The Dominion. TUESDAY, OCTOBER 5, 1909. LAND VALUES TAXATION.

Dominion, Volume 3, Issue 629, 5 October 1909, Page 6

The Dominion. TUESDAY, OCTOBER 5, 1909. LAND VALUES TAXATION.

'-.- .Those.who a'ro iriterbsted;in this theory of•■;sp r ecial ■ land' : taxation,;' and jvho:'■ wish' to.lknpwjoxaetly the.:full; strength;of, ithc; case ifor ■ taxing * land-'.values and of'the case against it, will.find that their, trou-, ble will be well repaid /if they procure, and read the files of the Westniins-. ter Gazette for, August .last,' beginning with tho issue of .August 10,. which contiains a. letter'from Lord Hugh . Ceo'iC, The Gazette had.used the argument.that increases. in: the '-. value ,of ' land ■ were '.'.■ brought about by causosput of tho 'conr , trol of the owners of property, , '■ and wero the : re : fqre. , pe.culiarly.;.'pr,ope£.to.;.be,, taxed., that ''.' inercases , . in/ value 0f..a11-property; arid labour aro brought about-by ' causes out of the control of the: owners'. ;or; labourers," and he;put.a simple case:; "Why, if I invest 'in ■ an :' industrial undertaking—e.g., : .'. a cbttori : mill—and make 3 per cint. in bad times and ..10. per; cent.; in 'good times,' ami less;a debtor to the community for tho'odd.V' per cent.', than' one .of theso ducal spectres' who haunt' Mr. LloydGeorge's imagination ? , In both cases tho incromerit of value-is due'to.causes outside its. recipient's control." Putting his contention ,in,more general', form, ho saidv. .''../••' : : ■■"." ■ ■•'. ': ~'-'■:- ■ ' >■' .-' -_ ■■! All;value is. determined by social'causes. When economists have tauglit'us that'value is governed'by demand ant] supply it surely requires little insight to go on to petccivo that demand is ivholly a social cause; and that most of the.processes vsWch make supply; are conducted under the protection and by .the help provided by the State.; Why; then, claim social causes as justifying thespecial taxation of, certain values?"■ . •■ ; Its correspondent did not go into, any detailed support of hie, contention, but tho, Gazette' made a lengthy reply, its main point, being' that ■ land is.a monopoly :■" No one can bring in competing plots of land.'. and offor them ■ for sale against the owner in possession." . ■A. svearm^ of other correspondents gave a mass'of similar support to tho theory, that land should bo specially taxed because it.is a "peculiar." thing, different from other-forms of proporty. Finally Lord' Hugh Cecil replied.in a short.letto "so brilliantly .witty and'logical, that we must quote the main' portion of it in fuliv/:, 1 ,;./,.,■ ../-■ '--; f v:.-v :

• My; objection.was,not to distinguishing betweon ; land and other kinds of property,' but between .the value of land and the value of other things. All values aro governed by the sarao laws, and they aro all determined' by ' social, causes;" It is surely, then, plain that, whatever else can justify the taxation of land , values,'--reference to,"social .'causes" cannot do it. Special treatment of one kind of value cannot be justified by; referring to what is common to all kinds of value. If the , Government propoaeil to tax red hair, it would be silly ■to .argue that the tax .was' fair' because ,the colour was produced by glands in the skin of the scalp. It would be less'evidently illogical and probably more : candid, to say that the reason for the tax was that Radical members did,not liko,red hair, .for tastes may and do differ .about the colour of hair; but all colours are- produced by the operation of glands. Similarly, ..ulj values, including land values, are determined by demand and supply; but Radicals may and do hate landlords. It is, theu, not land, but the value' of land of which the taxation is in dispute.' l And this answers some other 'Criticisms., made , either, in . your article or by your correspondents. Land is not a monopoly—for.lt is in the possession hot of one but.of very niany persons—hut if it were 1 do I>6t know that the case for the special l taxation of its value would be much helped. I<and is of high, importance to, the .existence and well-being of the community, and for that roason is quite properly subject to special regulation and control. Again, land is, as your courteous , correspondent, Mr, Crook; observes, indestructible; but its value is not, and actually, down as well as up-. It is this value on which taxation is to bo levied,, and neither the necessity nor.'the indestructibility:of land overthrows , ' tho proposition that tho valao of land is , determined by the same economic causes-that determine the.value of everything else. It is surely very to'sneak (as does tho correspondent to the " Times whom you quote) of-tho oirnor of urban land pocketing "the 'whole benefit" of public improvements. ■ fhe eoniinunity get, of course, precisely the benefit that they set out to Ret—namely,: the public convenience which (heir improvements serve; ,, Thev do not niako improvements, in order to enrich tho landlord, but ;for their own , usb; and that, use they.obtain. The demand for land is doubtless ma.de ~effective by .the iinprovomente, and its • value therefore enhanced j .; but ' this advantage to the lnadlord. which is the result of enabling people to obtain houses where., they want them, is. only r an instance of the advantages conferred by the- State upon all its subjects, Withdraw evtathins that daneads. oa the action of the.

vJ? •' aj iu hpw , little w<iuld "main of tho S °'« or ,i° f P r °P° rt y °f labour! The nfi ,P u 1 b ' ,c ,, lm P r °™mciits is nnjoyedby all .aft"octed-by the public, by by K A " that tho landlord gains is the countrv gC fri m , n , On t0 "!' Citizons of a civiliscd sunSu?',, at » th ? weohinery of demand and supply operate in-the marhet in which he deals smoothly and effectually. ■ The difficulty 0 { making satisfactory anto-. this ..masterly statement of tho principles involved .in the proposal to jtako a porcontage : o£ tho increment" /is obvious. The Westminster Gazette at any rate, which is an able and a very honourablo_ newspaper, with, no lovo for what a sporting community would'call ■" pointing," found itself entirely nonplussed. Here is its reply, brief and very candid: . "It is, of course, not disputed that there is an element of ' unearned increment' in other property besides land; what is maintamed is that land represents the simplest ami clearest case, and the case most suit ablo for taxation. Tho question is not whether other things might ■ bo taxed' on tho same principle, but whether this particular tax is tair." ,'■"■■ Exactly the same argument,' it. will-ba noted, as that of Sir Edward Grey, which ,we recently noted in theso columns: the landowner should ..bo .taxed because he is most easily got at. Now, it is hopeless to try and argue whether " this particular tax is fair." It may'be, , 'or it may not be. A good case can be raado out either way, but in either'caso tho argument would have to travel wide and' deep, far beyond, the mere question'of land-holding. But it cannot bo fair unless itiis equitable. For,it 'is quite obvious that/.if." tl l3l taxation of, increment due to social causes" is fair, it is quite? unfair to the landholder' to tax'him alone and _ leave the other beneficiaries from "social causes" untaxed. A moment's reflection will show, us why this is. so. For to tax the landholder's increment is to take, his money for tho general expenditure of the State, which is composed of other holders of increments. In other wordß, the holders of other 'increments aro not only left untaxed, but are presented with portion of the property of the class that can be most easily got at. So. far as fairness is* concerned, it : is as unfair to tax only the owner of one sort of property on tho increment of ! his property asit would be to levy the incometax only on bootmakers-or only on : ironfounders.. It is rarely : that ono man's wit_ and logic can drive, tho.ablest journalistic . champion of a new. political theory to confess that its theory has no foundation .in principle,. '" v ". "'• ' '