LAND TAXATION

["prakash chandrashekar" <prakash7uc@rediffmail.com>]

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I believe that the fairest form of tax is a tax on the rent of lands,
because this is a value which is not created by the individual. It is a
value created by the society, and a fair government can collect that value
to run its expenses ( which contributes to creating that value )

here is a speech by winston churchill made against land monopoly ( got it
from www.progress.org). please make time to peruse thro' it.

regards
prakash

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Land monopoly is not the only monopoly, but it is by far the greatest of
monopolies -- it is a perpetual monopoly, and it is the mother of all other
forms of monopoly.

Unearned increments in land are not the only form of unearned or undeserved
profit, but they are the principal form of unearned increment, and they are
derived from processes which are not merely not beneficial, but positively
detrimental to the general public.

Land, which is a necessity of human existence, which is the original source
of all wealth, which is strictly limited in extent, which is fixed in
geographical position -- land, I say, differs from all other forms of
property, and the immemorial customs of nearly every modern state have
placed the tenure, transfer, and obligations of land in a wholly different
category from other classes of property.

Nothing is more amusing than to watch the efforts of land monopolists to
claim that other forms of property and increment are similar in all
respects to land and the unearned increment on land.

They talk of the increased profits of a doctor or lawyer from the growth of
population in the town in which they live. They talk of the profits of a
railway, from the growing wealth and activity in the districts through
which it runs. They talk of the profits from a rise in stocks and even the
profits derived from the sale of works of art.

But see how misleading and false all those analogies are. The windfalls
from the sale of a picture -- a Van Dyke or a Holbein -- may be very
considerable. But pictures do not get in anybody's way. They do not lay a
toll on anybody's labor; they do not touch enterprise and production; they
do not affect the creative processes on which the material well-being of
millions depends.

If a rise in stocks confers profits on the fortunate holders far beyond
what they expected or indeed deserved, nevertheless that profit was not
reaped by withholding from the community the land which it needs; on the
contrary, it was reaped by supplying industry with the capital without
which it could not be carried on.

If a railway makes greater profits it is usually because it carries more
goods and more passengers. 

If a doctor or a lawyer enjoys a better practice, it is because the doctor
attends more patients and more exacting patients, and because the lawyer
pleads more suits in the courts and more important suits. At every stage
the doctor or the lawyer is giving service in return for his fees.

Fancy comparing these healthy processes with the enrichment which comes to
the landlord who happens to own a plot of land on the outskirts of a great
city, who watches the busy population around him making the city larger,
richer, more convenient, more famous every day, and all the while sits
still and does nothing.

Roads are made, streets are made, services are improved, electric light
turns night into day, water is brought from reservoirs a hundred miles off
in the mountains -- and all the while the landlord sits still. Every one of
those improvements is effected by the labor and cost of other people and
the taxpayers. To not one of those improvements does the land monopolist,
as a land monopolist, contribute, and yet by every one of them the value of
his land is enhanced. He renders no service to the community, he
contributes nothing to the general welfare, he contributes nothing to the
process from which his own enrichment is derived.

While the land is what is called "ripening" for the unearned increment of
its owner, the merchant going to his office and the artisan going to his
work must detour or pay a fare to avoid it. The people lose their chance of
using the land, the city and state lose the taxes which would have accrued
if the natural development had taken place, and all the while the land
monopolist only has to sit still and watch complacently his property
multiplying in value, sometimes many fold, without either effort or
contribution on his part!

But let us follow this process a little further. The population of the city
grows and grows, the congestion in the poorer quarters becomes acute, rents
rise and thousands of families are crowded into tenements. At last the land
becomes ripe for sale -- that means that the price is too tempting to be
resisted any longer. And then, and not until then, it is sold by the yard
or by the inch at 10 times, or 20 times, or even 50 times its agricultural
value.

The greater the population around the land, the greater the injury the
public has sustained by its protracted denial. And, the more inconvenience
caused to everybody; the more serious the loss in economic strength and
activity -- the larger will be the profit of the landlord when the sale is
finally accomplished. In fact, you may say that the unearned increment on
the land is reaped by the land monopolist in exact proportion, not to the
service, but to the disservice done. It is monopoly which is the keynote,
and where monopoly prevails, the greater the injury to society the greater
the reward to the monopolist. This evil process strikes at every form of
industrial activity. The municipality, wishing for broader streets, better
houses, more healthy, decent, scientifically planned towns, is made to pay
more to get them in proportion as is has exerted itself to make past
improvements. The more it has improved the town, the more it will have to
pay for any land it may now wish to acquire for further improvements.

The manufacturer proposing to start a new industry, proposing to erect a
great factory offering employment to thousands of hands, is made to pay
such a price for his land that the purchase price hangs around the neck of
his whole business, hampering his competitive power in every market,
clogging him far more than any foreign tariff in his export competition,
and the land price strikes down through the profits of the manufacturer on
to the wages of the worker.

No matter where you look or what examples you select, you will see every
form of enterprise, every step in material progress, is only undertaken
after the land monopolist has skimmed the cream for himself, and everywhere
today the man or the public body that wishes to put land to its highest use
is forced to pay a preliminary fine in land values to the man who is
putting it to an inferior one, and in some cases to no use at all. All
comes back to land value, and its owner is able to levy toll upon all other
forms of wealth and every form of industry. A portion, in some cases the
whole, of every benefit which is laboriously acquired by the community
increases the land value and finds its way automatically into the
landlord's pocket. If there is a rise in wages, rents are able to move
forward, because the workers can afford to pay a little more. If the
opening of a new railway or new tramway, or the institution of improved
services of a lowering of fares, or of a new invention, or any other public
convenience affords a benefit to workers in any particular district, it
becomes easier for them to live, and therefore the ground landlord is able
to charge them more for the privilege of living there.

Some years ago in London there was a toll bar on a bridge across the
Thames, and all the working people who lived on the south side of the river
had to pay a daily toll of one penny for going and returning from their
work. The spectacle of these poor people thus mulcted of so large a
proportion of their earnings offended the public conscience, and agitation
was set on foot, municipal authorities were roused, and at the cost of the
taxpayers, the bridge was freed and the toll removed. All those people who
used the bridge were saved sixpence a week, but within a very short time
rents on the south side of the river were found to have risen about
sixpence a week, or the amount of the toll which had been remitted!

And a friend of mine was telling me the other day that, in the parish of
Southwark, about 350 pounds a year was given away in doles of bread by
charitable people in connection with one of the churches. As a consequence
of this charity, the competition for small houses and single-room tenements
is so great that rents are considerably higher in the parish!

All goes back to the land, and the land owner is able to absorb to himself
a share of almost every public and every private benefit, however important
or however pitiful those benefits may be.

I hope you will understand that, when I speak of the land monopolist, I am
dealing more with the process than with the individual land owner who, in
most cases, is a worthy person utterly unconscious of the character of the
methods by which he is enriched. I have no wish to hold any class up to
public disapprobation. I do not think that the man who makes money by
unearned increment in land is morally worse than anyone else who gathers
his profit where he finds it in this hard world under the law and according
to common usage. It is not the individual I attack; it is the system. It is
not the man who is bad; it is the law which is bad. It is not the man who
is blameworthy for doing what the law allows and what other men do; it is
the State which would be blameworthy if it were not to endeavor to reform
the law and correct the practice.

We do not want to punish the landlord. We want to alter the law.




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