LJ Johnson, Production and Obstruction: Two purposes in land ownership
TWO PURPOSES IN LAND OWNERSHIP BY LEWIS JEROME JOHNSON
Professor of Civil Engineering, Harvard University.
Being in substance an address at the Reconstruction Conference of the National Popular Gowrnsiient League, Iw BuilxLing, De- partment of the Interior, Washington, D. C. , January 9, 1919.
Reconstruction includes two types of measures, first aid and fundamental cure, first aid is justly getting much ■«.-atteaxtian; the fundamental cure now presses, with daily in- creasing force, for discriminating as well as resolute con- sideration. Hence, as an engineer, with a deep sense of professional duty to propose whatever well-known and immut- able principles .indicate as necessary, I invite attention to fundamentals•
Land is the basic necessity of human life* What are the terms of land ownership?
Ownership of land is now permitted to serve two radi- cally different purposes.
Land may be owned as an incident to the construction and enjoyment of a horns, with suitable and, it is to be hoped, with adequate and ©ven beautiful grounds around it; as an incident to ths production of food and other necessities and comforts of life; as an incident to a banking, mercantile, manufacturing, transportation or other useful business; as an incident to wholesome pleasure and recreation.
Land may also ds owned as a means of getting tribute, for living without useful service, as an essential to out- right oppression. The speculators, dukes and kings know this very well.
The first purpose is beneficent in the highest degree; the second, though'often not deliberately so, is highly ob- structive to industry, to full returns for capital and labor and to that widely distributed prosperity and happiness which is the aim of democratic government.
Land ownership for the ftort-purposa-may, for brevity, be called productive laaxl ownwehip, that for the .second purpose obstructive land, ownership. Th® fact that an individual owner ©ay have both purpose® doss not affect their relative merits.
If either of the two purposes in land ownership is to be Mde a favored interest at the expense of the other, if either iA to be penalized to subsidise the other, it is plain that the productive purpose should be the one to bs fostered. But in- credible LG it is, ms axe acting on the diametrically opposite ..principle. Ns are actually ffubsldlging obstruction.at .the ex- pense of production. Sot only that” but this irrational pxaQ»-. ties prevails throughout the world. Our own country is no ex- ception. This policy is so universal and we are so habituated to it that it is hardly noticed and even less discussed.-
The train of evils produced by such a basic perversion of government as the maintenance of ths obstructive use of land at the expense of the productive use is naturally long—too long to enumerate now. Prominent among these evils, however, may be mentioned our burdensome and demoralising tax system. Another consequence of our tenderness of the harmful use of land is the restriction, in large degree, of the productive use of land to the less well-located and poorer land,-with corresponding dim- inution of the country’® economic power. Another consequence is inadequate funds for public improvement*, for salaries of pub- lic employees and for other public needs° toother is the set- tler forced to the lonely wildem.es®. toother is the city slum, toether is scarcity of employment. toother is the menace of blind revolution.
Out whole economic -and social system is thrown out of gear by this one economic blunder. For it is a blunder at a vital spot. Its correction, once ths public see® ths point, must prove one of the easiest of the many taHuuaonf renting our people. Ths result would be ths removal of the cause of a long train of evils and, in consequence, ths disappearance of these evils themselves. The way would then bs clear > as never before, for similarly vigorous and rational treatment of other evils.
Let us, as its hsportanss warrants, go into this subject somewhat more systematically. Investigation will reveal where the evil is intrenched, and indicate what ws must do to get rid of it.
The whole case may be briefly condensed as follows:
(1) Land is the source from which man produces capital and mssts all his material needs. The right to use land is essen- tial for the use of water, light and air. The right to use suitably located land is essential for a horns, for the conduct of a business, and for any activity of san. On the wisdom and justice of the terms of land ownership, the stability of society depends.
(2) Private ownership of land at present includes two fea- tures —- one essential and good, the other unessential and bad.
(3) The good feature In private ownership of land is the right to uss land, to conduct in security one's business, and to enjoy in security one's horse, property and life.
(4) The bad feature, now included in private ownership of land, Is the right with impunity and even with profit to pre- vent ths use of valuable land; a right which gives power to name the term® upon which land. Way be used, the terms upon which cap- ital and labor may function; a right which gives power to absorb by ever-increasing exactions and without service in return, the social value of all invention, discovery and civic advance; a right which gives power, through arbitrary control of the sur- face of the earth, to control ths lives and fortunes of men.
(5) Ths bad feature etill existing in private ownership of land is the one essential stronghold of landed autocracy, an- cient and modern; between it and democracy there can be no peace; wherever it prevails sen cannot be free; so disastrous has been its effect, to such extent it has overborn© the good feature in land ownership that the resulting discontent mistakenly threatens the whole system of private ownership of land-
(6) The harm experienced under private ownership of land is not inherent in private ownership; it is due solely to the one bad feature in private ownership —- a feature which has Lar too long found support because of its supposed inseparability from the good feature.
(7) Existing tax laws require a land owner to pay more taxes if he uses hia land than if he does not. They also permit his to absorb site-value, which is the value that the develop- ment and maintenance of society adds to land. The result of these two conditions is a premium upon withholding valuable land from uss. Thus is produced and maintained the bad feature in private ownership of land.
(8) All about us ar® the inevitable consequences of this policy: agriculture a needlessly precarious occupation; farm tenancy and absentee ownership widespread and on the increase; bad housing; living expenses harder and harder to meet; the price of land rising and taxes upon its use increasing,—condi- tions formidably obstructive to the production of food and other necessities and comfort® of life.
(9) The legalised premium upon obstructive use of land pwnsrship has no better claim to perpetuation than that other and kindred institution of medievalism, ths divine right of lings.
I therefore earnestly urge upon all who wish to sss the resources of our country made fully effective, and society put on a stable basis, the need of changing our system of taxation so a® to make the productive ownership of land rather than the obstructive ownership of land Ms favored interest of government.
The nature of site-value points the way. Bite-value is a vast fund. It is created by Ms public. It can be turned to public uss by suitably taxing it. The revenue fro® site-value taxation would, not only vs ample in ordinary time®, but in wax time would mobilize the whole economic power of the country, which existing taxes cannot possibly do. More can be had from the sss right and ample source, site-value, than fro© our pre- sent multiplicity of wrong and relatively unproductive sources.
The obvious step is to mate site-value the sole basis of revenue taxes and incidentally to abolish all taxes upon food, clothing and shelter; live stock, orchard and farm improvement®; buildings, ships and machinery; trade, transportation, manu- facturing, forestry, and agriculture; thrift, skill and effi- ciency; and upon all useful activity.
It is especially important that the individual states turn to site-value taxation since the holding of valuable land out of use is a favored, exempted interest under the Federal Income Tax, as it is under any income tax.
Once the universality of its benefits and the unsoundness of the case against it are understood, the obstacles to the adoption of the proposed single tax upon site-value must prove short-lived.
I urge consideration of the following opinions of its ad- vocates as to certain specific effect® of the proposed single tax.
The single tax, by entirely untaxing the uss of land, would add a large new value to land-ownership; by entirely un- taxing improvements, it would make ths taxes lower than now upon nearly all farms, as it would also to a wide extent, upon other improved real estate. By destroying the speculative ds- _msnd for-lanL lM. accomplish which it must be suitably extensive and thorough in application), it would reduce the price of land and reduce the total carrying charge (interest and taxes com- bined) upon all land bought after the change. It would, never- theless, by making suitable use the only way to meat even this low carrying charge, eliminate the speculative motive for hold- ing land out of uss. It would thus permit the market supply of land, urban and rural, to keep pace with ths demand and would thus reduce to a minimum the cost of land-ownership and of land use.
The taxes paid by each tax payer would then be proportioned, to the publicly“maintained benefits actually placed at Lis com- mand.- They would no longer be proportioned to the skill and success with which he serves himself and the public. No indi- vidual could escape paying and paying his just share; the pay- ment would decrease if the site-value of his land should fall, and would increase if the site-value of his land should rise. Son-land owners, so far as any such remain, would pay their tax solely through their rent, instead of as now, partly through their rent and partly through, increased prices of the necessi-' ties and comforts of life. Their rents would, however, be easier to meet than now. Nobody would give up anything for taxes which would not otherwise be absorbed by obstructive land ownership.
The signis tax would operate powerfully to smooth the way for other reforms, and to widen the participation in their value when secured., to increase tee production of wealth, to diminish poverty, and to male us a nation of land owners and home owners — impregnable in defense.
Idle an income tax, or an inheritance tax, the sin ;le tax would lay large enlarges only upon broad shouldersUnlike them, it would net violate an individual's just right to his earn- ings and savings, even if they are large. Unlike them it would actually reach the dangerous fortunes and no others. Unlike thorn it would not help perpetuate the bad feature in land ownership.
The single simplest of all least costly to tax would be the fairest, most productive and possible systems of revenue. It would be the collect, and it would not be inquisitorial.
The sin.,1s tax would abridge nothing in private ownership of land but its abuse.
The sin?le tax would make useful industry and the secure enjoyment of just property rights the prior concern of government, rather than the maintenance of the evil feature in land ownership.
Sy seer.ring revenue and protecting industry by a plan more effective than tariffs, the single tax would remove the demand for economic barriers between us and those w^ith whom, out citizens wish to trade.
single tax would open ample opportunities tn thia our own borders for capital -md thus reduce t«e incentive to ecenomic imperialism.
The Lin Is tax would, aid us immeasurably in meeting the problems o< reconstruction, and by undermining certain for- midable economic causes of war, would materially contribute to ias._l.n-. an end or war.
I believe that the foregoing accurately represents present dry single tax views. I may add that what I have just offered as wa brief condensation of tae whole case" was at opted prac- tically verbatim as & statement of principles of the National Single Tax League of the United States at a nesting of its Ex- ecutive Committee last August by unanimous vote. Such few changes as I have made are mainly ths omission of passages pertinent only under the war conditions then existing.
m closings say I add a word or two as to sore immediate proposals.
The first thing to ds dons is to develop a realisation that ws, the land, loving, home loving and 'business loving .American people are actually discouraging the wholesome owner- ship of land in the interest of the harmful ownership of land. He must also produce a realization that until ws abandon this practice it is hopeless to look for secure economic order, that until we abandon this practice- other efforts at improvement can result in relatively little but increase profits for the obstructive type of land ownership. These realisations ac- complished, public sentiment would, gradually right the wrong.
As with the making of other important public changes, tem- porary hardships to some individuals would doubtless be caused by adopting the Single Tax program. On the other hand, multi- tudes of severe cases of hardship otherwise chronic and other- wise incurable would be permanently cured. Moreover, the in- conveniences incident to the change would be acceptably mini- mized by reasonable handling of ad interim conditions, and cases of actual individual hardship could be suitably taken cars of by some such bodies as the draft exemption boards. Of course, exemptions to charitable religious, educational or other interests which it is deliberately intended thus to encourage would continue to prevail at least as liberally as Lt present, and far more effectively, for such interests would then be free from multitudes of indirect taxes from which they cannot now be shielded.
The best first legislative step toward the proposed
SINGLE TAX UPON SITE VALUE
- NOT single tax upon LAND ds it observed - may well be the as- sessing of site value separately from land improvements and from building®. Suoh separate assessment would obviously be an Essen- tial part of the new system, and would have to be adopted with it if not before it. If adopted beforehand, it would throw much light in advance on the actual workings of the new plan, and enable the public to take the next step with full understanding and calm confidence - a condition highly favorable to a smooth transition period.
Even if we cannot get ths Single Tax into actual force in time to aid in getting land and fitting it for a suitable wel- come to our returning soldiers and sailors» we can at least have it ready as a worked out plan of action, a vision of better things than they or the world have ever before known or dared seriously to contemplate, and they and we can have the lasting joy of working together to make it come true. Until it does come true, the work of 176, of *61 and of '18 will remain in vital respects unfinished. Until it does come true, we shall not have real reconstruction.
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