs it becomes necessary to estimate the value of a building lot or to fix royalties for mining privileges, no difficulty is experienced, and substantial justice is done. And though the exigencies of business seldom require the site value of an improved farm to be distinguished from the value of the improvements, yet it could doubtless be done as easily and justly as with city or mining property. Unimproved land attached to any farm in question, or unimproved land in the neighborhood, if similar in fertility and location, would furnish a sufficiently accurate measure. If neither existed, the value for enclosure of the contiguous highway would always be available. It should not be forgotten, either, that land for which the demand is so weak that its site value cannot be easily distinguished from the value of its improvements must be land of but little value. The objection that the value of land cannot be distinguished from the value of improvements is among the most frivolous of the objections that have been raised to the Single Tax by people with whom the wish that it may be impracticable is father to the thought that it really is so. Equally frivolous is the objection that land values cannot be scientifically appraised. This objection has been demolished by W.A. Somers, for years a Minnesota assessor, who is the inventor of the Somers system of scientific land valuation. The Somers system won the confidence of Tom L. Johnson, Mayor of Cleveland, and its use in the first quadrennial valuations of Cleveland in 1910, under the personal supervision of Mr. Somers, was a demonstration of its exceptional value. It is described in The Public, of Chicago, at pages 604, 608 and 827 of volume xiii. Mr. Somers superintended the use of his system by a corporation of Cleveland, Ohio, which is engaged in the business of valuing land. This fact raised against him the objection that he has "commercialized" his system, and that the employment of his corporation by tax authorities to assist them in their official duties was a "farming out" of taxes. The objection appears to be far-fetched. It should be made known for whatever it may be worth; but so far as Singletaxers are concerned, the point is not whether the system has been "commercialized" but whether variations in land value can be ascertained by means of it with economy and approximate accuracy. On this point Tom L. Johnson, whose judgment in such a matter rightly commanded respect, has testified strongly in the affirmative.