1. (2013 February) Announcement: Update from CGO

This year’s conference of the Council of Georgist Organizations “celebrates” the 100th anniversary of two important landmarks: Pittsburgh and Scranton becoming the first two cities in the United States to adopt a land value tax (which we do indeed celebrate) and the Wilson Administration’s implementation of the Federal Income Tax (mumble grumble).

Alex Wagner Lough is doing her doctoral dissertation on the Georgist movement in the progressive era, and will speak on the participation of Georgists in adopting the income tax and on the divisions within the Georgist movement over that issue. She suggests that passage of the income tax marks the decline of the Georgist movement, and might have caused it.

George himself vehemently opposed income tax, agreeing with David Ricardo that a revenue tax, even on rental income, would be passed on to the tenants. In Progress and Poverty, George wrote,

As to the truths that are involved in socialistic ideas I shall have something to say hereafter; but it is evident that whatever savors of regulation and restriction is in itself bad, and should not be resorted to if any other mode of accomplishing the same end presents itself. For instance, to take one of the simplest and mildest of the class of measures I refer to — a graduated tax on incomes. The object at which it aims, the reduction or prevention of immense concentrations of wealth, is good; but this means involves the employment of a large number of officials clothed with inquisitorial powers; temptations to bribery, and perjury, and all other means of evasion, which beget a demoralization of opinion, and put a premium upon unscrupulousness and a tax upon conscience; and, finally, just in proportion as the tax accomplishes its effect, a lessening in the incentive to the accumulation of wealth, which is one of the strong forces of industrial progress. (Progress and Poverty, Book VI, Chapter 1, Sec. V.)

However, Wilson’s administration, awash with Georgist leaders, proposed the 1913 income tax, and Congressman Henry George, Jr. cosponsored the legislation. Which Georgists supported the income tax, which opposed it, and the arguments and predictions they made, will be the topic of a special presentation at this year’s conference, August 6 – 10, at the Airport Holiday Inn, Coraopolis, Pennsylvania (a Pittsburgh suburb). We are excited to explore this very important but long-ignored aspect of the history of the Georgist movement.

We will also celebrate and detail the great successes of the Georgist movement in Pittsburgh and other Pennsylvania cities, and will tell you more about that in an upcoming edition of The Georgist News.

Dan Sullivan, President
Council of Georgist Organizations

2 thoughts on “1. (2013 February) Announcement: Update from CGO

  1. “Were it not for George and his allies in Congress we would probably have an income tax today that exempts land income. There were six Georgists in the U.S. House of Representatives in 1894 when the income tax law of that year was passed. Madison and Hamilton had aborted any federal direct tax on land by inserting in the Constitution a requirement that any such tax must be apportioned among the states by population, a provision that assured the opposition of the more populous states. The Georgists succeeded in getting Congress to include land rents in the coverage of the 1894 Act, forcing the U.S. Supreme Court either to reject the Act, or allow the direct taxation of land incomes. The Court chose the former. After 19 years, this led to the 16th Amendment of 1913, which allowed direct taxation of income from all sources, including land. Indeed, the first income tax legislation limited the tax entirely to property income. One of those writing the law was Congressman Henry George, Jr., of Brooklyn.”

    – Source: http://schalkenbach.org/rsf-1/on-line-library/works-by-henry-george/progress-and-poverty-study-guide/study-guide-part-8/

  2. How many of the following points for and against LVT are YOU aware of?

    14 ASPECTS of LAND-VALUE TAXATION affecting Government, Land Owners, Community and Ethics

    3 aspects for GOVERNMENT

    1. Most of the ground-rent being collected as LVT, adds to the national income. It allows the other taxes on earnings, purchases and family/corporate ownership of buildings to be reduced and eventually to be eliminated.

    2. The ownership of each land parcel is registered. Then the cost of collecting the LVT is much smaller than for income tax and other production-related taxes. Using regularly updated maps, the rental value of each site (as if without buildings) is public knowledge. Then the LVT is simple to understand, the amount of tax is easily found and its payment by the land owner is impossible to avoid.

    3. With LVT, the national economy stabilizes and no longer experiences the 18 year housing boom and bust cycle, which was due to the changing prices that arose from speculation in land-values during town expansion.

    6 aspects affecting LAND OWNERS

    4. LVT is progressive, the owners of the most potentially productive sites pay the most tax. None is paid on marginally productive sites, since their owners cannot claim ground-rent from possible tenants.

    5. The land owner pays his LVT regardless of how the land is used. When the land is leased to tenants most or all of the resulting ground-rent is the tax.

    6. LVT stops the speculation in land prices because any withholding of land from proper use is too costly.

    7. The introduction of LVT reduces the sales price of sites even though their value (or potential usefullness) may continue to grow.

    8. With LVT, land owners are unable to pass the tax on to their tenant renters, due to the competition for land use. The users of (untaxed) marginal sites price their produce according to the costs of their labour, the use of the durable capital and the added transport needs. Owners/occupiers who access more productive land pay LVT/ground-rent and compete in their production, so this tax cannot be added to what buyers willingly pay.

    9. With the introduction of LVT, land prices will drop. Speculators in land values will tend to foreclose on their mortgages and to withdraw their money for reinvestment. Depending on the rate of these changes, bankrupcies can result. Then LVT should be introduced gradually to allow the investors sufficient time to transfer money to company-shares in durable capital goods, where their greater use will meet the increased demand for produce (see below).

    3 aspects regarding our COMMUNITY

    10. With LVT, there is an incentive to use land for production, rather than it laying idle or being partly used. An optimum amount of urban land is brought into use, which reduces the spread of suburbs onto rural land and avoids vacant city centers.

    11. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper because entrepreneurs have less difficulty in starting-up and running their businesses. Demand grows, unemployment decreases and with it a reduction in the polarization of our class-society and its degree of poverty.

    12. As LVT is introduced, investment money is withdrawn from land and placed in durable capital goods. The investors in company shares tend to be wage-earners (as well as banks and monopolists). Their decisions favour more competition and cheaper local production without heavy transport costs, whilst the monopolists have less control of prices and the unavailability of alternative goods. This is a natural trend of our free-marketing social system.

    2 aspects about ETHICS

    13. The collection of taxes directly from productive effort and commerce is socially unjust. The associated philosophy favours coercive robbery and is “Robin Hood” in style. LVT replaces this form of extortion by gathering the surplus rental income which comes without exertion. Consequently LVT is a natural system of money-gathering, which avoids the present-day distortion of business economics.

    14. Bribery and corruption cease with LVT. Before, this was due to the leaking of news of municipal plans for housing development. However, the speculation in land values is no longer worthwhile after LVT is in place.

Leave a Comment