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The Pamphlet Collection of Sir Robert Stout: Volume 70

National Progress. — To the Editor

National Progress.

To the Editor.

Sir,—In continuation of my letter which appeared in your issue of the 5th, 1 will begin with two quotations which Mr Ewington makes from "Progress and Poverty." In the first of these landowners are spoken of, after the consolidation of existing taxation of land values (page 321), as having become "merely rent-paying tenants," Then from page 309 he quotes:—For this simple device of placing all taxes on the value of land would be in effect putting up the land at auction to whoever would pay the highest rent to the State."

Between these two quotations Mr Ewington adds the following remark of his own: "and the tenants would have to pay a rack-rent, the worst form of rent," He speaks of a "rack-rent" as the worst "form" of rent, as though some peculiar and seldom-heard-of enormity in connection with rent were proposed by Henry George, The word "form" is quite superfluous here, and has Do meaning except as nurses sometimes speak of the "bogey" to frighten the children, A "rack-rent" is not a form but a degree of rent It is a rent that is "racked" or extended to the utmost; i.e., it is the highest that competition will give, It is now the ordinary custom for landlords to get all they can, as evidenced by the necessity in Ireland for limiting them by fixing a "judicial rent," and also by the remissions which are constantly made in England and elsewhere when the tenants cannot pay owing' to bad seasons, The general, page 9 and indeed the true basis of rent is competition. This, then, is not an enormity which can be peculiarly charged to Henry George.

It may indeed be well here to call attention to a point in favour of the single-tax regime as against the charge that it would amount to a "rack-rent." At present the selling price of land and the annual rent obtainable under lease are enhanced by the belief in a prospective value. People are thus willing to pay more for the fee-simple or more annual rent under lease than the present using value will warrant, in the hope of benefitting by a resale or by subletting. When the single-tax is in force, land will not be held for speculative purposes. Thus not only will that which is at present held out of use be brought into use, but the price and rental of all land will be less by reason of the absence of speculative buyers or lessees from every auction. The single-tax would moreover be levied upon a public assessment of value from which "booming" as the result of speculative conditions, would be absent.

It is principally, however, to the inference with which Mr Ewington follows up the last two quotations, that I wish to call your attention. He writes:—"Hence the using annual value of an allotment in Queen-street without improvements being say, £300 a year, or a working man's cottage allotment worth £3 a year, or a farmer's farm land worth £30 a year without improvements, the £300, the £3, and the £30 would have to be paid to the State, not to the private owners."

Before criticising this, I have one thing in connection with it to thank Mr Ewington for. He effectually gives a contradiction to the statement, so industriously circulated against us, that single-taxers are setting the townspeople against the country settlers and are seeking to put all the taxes upon the latter to the relief of the former, Mr Ewington knows, and clearly states in the above passage, that we propose to tax all land, in town and country alike, upon its value exclusive of all improvements. The owner and not the tenant would pay the tax.

The fault which I find with the paragraph quoted is that it makes no mention of the taxation which would be remitted by the adoption of the single-tax. Single "means "only," and implies that the single tax would have no contemporaries, What is proposed is gradually to increase the small tax upon land values, and simultaneously to gradually reduce all other taxes, until the latter disappeared and the former became the "single tax," It would thus be substituted for and not levied in addition to the present taxes.

Now comes the question whether the amount of revenue required to be produced by the single tax in order to replace all existing taxes would be so large as to absorb the full rental value of all our land. It is not easy to calculate this from present data, but I don't think that it would. But even if it were not all required, it might still be considered desirable, and we hold it to be equitable, to take nearly, if not quite, the whole rental value. The excess could then be devoted to great reductions in the cost of railway and postal services performed by the State, and in the introduction of further conveniences, But as I cannot state the amount with certainty or probability, I will take the view least advantageous to our case, and assume, for the present that we should require the whole "ground-rental" value for the purpose of extinguishing our present taxation.

The last three lines of Mr Ewington's paragraph, taken in conjunction with the remission of taxes just mentioned, become very significant. He says:—"The £300, the £3 and the £30 would have to be paid to the State, not to the private owners," Exactly so; these rents would in future be paid to the State, and no other taxes would be demanded. Now tenants pay both page 10 items,—rent to the private owners and tajees to the State, a very important and substantial difference indeed. In addition to this all the present hindrances to the tenant's trade or industry caused by taxes, would be removed, These would be some of the tenant's gains.

How would the owner be affected? At present he receives rents and pays taxes, In future he would receive rent and then pay over nearly the whole of it to the State in the shape of a single-tax, but he would be called upon for none of the present taxes.

These explanations refer, both in the case of the tenant and the owner, to the land alone. The tenant would still pay, and the owner still receive, such interest upon the buildings or other improvements existing upon the land as competition would give. These improvements would be freed from all taxation, Their selling or letting value would not only remain intact, but probably be better than under existing' conditions. It will thus be readily seen that the landowner who would be best off in the future would be the one who had in the past put valuable improvements upon his land. On the contrary, he who had added least to his country's aggregate wealth in this way—who had thus set less trade and industry in motion—would be the worst off.

Our agitation is often charged with causing stagnation of business. Admitted as regards the business of speculation in land titles or leases, an operation which adds nothing, to the nation's wealth, but, on the contrary, obstructs its progress, Denied as regards trade and industry, and the making of improvements which constitute additions to the nation, visible and useful wealth, The man owning the Queen-street section with poor buildings upon it, the vacant cottage allotment or the unused country-land, would be encouraged by us to add substantial improvements to one and all of them.

Let us next consider the case of a man who occupies and uses his own land—a very valuable class of citizen. How would he be affected?

If he is the user and owner of the Queen-street site the tax on his improvements would disappear and he would be freed from all other taxes. He would cease to be hampered by cash payment of Customs duties before he could handle his goods. No stamps would be needed for his receipts, cheques, agreements or deeds. If he inherited anything under a will he would not be asked for probate duty. On the other hand he would pay more tax direct to the State than is at present collected from him under all the heads, but more trade would come to his shop because of the improved purchasing power of the many resulting from the removal of discouragements to all improvements in property, I think he would be more likely to gain than to lose by the change.

If he is the user and owner of the cottage allotment, he probably does not pay the present property tax, but under the single tax, which proposes no exemptions and does not appeal to the many to tax the earnings of the few, he would have to pay to the State the annual value of his land. He would gain very largely by the reduction of the price of supplies which now pay Customs duties; I should think quite enough to counterbalance the single tax. His principal gain, however, would probably be in the greater field for employment offered by the encouragement to everyone to make improvements, I take it also that he, being a wage-earner (I don't care for Mr Ewington's term "working-man") and a man of small means, profits little and loses much by the existing system of land speculation and ownership. Broadly speaking, then, he stands to gain more than most by the beneficial effects which we believe would follow the proposed change of taxation.

If he is the user and owner of the farm-land worth £30 a year he most page 11 likely pays property tax, and would in the future be saved any tax on his improvements. He would probably be a greater gainer by the remission of Customs duties than any man carrying-on a town business of equal magnitude. There would be something to the good on stamps. The single tax would very likely overtop these remissions, but he would have the satisfaction of knowing that he could devote his capital to making his farm more workable and productive, and his house more comfortable, without any fear of his taxes being increased thereby. I believe that his condition would on the balance be a better one,

There is another consideration affecting the foregoing cases, and that of everyone else in the community, which Henry George dwells upon with great force in chap. i., book v., pp. 185 to 199, headed "The Primary Cause of Recurring Paroxysms of Industrial Depression." I firmly belieave that he traces these to their true cause—private land-ownership—and that under the new regime all production of wealth would be increased, whilst distribution would be effected more equitably, If such a result followed, employment would be much more regular, and the purchasing power of the many would be enormously increased. Such a prospect is well worth considering, and the reasons given as to the likelihood of its attainment, criticizing. This item belongs to the large and general view of the reform; and it seemed desirable, before alluding to it, to analyse the three individual positions referred to by Mr. Ewington, lest he should say, "Oh! there you go with your hopeful generalities—nothing brought down to the balance-sheet test."

I think you have now sufficient reasons, from my own point of view, for my saying Amen to the quotations from Henry George. If I am wrong, I desire to be put rights and therefore hope that Mr. Ewington will bring his most penetrating guns to bear to batter down what he believes to be unsound.

In conclusion, I must thank you, Mr. Editor, for the large space which you have accorded me.

I am, etc.,

Edward Withy