Taxation of Land Values in 
 American Cities 
 
 The Next Step in Exterminating 
 Poverty 
 
 BY 
 
 BENJAMIN C. MARSH 
 
 Author of "An Introduction to City Planning" 
 
 Formerly Special Agent of the Philadelphia Society for Organizing Charity 
 Secretary of the Pennsylvania Society to Protect Children from Cruelty 
 The New York City Commission on Congestion of Population, and 
 The New York State Commission on Distribution of Population 
 
 Copyright, 1911, by BENJAMIN C. MARSH 
 920 Broadway, New York City 
 
DEDICATION. 
 
 To the uncounted millions of workers in the only unpaid occu- 
 pation in American cities, those who toil from birth till death at 
 their profitless task of creating land values for landowners, in the 
 sincere confidence that those who have votes will use the ballot and 
 those who have influence will exert it, in terminating the existing 
 land slavery in every American city. 
 
 The overthrow of the present system of subjecting women and 
 children who have no vote, and the sick and the helpless to the cu- 
 pidity of landowners involves a bitter struggle. The only other 
 struggles in our nation's history comparable with this one to restore 
 to "freemen" the right to values they produce, were the Revolution- 
 ary War, and the War of the Rebellion. Those two wars involved 
 bloodshed and loss of life, this battle for economic freedom involves 
 political, not party, action, bringing to the attention of all legis- 
 lators the rights of all the people, and not only of the propertied 
 classes who have hitherto largely controlled legislation for their 
 own selfish interests. While other measures in the warfare to ex- 
 terminate poverty are necessary, that fight cannot be won, till the 
 unpaid creators of land values secure through taxation of land val- 
 ues that which they create. 
 
 342172 
 
INTRODUCTION. 
 
 The excuse for another book on the taxation of land values is 
 the failure adequately to tax land values, and the increasing budgets 
 of cities, counties, states and the Federal government, while simulta- 
 neously, these political units are piling up millions of bonded indebt- 
 edness. The discussion in the present book, is limited to the taxa- 
 tion of land values in cities for municipal purposes since here the 
 necessity of heavy taxation of land values is of most immediate im- 
 portance v That similar taxation of land values is necessary for 
 rural and agricultural lands, and especially to reach the unearned 
 gains and values of mineral and oil lands the writer thoroughly 
 believes. The increase in value of agricultural land from 1900 to 
 1910 amounting to $15,000,000,000 or 118 per cent was not wholly 
 earned by the owners. 
 
 The heavy taxation of land values in cities so as to reduce the 
 ground rent to a minimum is a complex question and has manifold 
 bearings. For this reason, even at the risk of apparent repetitions, 
 the subject is treated from several points of view, the relation to the 
 housing problem, of fundamental importance in every city, fiscal 
 advantages, economic advantages, and social advantages, while the 
 evil results of present exemption of land values from adequate taxa- 
 tion are shown in a separate chapter. A brief statement of sources 
 of municipal revenue in foreign cities is incorporated because land- 
 owners in American cities are trying to discover or invent any kind 
 of tax which can be shifted to those least able to bear it, to enable 
 them to continue their ill-gotten, because unearned, gains through 
 increases of land values. In the chapter on possible methods of 
 taxing land values in American cities the most important methods 
 are considered. The conclusion that a higher annual tax-rate on 
 land values and a small land increment tax are the most feasible 
 methods of reducing ground rents and securing an adequate revenue 
 for municipal purposes^ including the cost of many current and 
 recurring improvements now met by postponed payments with the 
 large tribute of interest incident thereto, will probably be generally 
 accepted. 
 
 The small number of cities separating land and improvement 
 values has made statistical demonstration of the adequacy of the 
 taxation of land values for municipal purposes impossible for many 
 
cities. A few important cities only have been selected, and the data 
 from others not incorporated in the chapter on "Fiscal Reasons for 
 Heavier Taxation of Land Values," and general information, will 
 convince every one that this is an adequate source of revenue, nor 
 is this contention denied by landowners. Their sole contention is 
 that they don't wish to have their own profits reduced. The justice 
 and necessity of reducing their profits is thoroughly demonstrated 
 throughout this book. 
 
 VI 
 
FOREWORD 
 
 The following editorial by Dr. E. T. Devine on the bills gradually 
 to reduce the tax-rate on buildings and personal property in New 
 York, until it is one-half the tax-rate on land and to restrict the 
 heights of tenements in the city, was printed under EDITORIAL 
 Grist in the SURVEY for the week of June loth, 1911. It is re- 
 produced with Dr. Devine's permission, but does not commit him 
 to endorsement of the thesis of this book. 
 
 THE CONGESTION BILLS 
 EDWARD T. DEVINE 
 
 Senator Sullivan has introduced into the New York Legislature 
 the bills recommended by the New York City Congestion Com- 
 mission, the effect of which would be to reduce relatively the rate 
 of taxation on improvements as compared with land. 
 
 The change is one which would have far reaching beneficent 
 results. It would force unoccupied land into use, increase the 
 supply of new tenements, and so reduce rents. Yet it would do 
 this by favoring builders and owners of tenements rather than by 
 putting new and additional burdens upon them. Of course so 
 far as it encouraged new buildings it would diminish the monopoly 
 advantage of present owners and builders, and from the point of 
 view of the public interest this is exceedingly desirable. With 
 the pressure of population in New York there is no difficulty 
 about filling any tenements or apartments of any class if the rents 
 are reasonable, and by reducing the relative taxation on buildings 
 both old and new we increase the chances of reasonable rents. 
 
 Another good effect of the change would be to encourage the 
 building of factories on land now unoccupied. While I am not 
 in favor of allowing more factories to be built in the congested 
 quarters of Manhattan Island, there are abundant suitable factory 
 sites within the limits of Greater New York which it would be 
 advantageous to have used in this way. If our population and 
 factories were properly distributed there would be no ground for 
 complaint as to congestion. Increasing the relative taxation on 
 unoccupied land, and diminishing the tax upon buildings and im- 
 provements tend to bring about this distribution. 
 
 If so great a change as halving the rate of taxation on buildings 
 were made suddenly it would involve an element of injustice, 
 
 vn 
 
but to distribute this change over a period of five years reduces 
 that element to the minimum consistent with making any desirable 
 change whatever. If, again, there were no restrictions on heights of 
 buildings, fireproofing, etc., the proposed change might increase 
 congestion on Manhattan Island by encouraging owners of low 
 buildings to build higher, and the owners of unoccupied lots to 
 invest all the money they can raise in building skyscrapers and six- 
 story tenements; but there are already many restrictions, and it 
 is proposed by another pending bill to introduce still others limiting 
 future tenements north of iSist street to four stories. It is better 
 that any unoccupied lots on Manhattan Island should be built upon 
 than that the large unoccupied tracts in other boroughs should 
 remain unoccupied while the pressure of population is as great as 
 it now is. If we are not satisfied with the conditions under which 
 office-buildings and tenements are now being erected in the built-up 
 portions of the city, let us by all means make them more stringent. 
 These two policies encouraging the use of unoccupied land, 
 and determining in the most drastic way the conditions under which 
 buildings, especially tenement buildings, shall be erected are con- 
 sistent and complementary. These are the particular measures 
 recommended by the congestion commission which bear directly 
 upon the subject of congestion, and they represent a policy which 
 sooner or later we shall have to adopt. It will be better for the 
 present generation and that of the immediate future if it is adopted 
 now. 
 
 viii 
 
TABLE OF CONTENTS 
 
 CHAPTER I. 
 
 THE LAND QUESTION AND HOUSING REFORM IN AMERICAN CITIES. 
 
 Summary of Chapter. 
 
 Most housing reformers in American cities have failed to see the 
 relation between the land question and housing reform. A sample 
 attitude is that of the Tenement House Committee of the New York 
 Charity Organization Society, which stated recently with regard to 
 bills before the Legislature making the rate of taxation on all build- 
 ings one-half the rate of taxation on all land, they "are not consid- 
 ered as bearing directly on the improvement of housing conditions 
 or the relief of congestion." Cheap land is, however, essential to 
 good housing for wage-earners at reasonable rents. Heavy taxa- 
 tion of land values will mimimize land speculation, make and keep 
 land availably cheap, encourage the substitution of healthy tenements 
 for dark disease breeding ones, reduce rents, and encourage home- 
 ownership by wage-earners. Foreign housing experts agree to the 
 necessity of heavier taxation of land values. This has been em- 
 phasized by speakers at International Housing Congresses. The 
 English Royal Commissioners on Housing recommended in 1885 
 taxing "land available for building outside of towns at 4% on its 
 selling value." The minority report of the English Royal Commis- 
 sioners on Local Taxation in 1901 recommended that the site bear 
 heavier taxation than the structure, and that there should be also 
 a special site value rate to be charged also on unoccupied property 
 and on uncovered land. 
 
 CHAPTER II. 
 
 THE MORAL SANCTIONS FOR HEAVIER TAXATION OF LAND VALUES. 
 
 Summary of Chapter. 
 
 Unless any measure is morally just no plea of economic or fiscal 
 expediency will justify its adoption. The heavy taxation of land 
 values in cities is moral because land values are created chiefly by 
 the labor and industry of the entire population, and by the improve- 
 ments made by government at the expense of the community. Land- 
 
 ix 
 
owners in cities do not usually take, but make risks through desire 
 for speculative gains. Land values are essentially different from 
 any other values such as those of agricultural products, manufac- 
 tured goods, etc., because land values are the creation of social ef- 
 fort not paid for by the owner, who taxes others as a condition 
 of their using values they themselves create. It is immoral to secure 
 the fruits of others' toil without giving them something in return, 
 but this the landowner by securing ground rent does, since he taxes 
 the users of land "all that the traffic will bear" on values they col- 
 lectively create. The owner of land has no more moral right to 
 demand permanently as large a net return upon the price he has 
 paid for land or its full value in the market than a man has to 
 demand damages from the Federal government when a protective 
 tariff upon articles which he manufactures is reduced for the pub- 
 lic good. Like the beneficiary of the protective tariff, the land- 
 owner has never been morally entitled to the special privilege he 
 enjoys of taxing others. To undo a wrong is moral and not im- 
 moral. The owners of land adequately improved will usually bene- 
 fit, however, by a lower tax-rate on buildings and a higher tax-rate 
 on land, but this change should be brought about gradually. En- 
 dorsement of halving the tax-rate on buildings by the Federation 
 of Churches in New York City. 
 
 CHAPTER III. 
 
 RESULTS OF TAXING BUILDINGS AT THE SAME RATE AS LAND. 
 
 Summary of Chapter. 
 
 Taxing buildings at the same rate as land values results in the 
 reverse of good government; it makes it as hard as possible for a 
 man to do right and as easy as possible for him to do wrong. It 
 puts a premium upon sloth and the gambling spirit, discourages in- 
 dustry and fetters enterprise. The present exemption of land values 
 from adequate taxation puts the burden of government upon those 
 least able to bear it, and levies upon widows, consumptives and 
 children for the support and protection government affords to the 
 wealthy. It discourages home ownership and militates against 
 family life in tenements. It encourages extravagance in municipal 
 government, because the landlords can shift a large part of the 
 taxes levied on their property on to their tenants. Taxation on 
 industry and buildings instead of land values has thus stimulated 
 also the policy of "postponed payments" because owners of im- 
 proved property do not want their total taxes raised, as they are 
 under a uniform tax-rate on buildings, personalty and land values. 
 
CHAPTER IV. 
 
 ALLEGED OBJECTIONS TO HEAVIER TAXATION OF LAND VALUES. 
 
 Summary of Chapter. 
 
 In addition to the general objection that heavier taxation of land 
 values is "confiscation of property rights and immoral" it is claimed 
 that it "will create a panic in real estate," and "result in the calling 
 in of loans," that "adequate transit lines alone will prevent specu- 
 lation in land without heavier taxation of land values" that "a higher 
 tax-rate on land than on buildings and personalty is unconstitu- 
 tional," that "other sources of wealth are as much 'unearned' as 
 increments of land values," and that "if the city secure part of the 
 increment of land values by a super tax on the increases it should 
 recoup the owners for any decrease." 
 
 The experience of Vancouver, British Columbia, where all 
 buildings are exempt from taxation, shows that no panic will result 
 from a gradual reduction in the tax-rate on buildings and final 
 exemption thereof, and that money can be secured for construc- 
 tion of buildings although a low tax-rate on land values does not 
 prevent land speculation because it does not secure for municipal 
 purposes enough of the ground rent. The judgment of many finan- 
 ciers, and heads of organizations for constructing houses for wage- 
 earners is that halving the tax-rate on buildings will encourage the 
 construction of buildings and not involve a panic as claimed. Re- 
 liance upon transit lines alone to prevent speculation in land must 
 mean either so many, as to be a great and unnecessary cost to 
 the city or as experience shows, chiefly a means of making fortunes 
 through increased land values for landowners along the routes. The 
 United States Supreme Court has given an opinion that "The Four- 
 teenth Amendment was not intended to cripple the taxing power 
 of the states or to impose upon them any iron rule of taxation." 
 The power of taxation is largely legislative, state courts have held, 
 and "all the incidents are within the control of the legislature," so 
 that the constitutionality of heavier taxation of land than other 
 property seems pretty definitely determined. It is true that many 
 other incomes are as "unearned" as land increments, and it is pro- 
 posed to tax land values including increments f in cities for municipal 
 purposes leaving other "unearned" sources to the state and federal 
 governments, for the present at least. 
 
 Since the increase in land values is due only in small measure 
 to efforts of the owner while government secures only a small part 
 of the increment by a land increment tax it is perfectly proper that 
 a city should secure a share of bona fide increases in land values, 
 
 xi 
 
CHAPTER VIII. 
 
 SOURCES OF MUNICIPAL REVENUE IN SOME FOREIGN CITIES. 
 
 Summary of Chapter. 
 
 Landowners in their desire to postpone heavier taxation of 
 their land values, will suggest many other sources of municipal 
 revenue. The taxes of some foreign cities show how successful 
 landowners have been there in providing substitutes for taxation 
 of land values. Berlin has industrial taxes, taxes on incomes, res- 
 taurants, dogs, department stores, automobiles, brewing malt, tem- 
 porary vendors, exchange of property and trade taxes. Paris still per- 
 sists in putting a premium on darkness by taxing doors and windows 
 and secures about $21,000,000 a year by the octroi tax on goods 
 entering the city gates. London raises nearly two-thirds of its 
 revenue by public rates on real estate, which is largely paid by 
 the occupiers. Berlin, London and other cities rely upon "munici- 
 pal trading" such as gas works, tramways, etc., and taxes upon the 
 gross or net receipts of private companies conducting such busi- 
 ness for revenues, but these as well as most of the municipal taxes 
 are shifted ultimately to the consumer. Dearer gas, dearer food, 
 and more carfare injure wage-earners and revenue from such 
 sources is a bad substitute for taxing land values. Most of these 
 taxes are also costly to collect. 
 
 The taxation of land values hitherto has been largely confined 
 in Germany to land increment taxes, the plan adopted in England 
 for national revenue. Vancouver, B. C., has abolished all taxes on 
 buildings, and some cities in the Australian Commonwealth have 
 adopted a higher rate of taxation on land than on buildings, es- 
 pecially on unimproved land. 
 
 CHAPTER IX. 
 
 POSSIBLE METHODS OF TAXING LAND VALUES IN AMERICAN CITIES. 
 
 Summary of Chapter. 
 
 Several methods and degrees of taxing land values are possible : 
 
 ist. Lower assessment of buildings than of land, and reduc- 
 tion in assessment for depreciation of buildings through age. 
 
 2nd. A lower rate of taxation on all buildings and personalty 
 than on land. 
 
 3rd. Exempting all buildings entirely from taxation. 
 
 xiv 
 
4th. Exempting from taxation certain buildings which con- 
 form to a high standard of excellence, either for a term of years, 
 or permanently. 
 
 5th. Assessing all public improvements upon property benefited. 
 
 6th. Excess condemnation of land. 
 
 7th. Taxation of increment of land value. 
 
 8th. Municipal ownership of land. 
 
 The most immediate, practical, economic, and just method of 
 taxing land values in American cities in which land and improve- 
 ments are separately assessed is a heavier rate of taxation on land 
 values through a lower rate of taxation on all buildings and per- 
 sonalty. 
 
 Halving the tax-rate on buildings and personalty within the 
 next few years is the next step towards securing freedom from 
 existing land slavery. The total exemption of buildings and per- 
 sonalty from taxation will properly and naturally follow gradually. 
 The land increment tax despite its great administrative difficulties 
 is a practical and universal method of recovering for the community 
 its fair share of the community created and earned, land values. 
 The other methods enumerated are limited in their application, or 
 cumbersome at best, and do not conform to the American standard 
 and ideal of equality and justice, although temporarily feasible. Just 
 taxation of land values and a land increment tax will furnish ade- 
 quate revenue for every American city and be the most effective 
 step that cities as governmental entities, can take to exterminate 
 poverty and to regain their cities for the people. 
 
 XV 
 
CHAPTER I. 
 
 The Land Question and Housing Reform in 
 American Cities 
 
 A series of articles which has been running in The Survey 
 on "The Housing Awakening in America" records the strivings 
 of several American cities to secure, not only the abolition of the 
 slums, but as well the provision of good homes for their workers. 
 The recent organization of the National Housing Association with 
 a Board of Directors who have been prominent in housing reform 
 in cities throughout the country is another indication of the recog- 
 nition of the prevalence of the housing problem. A careful study 
 of the series of articles on "The Housing Awakening" referred to 
 and of the publications of the National Housing Association shows 
 adequate emphasis upon the necessity for more restrictive housing Housing 
 legislation, such as limits upon the heights of tenements, the pro- Reform Legis- 
 portion of the lot area that may be occupied, provisions as to cubic lation in 
 
 air space to prevent room overcrowding,, and the determination to Amer * c c efly 
 
 j- j r r , r restrictive to 
 
 eradicate slums and vaults. Ihe movers for housing retorm have ^ . 
 
 appreciated the necessity for cheapening the cost of housing 
 material, and of thereby reducing the cost of constructing tenements, 
 so encouraging home ownership and helping to lower rents. 
 
 Not only the omission, however, of any reference to the rela- 
 tion between the taxation of land values and the housing question, 
 but as well, the actual denial by many housing experts on the 
 directorate of this Association of any vital relation between the 
 taxation of land values and the housing problem indicates the 
 failure to appreciate a fundamental feature of their program. 
 
 The New York City Commission on Congestion of Population 
 after nearly a year's study of causes of congestion of population 
 and room overcrowding and methods of preventing these twin evils, 
 prepared bills providing for making the rate of taxation on all 
 buildings in New York City one-half the rate of taxation on all Some housing 
 land. experts deny 
 
 In a printed memorandum on these two bills, the Tenement direct relation 
 
 House Committee of the New York Charity Organization Society, ~ 
 
 f lan 
 of which Mr. Lawrence Veiller is Secretary, actually reported that values and 
 
 they "are not considered as bearing directly on the improvement of good housing. 
 
housing conditions or the relief of congestion."* The fact that Mr. 
 Veiller is an alleged expert on housing and also Secretary of the 
 National Housing Association necessitates an analysis of his concep- 
 tion of the housing reform which presumptively he would inculcate in 
 cities throughout the country. Unfortunately his point of view is 
 altogether too currently accepted. In an article in The Survey of 
 November iQth, 1910, Mr. Veiller states, "New York distinguished 
 for having the worst housing conditions in the world, but long the 
 leader of housing reform in America, continues that leadership. 
 Her 7,000 privies are now a thing of the past, and her 100,000 
 windowless bedrooms are fast disappearing." In his book, "Housing 
 Reform," published in the same year, Mr. Veiller states, "The con- 
 New York City, ditions in New York are without parallel in the civilized world. In 
 with worst no c j ty Q f E uro p e ^ not in Naples nor in Rome, neither in London 
 tiws^ln th * nor m P ar * s > ne ither in Berlin, Vienna, nor Buda-Pesth, not in 
 world, has Constantinople nor in St. Petersburg, not in ancient Edinburgh 
 taxed buildings nor modern Glasgow, not in heathen Canton nor Bombay are to be 
 heavily, lands found such conditions as prevail in modern, enlightened, twentieth- 
 century, Christian New York. In no other city are there the same 
 appalling conditions with regard to lack of light and air in the 
 homes of the poor. In no other city is there so great congestion 
 and overcrowding. In no other city do the poor so suffer from 
 excessive rents; in no city are the conditions of city life so com- 
 plex. Nowhere are the evils of modern life so varied, nowhere are 
 the problems so difficult of solution." 
 
 The pride of participation in the leadership of housing reform 
 under which such uncivilized and unchristian conditions exist and 
 continue, evidenced in the above statements, is a matter of passing 
 interest. 
 
 The important point for those interested in securing good hous- 
 Intelllgent ing conditions in the cities, and towns as well, of this country, is 
 
 housing re- the inevitable result admitted, and due in large measure to the f ail- 
 formers must ure to get j nto O p era ^ion or rather to release for natural operation 
 reason from , ... . , 
 
 cause to effect t" 056 economic forces which would tend to abolish many of the 
 
 housing conditions, noted by Mr. Veiller, in New York City, and 
 which exist to lesser or greater degree in nearly every large city in 
 the country. The New York Tenement House Law, enacted in 
 1901, and adopted unfortunately as the precise model by many other 
 cities in the country, is a wonderful example of restrictive legisla- 
 
 * In justice to some members of this committee, it should be stated that they 
 disclaimed knowledge that this statement was included and do not agree 
 with it. 
 
tion, in most respects carefully drawn. The size of bolts to a frac- 
 tion of an inch is laid down. Certain provisions are made as to 
 fireproofing, although four story , tenements t are not so safe as higher 
 ones, tending to excuse if not actually to encourage the construction 
 of higher ones. 
 
 Most of the restrictive legislation of this New Tenement House 
 Law is valuable, and in certain respects further restriction should 
 be enacted. The height of tenements in outlying districts should be 
 restricted to four and three stories, or even less ; and the proportion 
 of the lot area they may occupy should be decreased. The cubic 
 air space to be provided for each occupant of an apartment should 
 be increased and some provision made for the prevention of the 
 overcrowding which on grounds of health such a regulation attempts 
 to prevent. 
 
 But the existing restrictive provisions, admirable though they Restrictive 
 may be, have not served to reduce room overcrowding nor conges- housing legis- 
 
 tion per acre. Most of them have actually increased rents and l ^\ on esse " tial > 
 
 J ' but must be 
 
 hence room and apartment overcrowding and congestion per acre. sa f e g uar d e d by 
 
 When a family has to choose between having enough rooms to com- lower tax rate 
 ply with the impulses of decency and privacy or even with the inade- on buildings. 
 quate requirements of the New Tenement House Law, and having 
 food, they default on the housing, health, and moral safeguards, 
 and take in lodgers so they may buy food. Doubtless their logic 
 seems vicious to the owner of land, but it is general and they cannot 
 be too seriously blamed, at least as long as in New York City public 
 relief in their homes is not permitted to the victims of restrictive 
 legislation, on the one hand, and a policy of laisses faire on eco- 
 nomic causes of poverty on the other hand. An apparent dilemma 
 faces every housing reformer of the result upon the wage-earners 
 of the community of additional restrictive measures. Is it really 
 worth while to secure stricter housing regulations, if the inevitable 
 result will be higher rents, and a lower standard of living for the 
 wage-earner, including the taking in of lodgers with the conse- 
 quent disruption of family life? The dilemma is only apparent, 
 however, since while restrictive legislation alone will increase rents, 
 its influence can be largely counteracted by such heavier taxation 
 of land values as will terminate the ability of the landlord to shift 
 on to the tenant, in higher rents, the loss entailed upon the landlord 
 by legitimate restrictive measures. 
 
 This will be seen by taking up separate objects of the housing 
 reformer to see what he wants to accomplish. It is admitted by want to 
 practically every economist, as shown later, that the proportion of accomplish. 
 
Abolition of 
 
 unsanitary 
 
 conditions. 
 
 Automatic ef- 
 fect of heavier 
 taxation of 
 land values in 
 encouraging 
 sanitary con- 
 ditions. 
 
 the tax which is levied on the land is paid by the landowner or land- 
 lord, and that that part which is levied on the building is shifted on 
 to the tenant. In other words, if all taxes were taken off buildings 
 and put on land, the landowner would pay the taxes, and the tenant 
 would escape any payment of taxes whatsoever, thereby practically 
 reducing his rent to this extent. The heavier tax-rate on land will 
 also compel the adequate improvement of land in order to meet the 
 carrying charges. Mr. William E. Harmon, a well-known real 
 estate operator, with realty interests in many cities throughout the 
 country, testified on this matter before the New York City Commis- 
 sion on Congestion of Population : "Probably the best way to solve 
 the problem of congestion would be to double the tax on vacant 
 land, thus reducing the tax on improvements. If you increase the 
 tax on land you force construction to offset the carrying charges." 
 The housing reformer is naturally first concerned, since in no 
 large American city can the factory population be immediately 
 shifted from the unsanitary tenements they are occupying to better 
 ones in the suburbs, with improving the conditions of old tene- 
 ments. 
 
 Among the evils existing in old tenements are vaults, dark 
 rooms, and general unsanitary conditions. Admittedly, taxing land 
 values alone will not abolish vaults nor dark rooms. These twin pests 
 should be remedied by sumptuary legislation, vacating houses in 
 which the former, and rooms or apartments in which the latter are 
 found. 
 
 Nothing can excuse the cowardice with which American cities 
 have permitted the continuance of such conditions, because landlords 
 have had almost complete control of legislative bodies, and in many 
 cities have been able even to thwart the administration of remedial 
 laws. 
 
 Two American cities, Washington and Chicago, have secured 
 legislation empowering the demolition of unsanitary buildings unfit 
 for human occupancy. New York and several other cities have 
 authority to vacate tenements that are not adequately ventilated or 
 are defective in sanitary arrangements. Such demolition or vacating, 
 however, is always difficult to secure, because courts are unalterably 
 opposed to interfering with property rights if they can avoid it. On 
 the other hand, the heavy taxation of land values would be an auto- 
 matic incentive to the demolition of unsanitary tenements for two 
 reasons. First, old buildings are if the assessment is even fair 
 assessed for a relatively small amount, while the land is assessed in 
 the built-up sections of every city, rather high. A heavier rate of 
 
taxation on land than on buildings would mean that the property as 
 a whole would pay more taxes than under a uniform tax-rate on 
 both land and buildings, and by far the larger part, in many cases 
 practically all of the tax, would be upon land values, which the 
 owner must, in large measure, pay himself, since he cannot shift it 
 upon the tenants. 
 
 Second, the higher tax-rate on land values will, as testi- 
 fied by Mr. Harmon, force construction to meet carrying 
 charges. This is true, not only of vacant land, but of land 
 which is underimproved, that is, whose improvements are not 
 adequate to the district. In most cities, a normal improvement 
 is assessed for at least twice as much as the site. There are, how- 
 ever, in nearly every city, conditions similar to those in the lower 
 part of Manhattan, generally known as the East Side. Although 
 the majority of the buildings in the district bounded by Grand 
 Street, the East River, Manhattan Bridge and Fourth Avenue 
 are five and six stories high, there are, in 1911, fifty-seven parcels 
 of land entirely vacant, seventy-two with only a one-story build- 
 ing, one hundred and eighty with only a two or two and a half-story 
 building, and four hundred and ninety with only a three-story or a 
 three and a half-story building. A heavy tax on land would compel 
 better improvements than a three-story building in this section of 
 the city, not necessarily implying that more people should live in 
 these sections, but a larger supply of tenements, and incomplete as 
 is the New Tenement House Law as to lighting of rooms, its sanitary 
 requirements are far superior to those preceding it. The tendency of 
 a surplus of good tenements is just the reverse of the tendency enun- 
 ciated in Gresham's law of currency ; good tenements tend to drive 
 out bad tenements by reducing the demand for them. An alternative 
 to demolishing houses unfit for human occupancy at the owner's cost, 
 or keeping them permanently vacated, is the English method of de- Payment for 
 molishing unsanitary tenements and paying the landowner richly for 
 his property while the city proceeds to construct healthy tenements 
 for those displaced. This method of clearing unsanitary areas, as it <y / Mm 
 is designated, has been advocated for American cities, but recourse lordism. 
 to this atrocious method of paying the landlord for permitting the 
 deterioration of buildings can be entirely obviated by vacating such 
 buildings and taxing the land at such a high rate that the owner will 
 be obliged to improve it adequately with suitable buildings. Since 
 such property is not producing any revenue, it is obvious that the 
 higher the rate of taxation on the land the greater the inducement to 
 the owner of such unsanitary buildings to substitute therefor healthy 
 
Cheap land 
 essential to 
 proper housing 
 of wage-earn- 
 ing population 
 in American 
 cities. 
 
 revenue producers. The converse is also true, that the present uni- 
 form rate of taxation on land and buildings discourages the sub- 
 stitution of a new healthy tenement for an old, cheap and unsani- 
 tary one by penalizing the owner with heavy taxes. The incentive 
 a higher rate of taxation on land than on buildings gives to the 
 wiping out of slums at the expense of the beneficiaries of slum 
 property, instead of at public expense, is apparent. 
 
 The relation of the taxation of land values to housing in new 
 communities and undeveloped sections of cities is equally patent. 
 
 Cheap land is essential to proper housing of the wage-earners 
 in American cities. Taxation of land values as well as adequate 
 restriction upon the height or volume of buildings, and the pro- 
 portion of the lot area that may be occupied is essential to keep 
 land so cheap that wage-earners may afford homes, in the true 
 sense of the term. Partly because the New York City Tenement 
 House Law has been copied in so many American cities, we are 
 prone to think of housing in terms of multiple family tenements 
 three to five stories high. In point of fact, however, three stories 
 should be the maximum height for tenements in every American 
 city except in the centers where existing land values make this 
 impracticable. Such centers will in most cities gradually be given 
 over to business and commercial purposes. The standard for 
 housing enunciated for the British worker by Alden & Hay ward 
 in their book, "The Housing Problem," should be adopted in 
 American cities : 
 
 "The minimum for the average working man's family is a cheap but 
 well-built house with four or five suitable rooms, together with a 
 quarter-acre garden, or at least a fair-sized courtyard. The site should 
 be a healthy one and the house perfectly sanitary, well-lighted, well- 
 ventilated and well-drained. And this accommodation must be supplied 
 at a low rental, or it will be found beyond the means of the working? 
 classes." 
 
 The value of land is determined by its accessibility and its 
 net rental value. A high rate of taxation of land values reduces 
 the selling price and makes it cheaper. Single taxers claim the 
 right of the government to secure by taxation a large part, if not 
 all, of the rental value of land. Most housing reformers will not 
 go as far as this yet, but will, nevertheless, agree as to the desir- 
 ability of preventing land speculation as a means of keeping down 
 land values and the effectiveness of taxing land values as a means 
 of accomplishing this. 
 
The selling price of land is determined by the capitalization 
 of the net rentals from the maximum intensive use permitted. 
 Thus if forty families may be legally housed in a high tenement 
 and six per cent net is the usual return, the owner will ask a 
 price for the land which, with the cost of constructing the build- 
 ings, will yield a return from the rental at current rates, $4.50 
 to $5.00 a room per month. If only three families can legally 
 be housed on such a lot, the net return of six per cent upon the 
 value of the land will ensure a lower price. Since, except in 
 crowded sections of a city, and with abnormal demand for hous- 
 ing accommodations, the tax upon land cannot be shifted to the 
 tenant, while the cost on buildings can be, and is so shifted, a 
 reduction of even ten to twenty per cent in rent will be a great 
 relief to the rent-payers, i. e., all tenants in American cities as 
 well as people who are trying to own their own homes. A $2 
 tax-rate per $100 of assessed valuation is a common tax-rate 
 where real estate is assessed at full value. With such a tax-rate 
 the total taxes upon a tenement accommodating twenty families 
 assessed for $25,000, on a site assessed for $15,000 a total of 
 $40,000 would be $800 a year. Of this $800, $500 is the tax upon 
 the building and $300 upon the land. If buildings and personalty 
 were exempt from taxation, the tax-rate on land would be in most 
 American cities somewhere between $3 and $4 per $100 of 
 full assessed valuation, depending, of course, upon the relative 
 assessed value of land and buildings and personal property on the 
 basis of which value the tax-rate is determined. Taking $3 as a Heavy taxation 
 maximum rate of taxation on land, however, the total oj land values 
 taxes on the tenement property would be only $450 or rg 
 $350 less than with a uniform rate of taxation on land 
 and buildings of $2. Since the owner must pay the taxes 
 on land and cannot shift this on to the tenant he will have 
 to pay $150 more than under a uniform rate of taxation. At the 
 same time, the total amount of taxes on the property is $350 less. 
 To what extent will the tenant profit by this reduction? It is 
 apparent that the owner of the property can reduce his total rentals 
 for twenty apartments by $350 and still make the same net profit 
 as under the uniform $2 tax-rate. This would mean a possible 
 reduction of rental of $17.50 per apartment. If we assume that 
 each apartment was renting for $180 a year, this would mean a 
 reduction of only about one-tenth in the rental, which, nevertheless, 
 is worth while. There are several other factors and economic 
 forces which would operate, however, to reduce rentals if land 
 
were more heavily taxed. The increased tax-rate of $i means only 
 i per cent additional charge for taxes, 3 per cent instead of 2 
 per cent, that is $150 a year more on an investment of $15,000. 
 
 A fair system of assessment of land is assumed, of course, in 
 this statement, and with this a vacant lot next to a lot assessed for 
 $15,000 with a tenement assessed for $25,000 is also assessed for 
 $15,000. The owner of the vacant lot is, however, paying assess- 
 ments for sewers, streets, sidewalks and other public improve- 
 ments which are necessary to attract population or is putting these 
 in at his own expense. His carrying charges on the land are 
 probably at least 3 to 4 per cent in addition to interest at 5 per 
 cent to 6 per cent. On the other hand, he is aware that if he puts 
 up a tenement similar to his neighbor's he will be saved, if his 
 tenement be fully occupied, $350 a year or nearly i per cent over 
 his charges under a uniform rate of taxation on land and buildings, 
 which he can offer as an inducement to attract tenants. There are 
 thus the inducement to build and the penalty for not building im- 
 pelling him to put up such a tenement, while in addition the higher 
 tax-rate reduces the selling value of his land, and the consequent 
 amount of the community earned increment of ground rent which 
 he would secure under a uniform rate of taxation on land and 
 The higher the buildings. If the rate of taxation on land were, however, $3.50 
 tax-rate on or <^ instead of $3, the inducement to improve his land would be 
 qreater the ^ at mucn grater. Even under a $3 tax-rate upon land, and 
 reduction of tne resultant larger number of tenements competing for tenants, 
 rents. it is apparent, however, that the owner of tenement property would 
 
 reduce rents by more than the total saving in taxes of $350. To 
 what extent he would do this is, of course, problematical, but it 
 would probably be by at least the $150 extra taxes on the land 
 which he must pay and formerly could shift on to the tenant, plus 
 the $350 saved in taxes on the building or a total of $500, i. e., $25 
 for every one of the twenty tenants. The same proportionate re- 
 duction of rents would naturally be effected in a tenement assessed 
 for $5,000 to accommodate three families on a lot assessed for 
 $1,500. 
 
 The direct saving to the prospective or would-be owner of his 
 
 Taxation of own home is equally demonstrable. It is not germane to discuss 
 
 land values will here the relative advantages or disadvantages of having the un- 
 
 encourage skilled worker or even the skilled artisan own his home under the 
 
 e ( present conditions of industry. That there cannot be any ultimate 
 
 solution of the labor problem but one which makes the ownership 
 
 of private property possible for the majority of the urban popula- 
 
tion of the country stands to reason, and does not require any argu- 
 ment in this country where the ownership of private property has 
 been and will continue to be a fundamental conservative safeguard 
 of democracy. Classification of property, and regulation of prop- 
 erty rights, is distinct and apart from the abolition of private prop- 
 erty, advocated by some extremists. 
 
 Whether the wage-earners own their homes individually or 
 collectively through owning shares in co-operative building associa- 
 tions, or membership in savings and loan associations, they will 
 benefit by a lower tax-rate on buildings. Of course, if a wage- 
 earner buys even a single lot of land for the speculative increase 
 in land value, he should be treated exactly as any other land 
 speculator whether he owns one lot or as a real estate company ad- 
 vertises 20,000 lots. 
 
 With a uniform rate of taxation of $2 the owner of a home 
 assessed for $1,500 on a lot assessed for $500 would pay in taxes 
 $40 a year. With a tax-rate of $3 on land and no tax on buildings 
 he would pay only $15 a year in taxes, i. e., would save $25 a year, 
 that is one-thirtieth to one-twenty-fifth of his total earning. 
 
 If the owner of the house has been able to buy only the lot out- 
 right and to pay $500 on the price of the house, borrowing the 
 balance of the cost, $1,000, at 5 per cent interest, his annual interest 
 charges will be $50 a year. The saving in taxes with the exemption 
 of his building from taxation would in twenty-two years, assuming 
 only a moderate increase in the rate of taxation on land, enable 
 him to pay off the entire mortgage on his house, while his interest 
 charges would be annually decreased by his payments thereon. 
 That such a minimum saving of at least $20 to $25 a year would be 
 an advantage to wage-earners in American cities can hardly be 
 questioned even by those who have the temerity to assert that tax- 
 ation of land values is not considered "as bearing directly on the 
 improvement of housing conditions or the relief of congestion." 
 
 Naturally the man who buys his lot on the installment plan, until 
 he is ready to build, would have to pay $5 a year more taxes under 
 the conditions suggested but at the same time he is saved mean- 
 while at least $28 to $25 as tenant, which leaves a good margin of Dr. E. T. De- 
 saving, vine's endorse- 
 
 Dr. E. T. Devine, Secretary of the New York Charity Organiza- ment f mak 
 
 tion Society and Schiff Professor of Social Economics in Columbia \ he te f 
 TT . . . taxation on 
 
 University, says with reference to the proposal to make the rate gildings one- 
 
 of taxation on buildings one-half the rate of taxation on land in half the rate 
 New York City: on land. 
 
Foreign hous- 
 ing experts 
 agree to vital 
 relation be- 
 tween taxation 
 of land values 
 and housing 
 reform. 
 
 Land specula- 
 tion militates 
 against cheap 
 housing. 
 
 "The change is one which would have far reaching and beneficent 
 results. It would force unoccupied land into use, increase the supply 
 of new tenements, and so reduce rents. Yet it would do this by favor- 
 ing builders and owners of tenements rather than by putting new and 
 additional burdens upon them. Of course so far as it encouraged new 
 buildings it would diminish the monopoly advantages of present owners 
 and builders, and from the point of view of the public interest this is 
 exceedingly desirable. With the pressure of population in New York 
 there is no difficulty about filling any tenements or apartments of any 
 class if the rents are reasonable, and by reducing the relative taxation 
 on buildings both old and new we increase the chances of reasonable 
 rents. 
 
 "If our population and factories were properly distributed there 
 would be no ground for complaint as to congestion. Increasing the 
 relative taxation on unoccupied land, and diminishing the tax upon 
 buildings and improvements tend to bring about this distribution." 
 
 Referring also to limitations on the heights of tenements pro- 
 posed, Dr. Devine says : 
 
 "These are the particular measures recommended by the congestion 
 commission which bear directly upon the subject of congestion, and they 
 represent a policy which sooner or later we shall have to adopt. It will 
 be better for the present generation and that of the immediate future 
 if it is adopted now." 
 
 In this view most thoughtful persons who are not apologists 
 for the status quo of poverty will agree. 
 
 The testimony of housing experts abroad to the necessity of 
 invoking heavy taxation of land values to secure cheap housing for 
 wage-earners is striking. Dr. Wilhelm Mewes of Diisseldorf, Ger- 
 many, in an address on the "Land Question" at the International 
 Housing Congress in London, in 1907, states: 
 
 "Even among economists Land Speculation is not considered quite 
 with abstract indifference, though economically land speculation in itself 
 appears as justifiable as any other speculative business activity; only its 
 outgrowths appear to deserve attack. These outgrowths are indeed 
 practically largely to the front, thanks to the peculiarities of land. Since 
 the foundation of the land value is the return that can be made from 
 it, and contrary to goods which can be increased at will the costs of 
 production play a secondary, often very secondary, part, the subjective 
 intention plays an extraordinarily large one. Often when the price is 
 considered, the future return of the piece of land is discounted before- 
 hand, especially in times when business is good, and people can reckon 
 on a favorable future development. At the sale of unbuilt-on land, 
 prices have often been reckoned which after the building had to be 
 seriously reduced in order, together with the building value, to give an 
 obtainable return. In sympathy the outer lands of towns rise often to 
 such a height that they have to be used as intensively as lands in the 
 inner parts. 
 
 10 
 
"Although taxation according to market value appears to-day the 
 best form of existing tax, yet it does not suffice as the only tax to 
 grapple with the rise in value of land. 
 
 "It deals alike with all land of equal value, but does not allow 
 taxation of the unearned increment which accrues to the owner by sale 
 in accordance with the improvement in his financial position. Thus a 
 further tax becomes necessary connected with change of ownership. 
 
 "To-day a state tax on change of ownership is raised almost univer- 
 sally according to a percentage of the value. Yet this in no way answers 
 to the real financial position; it is also due when there is no gain or 
 very little. Besides, it regularly falls, not on the party which has 
 actually made the gain, but on the buyer. For these reasons there are, 
 on financial grounds, real objections to be made against the often pro- 
 posed raising the scale of this tax on change of ownership. Rather it 
 is far fairer to develop the tax on property changing hands into a tax 
 on unearned increment. 
 
 "This tax regularly takes a certain percentage of the unearned 
 increment from the seller. The height of the percentage is graded 
 according to the length of ownership and the rise in value of the land. 
 
 "The introduction of this tax has roused vigorous discussion and 
 debate everywhere. It must be admitted that it involves no slight prac- 
 tical difficulties (e. g., in settling the amount of the rise in value, the 
 grading of the percentage of the tax, the settling the amount of the 
 minimum increase of value which is to be untaxed, the maximum per- 
 centage of the tax, and so on), and so far the experiments are few. 
 But on principle, objections of any weight can hardly be made to this 
 method of taxation, at least in its improved form. That other unearned 
 gains are not taxed is no objection to the taxation of unearned gains 
 from land. To begin with, the amount of the latter is quite excep- 
 tional; then technically these gains, owing to our law of real property, 
 are much more easily coped with than those in ordinary trades." 
 
 Councillor John S. Nettlefold, of Birmingham, England, says : Councillor 
 
 "Those who have observed the existing housing conditions in this , , , ,' 
 country are aware that in the vast majority of cases poor people live . , 
 
 on dear land and rich people live on cheap land, 'which is absurd.' ^ ^ , 
 
 "The consideration of the question how to house properly the prevent "land 
 people of England on the land of England reminds us that in theory the sweating " 
 land of England belongs to the Crown, and through the Crown to the 
 people. In practice it belongs to a large number of individuals, whose 
 object is (and under present circumstances, no fair-minded man can 
 blame them) to get as much as possible out of their land. This is just 
 what the business man does with his brains and the working man does 
 with his labor; but all sorts of laws, from the Factory Act onwards, 
 have been enacted to prevent capitalists, brain-workers, and hand- 
 workers from making money by sweating their fellow-citizens; whereas 
 no law has yet been enacted in this country to prevent land-sweating 
 that is, the reckless overcrowding of human beings on the land in badly- 
 planned towns. This omission has not only seriously injured the 
 
 II 
 
vitality, and therefore, also the wealth-producing power of large num- 
 bers of English men and women; it has also resulted in the wasteful 
 neglect of the food-producing possibilities of more than half the land 
 in this country. 
 
 "Manufacturers are already prevented by law from making profits 
 out of unhealthy workshops, and the legislature endeavors to prevent 
 the sweating of individuals at their work. It is high time a well con- 
 sidered attempt was made to prevent individuals being sweated in their 
 homes. This sweating of the people in their homes is largely due to 
 land speculation, which is really nothing more or less than land 
 sweating." 
 
 Alden and Hayward, in their book on "Housing," state : 
 
 "Where urban land is in possession of a few great land-owners who 
 practically own some of our cities and who, in many cases, deliberately 
 keep back much of the unused land for the rise in value which is cer- 
 tain to come only the minimum amount possible will be purchased for 
 housing purposes. It is obvious how direct must be the connection 
 between this dearness of land and such evils as overcrowding, lack of 
 open space and general insanitary conditions of living. 
 
 Effects of "But another ill effect which this artificial value of land has upon 
 
 "corners" in our cities is its creation of that house famine of which we have already 
 
 land on the spoken. We have seen that private enterprise has very largely failed 
 
 housing ques- to supply a sufficient quantity of dwelling-houses for the working 
 
 tion and means classes. One of the main reasons for this is that, in consequence of 
 
 of preventing the high price of land, buildings cannot be put up at a rent which it 
 
 such "corners." would be possible for the workers, who need such houses, to pay, and 
 
 which would at the same time make a safe investment for the builder. 
 It has been pointed out that this is so even in the case of building 
 enterprise not strictly 'private.' This 'corner' in land has operated very 
 injuriously on those semi-public, semi-philanthropic bodies such as arti- 
 sans' dwellings' companies and co-operative societies, that have been 
 endeavoring to cope with the deficiency in the supply of good houses. 
 So much has their work been hampered by this and other causes, that 
 the great public companies and trusts, after building over 30,000 dwell- 
 ings, have practically suspended operations during the last ten years, in 
 spite of the average return of four and a half per cent, which they get 
 on their capital. 
 
 "But by some means or other 'there must be freer access to the 
 land if there is to be a lessening of the evils of overcrowding in our 
 cities. 
 
 "Yet another argument which may be adduced in favor of the rating 
 of site values, is that in consequence of urban land coming more freely 
 into the market and building enterprises being stimulated, rent would 
 
 Sir Henry be materially relieved; and this relief would come where rent is now 
 
 Campbell- at its maximum, i. e., in our large industrial centers. As we have seen, 
 
 Bannerman it is just here where rent presses most severely on our poorest classes, 
 
 says taxing of and any relief of this pressure would have a salutary effect, especially 
 
 land values in the direction of slum clearances. Every opportunity given to the 
 
 will stop the freer growth of the city in the suburbs will tend to reduce the conges- 
 
 12 
 
tion at the center. Abolition of restrictions in the matter of the hous- 
 ing of the people will have the same effect as in the matter, of the 
 people's food, viz., increased distribution of supply at a lower price. 
 'Overcrowding,' as Sir Henry Campbell-Bannerman recently observed, 
 'is to a large extent due to the maintenance of the same sort of restric- 
 tions and privileges at home as Free Trade has abolished for inter- 
 national commerce. The taxation of land values will put an end to the 
 immunity of the landlord enriched by the exertions of others, to the 
 circumscribing of natural expansion/ It is this 'natural expansion' 
 which is the all-important matter in the question of housing our 
 workers. It is this, and this alone, that will materially lessen the heavy 
 charge of rent; and so the rating of land values is a proposal to be 
 commended because, by aiding natural expansion, it will thus tend to 
 reduce rents. 
 
 "The most important Minority Report furnished by five out of the 
 fifteen Royal Commissioners on Local Taxation in 1901, signed by the 
 Chairman of the Commission, Lord Balfour of Burleigh, contains the 
 following recommendations : 
 
 (1) Sites should be separately valued from structure. 
 
 (2) Site can bear heavier taxation than structure, but all existing 
 
 contracts must be rigidly respected. 
 
 (3) There should be a special site value rate. 
 
 (4) This should be charged also on (a) unoccupied property, and 
 
 (b) on uncovered land. 
 
 "The general conclusion of that report was that the proposal to rate 
 site values 'would do something towards lightening the burdens in this 
 respect of building, and thus something towards solving the difficult and 
 urgent housing problem.' This report only followed in the steps of 
 the Royal Commissioners on Housing who, as far back as 1885, recom- 
 mended taxing 'land available for building' outside our towns at 4% on 
 its selling value." 
 
 immunity of 
 the landlord 
 enriched by 
 the exertions 
 of others. 
 
 Minority Re- 
 port of the 
 English Royal 
 Commission on 
 Local Taxation 
 favors higher 
 taxation of 
 land values. 
 
 English Royal 
 Commissioners 
 on Housing 
 recommend 
 4 per cent tax 
 rate on selling 
 value of "land 
 available for 
 building" out- 
 side of towns. 
 
CHAPTER II. 
 
 The Moral Sanctions For Heavier Taxation of 
 
 Land Values 
 
 Fortunately the appeal to morality, that is to our sense of justice, 
 is the most successful and fundamental appeal. No economic theory 
 whose morality, as well as economic advantages, cannot be estab- Moral sanction 
 lished is worthy of consideration, nor will it gain general acceptance essenha to * e 
 in any community. The cry of, "confiscation of property rights" any tc onomk 
 is raised by the opponents of taxing land values, and the fundamen- theory or 
 tal question whether government is really robbing people, whether fiscal policy. 
 rich or poor, of anything that is morally theirs must be met by the 
 advocates of the taxation of land values. Legal robbery by the 
 government, whether through a tariff imposed by the Federal gov- 
 ernment, or any tax imposed by a city or state, is so serious a wrong 
 that no economic, fiscal or social benefits to be derived by such a 
 tax would justify, or excuse it. 
 
 What is the moral sanction for the taxation of land values, 
 whether it be achieved by a land increment tax, abolishing all taxa- 
 tion of buildings and improvements, reducing the assessment or the 
 rate of taxation on all such buildings and improvements to one-half 
 or one-quarter the rate of taxation on land, exempting buildings 
 of a certain high standard of excellence from taxation for a period 
 of years or permanently, or by any other method of taxation making j fl ^ u 
 land values pay a larger proportion of the cost of government than must ^ e con . 
 at present? No argument on this subject is new, but a world-wide sidered on its 
 interest in the subject evidenced by recent legislation justifies care- merits apart 
 ful consideration thereof. We have fortunately reached the stage ^ rom b re i*~ 
 in consideration of public policies where we can and do consider 
 subjects upon their merits, and so in the consideration of this ques- 
 tion, we need not concern ourselves with the question of whether 
 this is "single tax/' "Henry Georgeism" or any other system, but Land values 
 merely whether it is a moral proposal. are due 
 
 It is generally, almost universally conceded that land values in primarily to 
 cities are due largely to the demand for use of land by the popula- demand for 
 tion for various purposes, industrial, commercial, residence, etc., u an( 
 and to the improvements made by the city. This is admitted by real 
 estate dealers and operators as frankly as by those who advocate city. 
 
 15 
 
Landowners 
 make but do 
 not take any 
 large risks in 
 land owner- 
 ship. 
 
 Profits are not 
 so sure in 
 most businesses 
 as in land 
 ownership and 
 development. 
 
 any method of taxing land values. The real estate dealers base 
 their claim that land values will increase upon the admitted fact of 
 increase in population, but assume the right of the owner, not only 
 to the increase in value of land, but to at least the same net return 
 upon such value of land as is regarded fair upon other investments. 
 Many go even further and claim the right of the owner of land to 
 make all the profit "that the traffic will bear." Both classes of real 
 estate owners and at least inferentially the majority of most com- 
 munities who permit them to have all that they claim, admit there- 
 fore the right of a limited class in the community to secure some- 
 thing from the rest of the community without giving any return 
 therefor. The excuse for this procedure, by which in essence all 
 the landless members of the community work without compensa- 
 tion for the landowning members of the community is that the 
 owner of land takes all the risks of investment. This claim is inter- 
 esting but not true under present conditions. The owner of land 
 does not so often take risks as make risks. The very slight risk 
 which the owner of land in a city may incur is chiefly not inherent, 
 but due first to his own speculative instinct and desire for specula- 
 tive gains, and second to the failure of the city to determine what 
 the development of the city shall be. Almost every American city 
 is at the mercy of real estate operators and developers, who go a 
 long distance from the center of the city to secure land still assessed 
 at acreage or at least very cheap, which they break up into lots 
 and try to sell at high lot prices. The cost of carrying such lots and 
 the investment in streets, sewers, sidewalks, etc., is something of a 
 risk which the owners voluntarily assume in the hope and well 
 founded expectation of a large increase in land values. This is 
 an incidental risk, however, to real estate development and deal- 
 ing, which with the growth of the city is not, as has been stated an 
 inherent risk. The vast sums of money spent on advertising and 
 cajoling people to buy land at a greater distance from the centers 
 of cities and in private developments are of course similarly wastes. 
 
 In no other kind of business (except that protected by some 
 equally unjust privilege whether it be tariff, patent, or other legis- 
 lative favor) are the profits so sure as dealing in land, for the rea- 
 son so obvious to land developers in advertising their land, and so 
 vigorously denied by them when taxation of land values is sug- 
 gested, that the amount of available land in every city is limited and 
 the demand for land is certain. 
 
 It must be admitted that most moral arguments, as well as argu- 
 ments from a fiscal, economic and social point of view which can be 
 
 16 
 
advanced for the taxation of land values can also be advanced for 
 the single tax, that it is only a question of expediency and not one 
 of essential difference. 
 
 To recognize the fundamental injustice of an existing condition 
 or system does not imply that it is either just or expedient to upset 
 the entire condition or system immediately, nor by drastic measures. 
 It is often claimed by the opponents of the single tax that this sys- Heavy taxation 
 
 tern of taxation would abolish private property in land. Single tax- f land values 
 
 r . J . must come 
 
 ers to-day do not attack private property m land, but merely the s i ow i y ^ ut 
 
 "untaxed ownership of our day and generation." does not de- 
 
 As Mr. C. B. Fillebrown, in his book "The A B C of Taxation," stroy private 
 remarks : ownership. ^ 
 
 "It may be confidently asserted that when Henry George said, 
 'Private property in land is unjust,' he meant as the whole principle 
 and spirit of his teaching shows that private property in land values 
 is wrong. 
 
 "It is sometimes said that if landowners can rightfully claim Present con- 
 ownership they are entitled to all the ground rent; that the common ception of 
 right to land and the common right to ground rent go together. How private owner- 
 can this be true, when even under the land tenure of to-day, which is ship of 
 that of ownership, no one claims that the landowners, as for example, land admits 
 those of the city of Boston, are entitled to all the ground r'ent, but the right to 
 only to that part which is not taken in taxation. Their own claim falls tax land 
 short of 'all' by the $10,000,000 now yielded up in taxation. In case values. 
 the demands of taxation should be twice as great, would they be any 
 more than now entitled to 'all'? It is not easy to see how ownership 
 can carry with it as a necessary consequence the private appropriation 
 of ground rent, because while there has never been a denial, there has 
 always been a recognition, of the sovereign power and right to tax the 
 land. 
 
 "Private ownership of land is no injustice to anybody to-day, nor Not private 
 has it been at any time. The untaxed private ownership of land value ownership 
 as it exists to-day is unjust. This does not mean that the ownership but untaxed 
 is unjust, but that not to tax it is unjust. An absolute ownership private 
 in land, such as Henry George recognizes in the products of labor 1 , ownership 
 would be unjust, but, says Mr. Edward Atkinson, no such ^absolute of land is 
 ownership of land is recognized in the law books.' Its tenure is always unjust. 
 subject to taxation, and to the superior right of eminent domain. 
 Feudal tenure would seem to have been a rude recognition of the prin- 
 ciple that the beneficiaries of a government should pay the expenses of 
 government." 
 
 Even more important than the fact that land values in a city are Clt y iwprove- 
 
 created partly by the growth of the population is the fact that they ments whtch 
 , , .. , ,. . increase land 
 
 are also due to the expenditures by the city for public improvements, m i ues are 
 
 such as sewers, schools, streets, sidewalks, transit, parks, etc. The paid for by 
 provision of these essentials to the development of any community taxes on those 
 
 17 
 
who do not 
 participate in 
 these values. 
 
 Prof. E. R. A. 
 Seligman 
 admits that 
 much of city 
 taxes is borne 
 by those least 
 able to pay. 
 
 The result of 
 taxing land 
 values and 
 buildings at 
 the same rate 
 proves it 
 immoral. 
 
 New York 
 City Com- 
 mission on 
 Congestion 
 find equal tax 
 rate on land 
 and buildings 
 discourages the 
 construction 
 
 is met by taxes upon the users of land and buildings and paid 
 for by them. The owners of property expect and demand a net 
 return upon the cost of property, over and above all the taxes 
 which they ostensibly pay. They generally get this, and to the 
 extent this is so they shift the taxes, i. e., the cost of city govern- 
 ment, upon the users of land (in exceptional cases) and always of 
 buildings, that is the tenants. Admittedly the tax on land cannot 
 be shifted upon the tenants unless there is very great demand for its 
 use. This is sometimes the case, however, in the center of a large 
 city, especially when the tax-rate upon land is low. As Prof. E. R. 
 A. Seligman states in his "Incidence of Taxation," "While the real 
 estate tax falls upon the owner in case of stationary or declining 
 population, a considerable proportion of the tax is shifted on the 
 tenant in the normal case of prosperous town or city districts under 
 the present administration of our property tax. When we reflect 
 that in the city of New York over three-quarters of the population 
 live in tenement houses, we are thus forced to the conclusion that 
 a large burden of our American local taxation is to-day borne by 
 those least able to pay." 
 
 Assuming, however, that only the part of the tax which falls on 
 buildings or improvements of any kind is shifted on to the tenants, 
 even so this tax alone amounts to from $10 to $30 a year or more, 
 which every family in a city has to pay for the use of a building 
 toward the expenses of city government. This is a burden upon 
 the poorer classes of a community which even if it could be justi- 
 fied from an economic point of view would not be justifiable morally. 
 
 In seeking too, the moral sanction for the taxation of land val- 
 ues, we should inquire what has been the result of failure to tax 
 land values adequately, or in other words exempting them from 
 fair taxation, by loading upon buildings and industry more of the 
 necessary cost of government. Among the causes of congestion 
 of population, the New York City Commission on Congestion of 
 Population refer to the present method of taxing land and buildings. 
 
 "In New York City until very recently the owner of land improved 
 with buildings has been penalized, while the man who holds the land 
 out of use so that he may secure the speculative increase of land values 
 has been helped by the taxation policy of the city, since unimproved 
 land has been assessed at a relatively low value, while the rate on land 
 and buildings has been the same. The system of taxation has dis- 
 couraged the construction of tenements, of factories and all other 
 buildings until the growth of the city's projected improvement has 
 given to land the capitalized congestion value, to which reference has 
 been made, and has enabled the owners of land to reap fortunes from 
 
 18 
 
values created largely by the increase of population. This policy is of buildings 
 putting a premium upon congestion and is in appreciable measure and encour- 
 responsible for the holding of land out of use for a much longer period ages land 
 than it would be so withheld if a large share of the increase of land speculation. 
 values by the community were recovered by them for community needs." 
 
 Almost everyone except a very few landowners agrees that Intolerable 
 the conditions of room overcrowding and congestion per acre in congestion and 
 New York City are indeed, as Governor Hughes described them, room over : 
 "intolerable," and his characterization of such conditions is applica- ** 
 
 ble to other cities of the country as well. cities. 
 
 Mr. Allan Robinson, President of the Allied Real Estate Inter- 
 ests of New York, a member of the City Congestion Commission, 
 in a recent address gave his estimate of the owners of land who 
 will not improve it in vigorous language. 
 
 "I hold no brief for the man who owns land he will not improve. President of 
 
 Worse than the miser who hoards his gold and thus keeps it from cir- Allied Real 
 
 culation, more culpable than the capitalist who spends his wealth for Estate Interests 
 
 his own pleasure is the landowner who, for distant profit, withholds of New York 
 
 from use land that the exigencies of the community require. The says the man 
 
 corroding cares, ill health, stunted growth, and inequality of opportu- who for distant 
 
 nity which haunt the habitations of the poor in our cities may well be profit with- 
 
 laid at his door, and I shall make no effort to relieve him of respon- holds from use 
 
 sibility which his ownership has entailed upon him and which he has land needed 
 
 been unwilling to assume. Ownership of land carries with it corre- is worse than 
 
 spending burdens. The welfare of the race may be jeopardized through the miser. 
 the selfish policy of landowners. The voters of the future are the 
 children of to-day. Take from them what they now need for normal 
 growth and development and when they reach man's estate they will 
 take from you or your children all that land which you are now 
 withholding from them." 
 
 The morality of taxing land values somewhat is, however, not 
 questioned even by those who oppose the proposal to tax them suf- 
 ficiently to take the burden off industry whether it be the industry 
 of the man who constructs buildings or who manufactures or who 
 toils with his hands. Mr. Allan Robinson, quoted above, remarks, 
 "Land is an 'easy mark' to use a slang expression. It is the pack- 
 horse that carries most of our burdens; and because it has shown 
 a disposition to take the major part it is now proposed to load it 
 with all of them." This expresses the case for the taxation of land Land is not an 
 values properly because the "packhorse" is purchased and fed by eas y> bu * a 
 those who propose to put upon it the burdens which it alone can just mark f r 
 best bear without any injustice. Land is different in its nature from 
 any other object of taxation, since its value is due to the work and 
 expenditure of others. The fundamental morality of the taxation 
 
 19 
 
No one is 
 entitled to 
 values he has 
 not created, 
 nor to reap 
 benefits of 
 others' toil. 
 
 Is it right to 
 diminish 
 anticipated 
 returns from 
 investment in 
 land? 
 
 It is fallacious 
 to expect 
 government 
 to guarantee 
 any unearned 
 profits. 
 
 of land values is the fact that no one is entitled to benefit by the 
 exertion and efforts of others, as the owners of land do, without 
 giving a quid pro quo that is returning something adequate for value 
 received. The reason that the owner of land is not entitled to the 
 same net return upon his investment in land as upon his investment 
 in buildings, manufacturing plant, stock of goods, etc., is that land 
 values are a social product, while the others are not in the same 
 sense because land in a city has a unique value since the supply is 
 limited and it cannot be increased, and one can manufacture or open 
 a store in almost any city of the country while a man must live 
 within a certain distance of his work. The very presence of a fac- 
 tory and store creates land values. 
 
 "While it may be proper, however," the opponents of taxing land 
 values claim, "to tax cheap land at a higher rate of taxation, or 
 land in a new community, a person who has invested money in 
 land whether improved or not expecting a certain net return upon 
 his investment is entitled to such net return, and any legislation 
 which would reduce this anticipated return is contrary to the Four- 
 teenth Amendment in upsetting the basis upon which the contract 
 was made, and deprives the owner of his property without com- 
 pensation or due process of law and is to this extent unmoral, not 
 to say immoral." 
 
 The fallacy underlying this argument is that government should 
 guarantee or undertake to guarantee any fixed return, or to re- 
 frain from any legislation or action which might impair or alter 
 conditions existing at the time of purchase of land. The same 
 argument can be advanced against any tariff reduction, because a 
 manufacturer of a highly protected article has invested money in 
 his plant, which with the continuance of this tariff would yield large 
 returns, but which might either yield a small return or entail a loss 
 if the tariff were abolished. So too, an unnecessary improvement 
 is often promised by an administration to a certain section of a 
 city, and the owners of land discount its achievement and sell their 
 land in this section at a large advance. This, however, does not 
 constitute any valid reason why the city should make such a gift 
 to the owners of land in any section of a city. "Whatsoever a man 
 soweth, that shall he also reap" enunciates sound economic doctrine, 
 frequently overlooked by get-rich-quick land schemers, whose pro- 
 moters neglect the converse of this statement that no man is entitled 
 to reap where he has not sown, nor to secure the values which others 
 have created. 
 
 20 
 
Naturally, however, a heavier taxation of land values permits 
 the lower taxation of buildings, machinery and all property which 
 
 represents industry. The owner of a factory which is an adequate Heamer ta * a ~ 
 
 . , * . J . , * tion of land 
 
 or suitable improvement, will be required to pay less taxes with the va i ues ^ \^ e 
 
 proper taxation of land values, and this will properly encourage virtue, its own 
 the construction of such buildings. reward in 
 
 In his speech on the People's Budget, Mr. Lloyd-George quotes a Permitting 
 conservative member's statement about the increases of land values, ?W f r -fj** J 
 and rentals and states his justification of taxing the urban landlord 
 as follows: 
 
 "In the parish of Plumstead land used to be let for agricultural Mr. Lloyd- 
 purposes for 3 an acre. The income of an estate of 250 acres in 1845 George 
 was 750 per annum, and the capital value at twenty years' purchase instances 
 was 15,000. The Arsenal came to Woolwich; with the Arsenal the increases in 
 necessity for 5,000 houses. And then came the harvest for the land- land values in 
 lord. The land, the capital value of which had been 15,000, now England. 
 brought an income of 4,250 per annum. The ground landlord has 
 received 1,000,000 in ground rents already, and after twenty years 
 hence the Woolwich estates, with all the houses upon them, will revert 
 to the landowner's family, bringing another million, meaning altogether 
 a swap of 15,000 for a sum of 2,000,000. 
 
 "There are many cases of a similar character which will readily 
 occur to the memory of every hon. member who is at all acquainted 
 with the subject. Take well-known properties in Lancashire and 
 Cheshire in regard to which evidence was given. 
 
 "And yet, although the landlord, without any exertion of his own, Mr. Lloyd- 
 is now in these cases in receipt of an income which is ten or even a George 
 hundred-fold of what he was in the habit of receiving when these prop- shows how the 
 erties were purely agricultural in their character, and although he is "slumbering 
 in addition to that released from the heavy financial obligations which landlord" 
 are attached to the ownership of this land as agricultural property, he described by 
 does not contribute a penny out of his income towards the local expen- Mill gets land 
 diture of the community which has thus made his wealth, in the words values. 
 of John Stuart Mill, 'whilst he was slumbering.' Is it too much, is it 
 unfair, is it inequitable, that Parliament should demand a special con- 
 tribution from these fortunate owner's towards the defence of the 
 country and the social needs of the unfortunate in the community, 
 whose efforts have so materially contributed to the opulence which they 
 are enjoying?" 
 
 Mr. Fillebrown gives some typical instances of increases in 
 assessed land values in Boston. The assessed land value of one 
 and eight-tenths acres on Winter street, Boston, between Tremont j nstances O f 
 and Washington streets was in 1898, $5,142,600. In 1907, it was increases in 
 $8,272,000 or an increase in nine years of $3,129,400, or 57 per cent, land values 
 The assessed valuation of this property of $275 per square foot was, in Boston. 
 he states, the highest in Boston : 
 
 21 
 
Instances of 
 increases in 
 land values 
 in Chicago. 
 
 Some increases 
 in land values 
 in Pittsburgh. 
 
 Increases in 
 land values and 
 profits in land 
 in New York. 
 
 Large increases 
 in land values 
 common in 
 American 
 cities. 
 
 "The assessed valuation of Washington Street, from Adams Square 
 to Eliot Street, 3,495 feet, or two-thirds of a mile in length, with an 
 area of 745,003 square feet, 171/10 acres, comprising 179 estates, was 
 in 1907: 
 
 Land $61,135,900 $77.00 per square foot 
 
 Buildings 10,793,200 13.50 per square foot 
 
 "This is an increase in valuation, over the year 1898, of land, 
 $20,438,400, or 50 per cent; of buildings, $1,955,100, or 20 per cent. In 
 1899 the valuation of the buildings was 21 */ 2 per cent that of the land; 
 in 1907, only 17% per cent." 
 
 The following cases of increases in land values in Chicago show 
 typical increments in crowded sections of that city: 
 
 Assessed Land Increase from 
 Values. 1903 to 1907. 
 1903. 1907. Amount. Per Cent. 
 Marshall Field, Retail De- 
 partment Store $4,715,200 $6,006,025 $1,290,825 27.37 
 
 Siegel, Cooper & Co. De- 
 partment Store 2,040,000 3,145,660 1,105,660 54.21 
 
 Congress Hotel 1,297,800 2,313,780 1,015,987 78.28 
 
 Republic Office Building 1,155,600 1,799,000 643,400 55.67 
 
 Stratford Hotel (c) 642,575 1,656,500 1,013,925 15/78 
 
 (c) Sale 1899, $640,000. 
 
 The property at No. 311 Fourth Aveuue, Pittsburgh, was sold in 
 1884 for $30,000, and was worth in 1908 $400,000 an increase in 
 about a quarter of a century of 1,333 per cent. 
 
 Similarly the site of the Schmidt Hamilton Building in Pitts- 
 burgh was worth per front foot in 1884 $3,500, in 1908 $15,000 
 an increase of 429 per cent. 
 
 The following statements have appeared recently in New York 
 papers : 
 
 "A Lot on the east side of Tenth Avenue, between 2o6th and 
 2O7th streets sold in 1904 for $1,100, and last year (1910) the same 
 property brought $12,600." 
 
 "Six years ago the lots sold for $1,600 each. The present selling 
 price is $9,000 apiece. This is an increase of nearly 600 per cent 
 since 1905." 
 
 "In active markets I have made for myself and my friends 500 
 per cent per year." 
 
 "Our profits for four years were fully 250 per cent per annum." 
 
 Similar percentages of increase in value of land and profits 
 therefrom can be duplicated in nearly every American city, and 
 while allowance should be made for inflation of land values, and 
 "land booms," the salient fact remains that the natural increase of 
 
 22 
 
population creates increased land values, and that in addition to 
 these increases the land could if properly utilized or improved have 
 yielded a good net return. 
 
 The bona fide land values of New York City for example, ex- General 
 
 elusive of expenditures by the owners or assessments by the city tncr f ase f f 
 
 ,Hr> . t t mm * land values in 
 
 increase about $800 a year for every person who has been added New York 
 
 to the population. The mere fact that New York City like many 
 American cities has relied upon immigration to increase its popula- 
 tion and hence its land values does not mean that restriction on im- 
 migration would mean a cessation of the increase in land values. 
 A lower death rate and a higher birth rate are just as potent means 
 of increasing population, and hence land values, as immigration, 
 and one can claim without being regarded as a sentimentalist that 
 it is a much more humane method. Each day's labor of New York 
 City's population including the Sunday of rest for the next week's 
 work increases the city's land values by about $300,000. 
 
 Certainly on no moral grounds can the right of creators of land There is no 
 values to participate in the values they create be denied. Hitherto moral basis 
 they have been denied fair participation, because selfish interests f r objecting 
 have controlled legislation, and the people have not been able to ^ a ^'L 
 enact their own convictions and wishes into law. j and va ] ues 
 
 Mr. Allan Robinson has frankly admitted that if the pro- 
 posal to make the rate of taxation on all buildings and personal The sober, 
 property in New York City, one-half the rate of taxation on all land conservative 
 
 were submitted by referendum to the people of the city, it would be I" d 9 en * f 
 rr,, . . t e ,, A . the American 
 
 adopted at once. The sober conservative judgment of the Amen- p eo p^ e ^ 
 
 can people is opposed to the continuation of special privilege, how- O pp ose d / 
 ever granted. This judgment believes that men, women and chil- special privi- 
 dren are entitled to the values which they produce, and that no one le se such as 
 
 is entitled to anything wrested even with legal sanction at pres- underta * ed 
 
 - J ownership 
 
 ent ,-f rom them. of Jand 
 
 The progressive rate of taxation on inheritances for state pur- 
 poses adopted by many states and the progressive income tax now 
 under consideration for securing revenue for the Federal govern- 
 ment are based upon the same fundamental principles of justice 
 which underlie the demand for the taxation of land values for the 
 relief of industry, and the termination of other special privileges. 
 Neither the taxation of incomes derived from mines in which immi- 
 grants have lost their lives from accidents and low wages, the taking 
 by an inheritance tax of the entire wealth derived from unsanitary 
 tenements and underpaid workers, nor levying upon land the cost 
 of government to protect the lives and to educate the people who 
 
 23 
 
Taxation is 
 one of democ- 
 racy's surest 
 methods of 
 restoring and 
 securing social 
 justice. 
 
 The Federa- 
 tion of 
 Churches in 
 New York City 
 endorses 
 halving the 
 tax-rate on 
 buildings. 
 
 give to land its value will, however, restore to life or health those 
 who have died or lost their health through government's failure to 
 establish and enforce safe and healthy conditions of living in the 
 past. Nevertheless, in American cities just and economically sound 
 taxation still is one of democracy's surest methods of restoring and 
 securing social justice. Because the heavy taxation of land values 
 is the soundest and most just method of taxation it is the most 
 moral method of taxation for municipal purposes. 
 
 The Federation of Churches and Christian Organizations in 
 New York City in advocating the halving of the tax-rate on build- 
 ings states : 
 
 "In the minds of many this bill is an application of the 'Gospel 
 according to George.' This is only partially true, inasmuch as Henry 
 George advocated the abolition of all taxes except taxes on land, and 
 this bill does not do that. The Federation regards the bill as the most 
 important piece of social legislation introduced at Albany in the last 
 twenty-five years, not even excepting the race-track gambling measures. 
 
 "It is a bill in the interest of the proper housing of the people of 
 New York. The Federation has proved by its publications that New 
 York, in 1940, will have less than 10,000,000 people. That is to say, the 
 people of New York a generation from now could be housed on its 
 area at an average of less than 60 people per acre, whereas Manhattan 
 Island has 166 people per acre, with districts running as high as 731 
 per acre, and individual blocks as high as 1,674 P er acre, while Bfook- 
 lyn has wards running over 300 per acre, and 31.9 per cent of the 
 Bronx's population is housed at an average density above the average 
 density of Manhattan. From July, 1902, to December 31, 1908, 62 per 
 cent of the dwellings erected in the Bronx were five stories or over. 
 
 "Tenement House Reform' as a rallying cry for housing move- 
 ments in New York should give place to 'Tenement House Prevention,' 
 and speculative landowners, who are opposing this bill, which penalizes 
 the non-use of land, by placing a larger measure of the carrying charges 
 of the city budget upon it, and rewards the building of homes for the 
 people by exempting them, in 1912, 10 per cent of their value, and 
 adding 10 per cent exemption per annum till, in 1907, 50 per cent 
 exemption is granted, should be routed by the combined force of the 
 churches and laboring people of New York. If the tenement many 
 stories high is to house the people of New York of the future, every 
 church will, in time, be compelled to become an 'institutional church.' 
 The churches should be willing to assume this form of social service 
 if they are compelled to, but it would be better if they should become 
 Vestitutional churches,' and so compel the use of the livable area of 
 New York as to restore the single, the two- family and three- family 
 dwelling as the normal type of housing. Rapid transit should not be 
 allowed to enrich a few land speculators, but should be so developed 
 as to distribute the population of New York throughout its whole 
 livable area." 
 
CHAPTER III. 
 
 Results of Taxing Buildings at the Same Rate 
 
 as Land 
 
 John Stuart Mill's dictum, "That is the best kind of government Good govern- 
 which makes it as hard as possible for a man to do wrong, and as ment 
 easy as possible for him to do right," may be applied to systems of ^ofit 
 taxation and read, "That is the best system of taxation which en- wrong action 
 courages enterprise and effort, and discourages sloth, which stimu- unprofitable. 
 
 lates the construction of healthy dwellings and the demolition of , 
 
 r . Taxes should 
 
 unsanitary ones, and which not only compels payment of taxes in be j udged by 
 
 proportion to ability to pay, but as well in proportion to services their moral 
 rendered." re lts - 
 
 The incidence of taxation is quite as important as the rate of 
 taxation, and is worthy of the careful consideration of those inter- 
 ested in the administration of cities. The social activities of Amer- 
 ican cities are as yet in their inception. In nearly every large Amer- Collective 
 
 ican city the expenditures for educational purposes, the extermina- mu cl P al 
 
 1 social activi- 
 
 tiori of tuberculosis, inspection of milk and other food, medical ties st ^ j n 
 
 treatment of school children whose parents are too poor to provide their 
 such treatment for them, parks and playgrounds, etc., are constantly beginnings. 
 increasing, as we as a nation are conceiving and carrying out the 
 duty and economy of collective municipal action. 
 
 In 1908, the one hundred and fifty-eight cities in the country 
 having a population of 30,000 or over, out of total payments for 
 general expenses and special service expenses amounting to $402,- 
 633,976, expended over one-fourth, $102,723,553 for protection of 
 life and property, and $40,055,559, or about one-tenth, for health 
 conservation and sanitation ; $28,006,783 for charities, hospitals and 
 corrections, and $119,004,725, nearly one-third, for education. De- Many 
 
 spite these facts we have in our cities abnormal fire losses, and muma t >a 
 
 expenditures 
 inadequate police protection, death rates are cruelly and criminally mere i y "i oc k 
 
 high, jails and reformatory institutions are disgracefully crowded, the door after 
 and school buildings are unsanitary, classes are too large, and teach- the mule is 
 ers are grievously underpaid. The sweeping claims made as to stolen." 
 waste which can be eliminated gave promise of material reduction 
 in municipal expenditures, but the promise has not been achieved. 
 
 25 
 
Dominance of 
 real estate 
 owners in 
 budget-voting 
 bodies is now 
 challenged. 
 
 Not the tax 
 rate, but who 
 pays the taxes, 
 the most 
 important 
 question. 
 
 Robbing the 
 sick and poor 
 by taxation a 
 more serious 
 evil than a 
 small waste 
 of funds. 
 
 Legalised rob- 
 bery through 
 taxation 
 must stop. 
 
 The dominant influence of real estate owners over budget-voting 
 bodies is at least challenged, however. 
 
 Ability to "keep down the tax-rate" is no longer the criterion of 
 efficiency. The thinking public of American cities realizes that im- 
 portant as are economy and efficiency in administration, adequate 
 appropriations for social needs are equally important. Of course, 
 the two are not incompatible, but the people of American cities 
 while desiring strictest economy do not wish adequate provision 
 for the city's social needs to await perfection in the organization and 
 administration of all the city's departments. Efficiency in admin- 
 istration has outstripped efficiency in scope of municipal activities. 
 The questions who pays the taxes, and whether those who do pay, 
 are able to pay, are demanding as much attention as whether 5% 
 or even 10% of public funds is wasted and this charge is more 
 easily made than proven. A waste of 5% even of the city's expen- 
 ditures, which should be stopped, is, nevertheless, not so serious an 
 evil as taking $10 to $50 in taxes, a year, from scores of thousands 
 of farniles in the city who are not able to pay even a dollar toward 
 the expenses of the city. A certain sum of money is required in 
 every city to enable a family, even making allowance for the per- 
 sonal equation, to maintain a standard of living essential to national 
 efficiency. The lower a family's income is below this minimum of 
 national efficiency, the more heinous the city's offense in extorting 
 from them by unjust systems of taxation even a dollar for ex- 
 penses, and the more costly the later atonement the city must make 
 for such a policy. 
 
 In times of war, deprivation of the necessities of life may be 
 condoned, but the legalized robbery through taxation sanctioned in 
 American cities to-day by inert or unthinking public opinion is 
 unparalleled since the days of the Duke of Alva in the Netherlands. 
 We rob widows, consumptives, and children because we do not tax 
 land values adequately. We fetter industry and condone low wages 
 because the owner of ground rent the landowner is permitted to 
 tax the industrious users of land. 
 
 Before examining in detail the economic, fiscal and social aspects 
 of taxing land values, we may profitably study the incidence of 
 present methods of taxation in American cities. 
 
 Of the total receipts in 1908 of $479,834,806 from general rev- 
 enues in the one hundred and fifty-eight cities in the country having 
 a population of over 30,000, $393,940,142 was derived from taxes. 
 Of this amount $377,340,940 was the original levy upon general 
 property, and $2,643,309 penalties upon such property, while 
 
 26 
 
$12,686,929 was derived from special property and business taxes, About three- 
 
 and $1,268,904 from poll taxes, $50,435,297 was derived from licen- Quarters of 
 
 ses and permits, $3,893,719 from fines and forfeits and $31,545.785 ^eT^ith 
 
 from subventions, grants and gifts from other civil divisions such over 30floo 
 
 as school funds from the state and from private individuals. population 
 
 In other words nearly three-quarters of the total revenue of derived from 
 
 these one hundred and fifty-eight cities was derived from a gen- 9 eneral P r P~ 
 
 eral property tax. The tax on land values was the only tax that la * ge p r *p or . 
 
 usually cannot be shifted. Over $63,000,000, about one-eighth, was tion of this 
 
 secured from taxes on special property and business licenses and levied on 
 
 permits including $40,716,637 from liquor licenses and taxes. buildings. 
 
 Unfortunately a few cities only of the total one hundred and 
 
 fifty-eight separate land and improvement values in their assess- ?*"**Jf upon 
 
 individuals of 
 ments, so that it is impossible to state accurately the levy on each. tax ^ ng & tt ,7</_ 
 
 This is not so important, however, as to see the effect upon individ- i ngs / same 
 ual renters which the taxation of land and buildings at the same rate as land. 
 rate would produce. American 
 
 The Federal Census for 1900 gives the percentage of families cities' popula- 
 tenants in some important cities as follows : Baltimore, 73.9 ; tion largely 
 Boston, 81.6; Buffalo, 60.0; Chicago, 71.3; Cincinnati, 80.8; **<**** 
 Cleveland, 60.9; Columbus, 67.3; Detroit, 58.3; Fall River, 
 82.9; Jersey City, 81.2; Kansas City, 76.9; "Los Angeles, 60.0; Mil- 
 waukee, 57.9; Newark, 78.0; New Haven, 73.3; Manhattan and 
 the Bronx, 93.7; Brooklyn, 81.4; Omaha, 74.1; Paterson, 76.0; 
 Philadelphia, 77.2; Pittsburgh, 72.1; Providence, 79.3; St. Louis, 
 79.5; San Francisco, 78.5; Washington, D. C., 74.8; Worcester, 
 
 737- 
 
 The basis of assessment in different cities also varies materially 
 from 33 1/3% of full value in Chicago to nearly 100% in New 
 York the rate of taxation differing naturally similarly, but the 
 effect in every city of taxing the industry represented by a house 
 or tenement at the same rate as the ground values created largely 
 by the community and by municipal improvements so that the taxes 
 on buildings may be shifted to the tenant and enrich the owner of 
 the ground rent the landowner is shown in the following illus- 
 tration. 
 
 The taxes on a house assessed for $3,000 with a tax-rate of H wh taxes on 
 $2.00 amounts to $60.00. This tax must be paid by the tenant of the 
 
 *j r * * 
 
 building as part of his rent. The taxes on an apartment assessed 
 for $1,250 at the same tax-rate amounts to $25.00. It is evident that 
 to secure funds for a city's necessary expenditures by an equal 
 rate of taxation on land and buildings means that an appreciable 
 
 27 
 
Taxing build- 
 ings lowers 
 the standard of 
 living and 
 creates paupers. 
 
 New York City 
 extorts taxes 
 from scores 
 of thousands of 
 consumptives' 
 families and 
 widows. 
 
 Taxing build- 
 ings robs 
 families with 
 incomes below 
 the required 
 standard of 
 living. 
 
 amount is extorted from families, whether they are able to pay or 
 not. 
 
 The consumptive under such a system of taxation who returns 
 from an effort to cure this dread disease, the widow working for 
 a pittance to keep her family together, the unskilled worker who 
 is striving to maintain his family and bring them up to efficient 
 citizenship, all must pay their quota of taxes in their rent, although 
 it means lessening the consumptive's chance to regain health, has- 
 tens the day when the widow must abandon the struggle to keep 
 her family together and reduces the vitality of the workingman 
 and his family. 
 
 Illustrations from New York City where rents are so cruelly 
 high will sufficiently demonstrate the validity of this statement. 
 There are 40,000 known consumptives in New York City, and prob- 
 ably at least 10,000 more whose location is unknown, while 28,000 
 new cases of consumption are developed every year and 10,000 peo- 
 ple a year go to consumptives' graves. Approximately 4,000 wid- 
 ows are supported, or to be accurate, helped, though not always 
 adequately supported, by private charities of New York City. Some 
 23,000 children are supported in institutions by the city's appropria- 
 tions ; many whose mothers yearn to care for them, but who can't 
 afford to pay taxes and rent under our present system of taxing 
 land and buildings at the same rate, and in addition to buy food 
 and clothing, while private charities also are unable to keep the 
 homes of all competent widowed mothers intact, and the city does 
 not give public outdoor relief. 
 
 The New York State Commission on Employers' Liability, Un- 
 employment and Lack of Farm Labor accept the report of a com- 
 mittee on the standard of living of the New York State Conference 
 of Charities and Correction in 1907 in which they express their 
 belief that with an income of between $700 and $800 a family can 
 barely support itself, provided that it is subject to no extraordinary 
 expenditures by reason of sickness, death or other untoward cir- 
 cumstances. The Commission remarks, "If unemployment so vi- 
 tally affects the well-being of the skilled workman and his family, 
 its disastrous consequences in the household of the unskilled work- 
 man can be left to the imagination. His income if employed six 
 days every week in the year cannot reach $550.00, already $150.00 
 below the standard." 
 
 In point of fact there are relatively few even highly skilled 
 operatives in New York City who get over $800.00 a year, and 
 
 28 
 
$500.00 to $700.00 is the usual income of an unskilled worker in 
 the city with the exception of city employees. 
 
 Social workers and advocates of larger municipal expenditures 
 may well hesitate under the present system of taxation to urge lar- Larger muni- 
 ger expenditures by the city, since it means taking with one mailed cipal budgets, 
 left hand from all the poor of the city to give to a few poor with 
 the pseudo-charitable right. For more than one reason a means 
 city's right hand doesn't want to let its left hand know what it families below 
 is doing in "charity" under present systems of taxation. This is the standard 
 a qualitative and not merely a quantative injustice. It is not a ques- of national 
 tion of whether there are 10,000 consumptives in Chicago, or 50,000, ******* 
 20,000 or 30,000 families in Philadelphia who receive at least $100.00 
 less a year than they need to attain and maintain efficient manhood The injustice 
 and womanhood and productivity. In every one of the one hun- of taxing 
 dred and fifty-eight cities to whose receipts and expenditures ref- ^ j"?* n 
 erence has been made, there are many consumptives, many widows u p on the 
 and many, too many, families below an honest line of dependence, number of con- 
 and trying to exist on deficits. Nor will any informed citizen in sumptives, 
 any city of over 8,000 population in the United States, except those widows and 
 charming suburban places to which the wealthy retire to get away It. t- * ( 
 from the results of present economic conditions, claim that there dependence. 
 is no irremediable poverty in his city. Of course, the income re- 
 quired to maintain a reasonable standard of living is less in most 
 cities than in New York, but the salient fact remains that every in- 
 crease of IOC in the tax-rate per $100.00 of assessed value means that 
 the tenant of a tenement house apartment, assessed for $1,250 will 
 pay $1.25 more taxes, the owner of a building assessed for $2,000 No city can 
 struggling to make both ends meet will pay $2.00 a year more taxes justly take 
 on his building, while a general tax-rate of $2.00 per $100.00 of taxes . out f a 
 assessed value means that the tenant of such an apartment must pay J, ' 
 $25.00 in taxes in addition to a net profit to the landowner $25.00 
 taken from a deficit of $100.00 to $200.00 a year, however, is an 
 injustice which no city should inflict upon its citizens. 
 
 A further economic result of taxing buildings at the same rate 
 as land has been referred to in the findings of the New York City 
 Commission on Congestion of Population that owners of vacant 
 land are thereby encouraged to hold land out of use to secure the 
 increase in values and to discourage the construction of buildings 
 since the owner is penalized in heavier taxes for construct- 
 ing new buildings or replacing old and unsanitary buildings with 
 new and healthy ones. This subject is more fully dealt with in the 
 chapter on "Taxation of Land Values and Housing Reform." 
 
 29 
 
Is the land- 
 owner entitled 
 to more than 
 2% ground 
 rent, the 
 interest paid on 
 Postal Sav- 
 ings Bank 
 accounts? 
 
 Taxing build- 
 ings at the 
 same rate as 
 land cripples 
 industry 
 and tends to 
 reduce wages. 
 
 Taxing build- 
 ings at the 
 same rate as 
 land puts a 
 premium on 
 firetraps. 
 
 Under the present general system of taxing land and buildings at the 
 same rate, the owner of ground rents feels entitled to and attempts 
 to secure $% to 6% net return on investment in the land and build- 
 ings alike. This tends to keep up rents since it is to the advan- 
 tage of the owners of lightly taxed land to postpone adequate im- 
 provements thereof for as long a time as possible so as to get 
 scarcity value rents, and to secure the maximum share of increas- 
 ing ground rents. This applies, of course, to land which should be 
 improved for business, manufacturing and commercial as well as 
 residence and tenement purposes. The inevitable result is high 
 rents, and a tendency to overcrowd all buildings and not to pro- 
 vide proper standards of sunlight, space and ventilation. Continu- 
 ing the illustration we have used of an apartment assessed for $i,- 
 250.00 with a proportionate site value of $750.00, we find that 
 a net return of 6% on such property above interest, depreciation, 
 vacancy charges, etc., and taxes means a ground rental of $45.00 and 
 a profit on the tenement apartment of $75.00 or a total net profit of 
 $|I2O.OO. If, however, we are agreed that, say 2% on the land value, 
 i. e., 2% ground rent, is all that the owner of ground rent is really 
 entitled to, then $30.00 a year of ground rental is extorted from the 
 tenant of such property, an appreciable sum for a man with an 
 income of $500 a year, or less.* 
 
 Six per cent net return on a factory building assessed for $80,- 
 
 000, on land assessed for $30,000 a total of $110,000 is $6,600 
 of which $1,800.00 is ground rent. If, as in the former instance, the 
 owner of the land is in fact entitled to only 2 per cent net return, 
 
 1. e., 2 per cent ground rent, then $1,200.00 is extorted from the 
 manufacturer in ground rent by the landowner. This sum distribu- 
 ted in increased wages to two hundred employees would afford an 
 appreciable increase of wages amounting to from i per cent to 2 
 per cent of the total wages paid many employees in factories. Per- 
 mitting the landowner, however, to secure the additional ground 
 rent puts a heavy burden upon the manufacturer. 
 
 The equal tax-rate upon land and buildings is a serious handi- 
 cap to the provision of fire protection. The tragedy of the recent 
 factory fires in Newark and in New York City has shown the ne- 
 cessity of better construction of factory buildings, and the making 
 
 *This concrete illustration is arrived at by following the incidence of a 
 single apartment, using the proportion of the assessed value of a tenement 
 accommodating twenty families assessed for $25,000.00, on a site assessed for 
 $15,000.00. The same principles and ratio apply to the manufacturer in erery 
 American city. 
 
over of many buildings to safeguard the lives of those employed 
 therein. 
 
 The National Board of Fire Underwriters report that from 1866 
 to 1908 inclusive the cost of conflagrations in the United States 
 has totalled the sum of $936,551,135 nearly twice the total muni- 
 cipal expenditures in 1908 of the one hundred and fifty-eight cities 
 in the country which in that year had a population of 30,000 or over. 
 By conflagration is meant all fires involving a loss of half a mil- 
 lion dollars and over. 
 
 The "American Year Book" states, "The direct and indirect 
 losses from fire in the United States during 1907 approximated Is it worth 
 $450,000,000 or one-half the cost of construction. Of this loss four- while discour- 
 fifths or an average of $1,000,000 per day could be prevented, as aging $ ? 
 shown by comparison with the standards of fire construction and fire 
 losses in the larger European countries." The provision of fire 
 towers costing $5,000, in a factory, with a $2.00 tax-rate on build- 
 ings would mean penalizing the owner with $100.00 additional taxes 
 a year. 
 
 A firm leasing factories and lofts in the manufacturing centers 
 of Manhattan states, "The average square-foot rate for manufac- 
 turing space in non-fireproof buildings in this section is twenty- 
 five cents, in fireproof buildings forty cents." 
 
 Obviously the owner of such a building gets about the same net 
 return upon his property when fully occupied, whether it be fire- 
 proof or firetrap. The firetrap building may be worth and assessed 
 for $5,000 or $6,000, while a new building with the same rentable 
 area might command higher rents, but the cost would be in the Should a 
 neighborhood of $20,000 or at least three times as much. On an manufacturer 
 increased assessment of only $12,000, however, the increased tax be Penalized 
 
 at a rate of $2.00 per $100.00 of assessed valuation would be * r 
 
 fire protection? 
 $240.00 or i per cent on a total investment of $24,000. 
 
 It should be noted too that while the owner of the building 
 might have to pay higher insurance in the old high fire-hazard build- 
 ing, that the city also has to pay more for fire protection and fire 
 fighting where there are any considerable number of such high fire- 
 hazard buildings, and this cost is reflected in the higher tax-rate, 
 and proportionately shifted to the rent burdens of the poor. 
 
 The entire cost of maintaining the Fire Department of New 
 York City is about $1.72 per capita of population, as compared with 
 a cost in Cologne and suburbs of $0.25 ; Berlin, $0.26 ; London, $0.19 ; Di scourag ' ing 
 St. Petersburg, $0.22; Paris, $0.21; Budapest, $0.08. It is of fireproof 
 course true that New York City has an extremely efficient Fire buildings by 
 
taxation, means 
 more expen- 
 sive fire 
 departments. 
 
 Taxing build- 
 ings injures 
 both employers 
 and workers. 
 
 Department, but it is equally patent that no such large expendi- 
 ture would be required, were there not such widespread serious con- 
 flagration hazards. 
 
 Even though the owner of the factory pay immediately, too, the 
 increased insurance rates he will to the best of his ability shift this 
 increased cost on the consumer of his goods or attempt to take it 
 out of his employees, since no manufacturer except under duress 
 pays for waste, or leakage in the cost of production. In any event 
 these extra costs may be partially laid to the system of penalizing 
 by heavy taxation the man who safeguards his employees, without 
 exonerating officials who permit the continuance of dangerous fire- 
 hazards. No justification can be found in morality, only in law, 
 for punishing or fining a man for doing right. Taxing buildings, 
 which means the exemption of land values from adequate taxation 
 injures both employers and workers. Each class to-day as dur- 
 ing past centuries is striving to secure the full values of what each 
 class produces. Both classes are despoiled of the values they create 
 by the legal but unmoral extortion of ground rents by landowners. 
 On this point they are agreed, and the most thoughtful members 
 of both classes realize that before they can distribute equitably the 
 values of their joint products, the confiscation of ground rents 
 must be terminated by reducing or abolishing taxation of buildings 
 and other forms of industry. 
 
CHAPTER IV. 
 
 Alleged Objections to Heavier Taxation of 
 
 Land Values. 
 
 Aside from the general objection to taxing land values at a 
 higher rate than buildings, that it is "confiscation of property rights 
 and immoral" which is dealt with fully in the chapter on "The Moral 
 Sanction for Taxing Land Values Heavily," several alleged objec- 
 tions are raised which deserve careful consideration. The most im- 
 portant objection presented is that it "will create a panic in real ^ U * fa that 
 estate and prevent the construction of new buildings because money i ieav i er taxa _ 
 will not be loaned under such conditions, and mortgages will be tion of land 
 called." values will 
 
 The most direct and convincing answer to this claim is the expe- create a real 
 
 rience of Vancouver, British Columbia. The marvelous success esia * e ^ anlc 
 
 from a financial point of view of the so-called "single tax" experi- loans j or con _ 
 
 ment in Vancouver is described by Mr. Luther S. Dickey in the structing new 
 
 "Single Tax Review" for May-June, 1911. It should be noted, buildings. 
 
 however, that even Vancouver has not tried out-and-out "single y ancouver 
 
 tax," that is it has not abolished all other sources of municipal rev- exempts build- 
 
 enue since during the year ending March 3ist, 1911, there was ings from 
 
 levied from the city: taxation, but 
 
 has not a real 
 
 Personal Property ***** *" 
 
 Income Tax 56,876.1 1 
 
 Revenue Poll Tax 56,055.00 
 
 Total $176,306.19 
 
 Brief reference must be made also to the system of taxation in 
 Vancouver as reported by the Mayor, L. D. Taylor, in 1910: Mayor Taylor's 
 
 "The taxing of the 'unearned increment/ a term used to express ex ,. 
 
 the increase in land values uninfluenced by the effort of the owner, is . 
 
 , . , T r^.f, . of taxing land 
 
 no longer an experiment in Vancouver. Fifteen years ago the city gov- , 
 
 1 i T j ^ L-1J- / values \n 
 
 ernment concluded to encourage building by reducing the improvement v 
 
 tax fifty per cent. The effect was immediate. Huge buildings at once 
 began to rise up where shacks had stood. 
 
 "In 1906, as a result of the success of the first experiment, an addi- 
 tional decrease of twenty-five per cent was made in the improvement tax. 
 At once building operations showed another startling increase an 
 increase that when compared with the increases shown in the statistics 
 of other cities was wholly out of proportion to the increase of 
 population. 
 
 33 
 
Mayor Taylor 
 claims taxation 
 of land values 
 benefits 
 landowners. 
 
 Illustration of 
 effect of 
 exempting 
 buildings, upon 
 the construc- 
 tion of 
 buildings. 
 
 ''At the beginning of this year (1910), it was decided to eliminate 
 the building tax altogether, and, in consequence, the Single Tax was 
 adopted in its entirety. 
 
 "From the beginning the cities of the Canadian West have taken 
 the initiative in promoting the Single Tax policy by putting it into 
 actual operation while other municipal governments have not reached 
 beyond the theoretical. Vancouver's policy of valuing land at full capital 
 value and improvements at only fifty per cent, thereby taxing buildings 
 only half as much as sites, was adopted long before the Single Tax 
 leaders had begun their campaign of education that to-day reaches 
 around the world. And so satisfactory was this first experiment that 
 when the further reduction of twenty-five per cent was made so as to 
 tax the capital value of improvements only one-quarter as much as that 
 of sites, the opposition was so small as to be scarcely worth taking into 
 account. 
 
 'The landowners, as a matter of fact, receive greater benefits from 
 the Single Tax than the builders and building owners themselves, for 
 while the tax on improvements has been abolished, the tax on land has 
 not been increased, and still remains twenty-two mills on the dollar, 
 just what it was before the Single Tax was adopted. With the tax 
 remaining the same, whether a site is improved or unimproved, it is 
 readily seen that lot owners would rather have their property improved 
 and bringing in an income. It is simply a question of which is best 
 policy, to have a dollar lying idle in an old stocking, or to have it work- 
 ing, bringing in an income at a bank. 
 
 "The municipal building statistics during the last fifteen years clearly 
 demonstrate the value of the Single Tax in hastening the substantial 
 upbuilding of a city. Before the fifty per cent reduction in the value of 
 building improvements was voted in the year 1895, building operations 
 in the city of Vancouver represented approximately $200.00 per capita. 
 In the year 1905 the per capita value of building improvements increased 
 to $245.00, and in 1905 the end of the ten-year period during which the 
 fifty per cent basis was in operation, the per capita value of improve- 
 ments had increased to $284.00. A similar increase was shown immedi- 
 ately following the further reduction of twenty-five per cent. In 1908 
 the per capita valuation of building improvements was $302.66, and in 
 1909 the figures were $308.17, and yet these statistics, striking as they 
 seem, do not half tell the story, for the reason that the population of 
 Vancouver increased from 17,000 in 1894 to over 100,000 last year, and 
 in the last five years has been trebled. 
 
 "Since the reduction of the improvement tax to twenty-five per cent 
 in 1906, more steel and granite buildings have been erected in Vancouver 
 than during any previous decade, and in proportion to the size of the 
 city, more substantial, costly buildings have been erected in Vancouver 
 than in any other city on the coast. Beginning with the election of last 
 January, when the Single Tax system was adopted by the Council in its 
 entirety, permits for buildings have been applied for at a more rapid 
 rate than at any other time since the incorporation of the City, and it 
 is estimated that over a million dollars' worth of handsome private 
 residences are either under construction now, or will be before the end 
 
 34 
 
of the year. Since the first of the year six steel skyscrapers have been 
 
 projected, two of them already under construction, and plans have been 
 
 drawn for four more. Modern steel apartment buildings are going up 
 
 in every section of the city, and frame and brick buildings that for 
 
 years have stood untouched on Granville Street are now giving way to 
 
 steel structures. The effect of the Single Tax on building operations _ 
 
 has been immediate, but nowhere has the beneficence of the system been . . 
 
 more fully felt than among factory workers and wage-earners. In Van- va \ ues ana 
 
 couver seventy-five per cent of the toilers own their homes. This esti- exempting 
 
 mate is conservative, and is based on figures presented by the employers buildings 
 
 of labor. on home 
 
 "Other cities of the west, making efforts to attract capital to them, ownership. 
 have discovered that landowners instinctively 'boost' prices to the out- 
 side purchaser, and this stands in the way of a city's progress. With 
 the Single Tax in force, no property owner is going to set up a claim 
 that his property is worth twice its real value, when he knows that 
 such a claim will make him pay twice the amount of taxes he is now 
 paying. Under the Single Tax, as it is operated in Vancouver, a new 
 sky line is being built up for the city, a sky line of tall, substantial 
 buildings of stone and granite, and under the Single Tax, not only is 
 the man who builds benefited, but also the landowner, the tenant and 
 the man who works with his hands in the city's factories and saves 
 his money to build his family a place they can call home." 
 
 In reply to the statement that the geographical advantage of 
 Vancouver and the construction of railroads was the cause of the 
 city's remarkable growth and that as high as 8 per cent and 8j^ 
 per cent is charged on mortgages, Mayor Taylor in a letter to the Mayor Taylor 
 writer says that : admits all 
 
 contributing 
 
 "While attributing to a great extent the impetus building in this factors to 
 city has received to the adoption of a single tax on land, he, together Vancouver's 
 with other advocates of the system, fully recognize that the geograph- growth. 
 ical situation of Vancouver, the number of railroads which are being 
 directed to this port, and other contributory causes have been respon- 
 sible lor much of the development which has been taking place in this 
 city during the past few years, and in regard to the claim that as high 
 as 8 and 8 l /2 per cent is charged on mortgages, that although such rates 
 prevail occasionally when the security is not considered good, it is 
 hardly fair to quote rates like that as usual for mortgage loans in Van- 
 couver. The current rate is 6 or 7 per cent, on large amounts some- 
 times as low as $ l / 2 per cent, when good security is offered." 
 
 The following table, giving the number of building permits, 
 value of buildings and population of Vancouver from 1906 to 1910, 
 refutes, however, the charge that money will not be loaned for the 
 construction of buildings: 
 
 35 
 
Criticism of 
 the low tax- 
 rate on land in 
 Vancouver. 
 
 The obvious 
 remedy for 
 the low tax- 
 rate in Van- 
 couver is a 
 higher tax-rate. 
 
 Vancouver 
 should pay its 
 bills currently 
 instead of 
 b or f owing 
 money for 
 postponed 
 payment. 
 
 ipo6 
 
 Number, 
 i 006 
 
 Value. 
 
 $4 ?o8 41 
 
 Population. 
 
 c.2 OOO 
 
 IOO7 
 
 1,777 
 
 5, 6 T.2, 744 
 
 6o,IOO 
 
 I008.. 
 
 1,607 
 
 =;,Q c ;o,8Q'? 
 
 66,5OO 
 
 IOOO 
 
 2 O54 
 
 7 2^8 ^6^ 
 
 780OO 
 
 IOIO.. 
 
 2.260 
 
 n.mo.tfk 
 
 0^.700 
 
 Fairness compels the admission, however, that there seems to 
 be a defect in the operation of the tax, because too low a tax-rate 
 is levied, only 22 mills on the dollar. 
 
 The Editor of The Single Tax Review, commenting on this, 
 says: 
 
 "This must be accepted as a statement of fact, and not as favoring 
 the taking of no more than 22 mills on the dollar. It is no part of 
 the Single Tax to favor landowners as landowners. But because 99% 
 of landowners have interests as builders, capitalists or laborers, 
 their gain from the application of the Single Tax principle must be 
 quite as great as that coming to other members of the community. If 
 this tax of 22 mills on the dollar leaves the same amount of economic 
 rent or site value in the hands of the landowners as before, or if as 
 now seems the case in Vancouver the impetus to property caused by 
 the removal of the tax on buildings has been to actually increase eco- 
 nomic rent or site value remaining to landowners, there is even greater 
 necessity of keeping on in the way the city has begun, and taking grad- 
 ually an ever increasing proportion of land values until the full amount 
 is absorbed for public purposes. Otherwise Vancouver faces the inevi- 
 table interruption that comes to the prosperity of every 'boom town' 
 whose history is a matter of record." 
 
 The remedy for the failure to secure a larger share of the ground 
 rent is obvious. The city should, instead of passing on to future 
 generations the cost of providing public improvements such as 
 streets, sewers, transit, schools, parks, etc., pay its way as it goes 
 along. The result of the policy the fathers and grandfathers of 
 the present citizens adopted of bequeathing to us the payment 
 for improvements they should have met, is shown in the enormous 
 debt charges which burden American cities. 
 
 The Report of the Corporation of Vancouver for 1910 states 
 that the value of the real property of the city at the end of that year 
 was $98,777,785, while the outstanding General Debentures and 
 Stock of the City amounted to $12,808,265.95, or approximately 12 
 per cent of the total valuation of real estate, i. e., exclusive of im- 
 provements which are exempt from taxation. About $10,250,000 
 of this municipal indebtedness bears interest of from 4 per cent to 
 6 per cent, and over half was issued for terms of nearly forty years, 
 while the interest charges of the city were in 1910, $279,861.16, 
 
 36 
 
exclusive of the lumped sum for "Interest and Sinking Fund" for 
 Schools and Waterworks, aggregating $178,514.96, and the Sinking 
 Fund (Debentures other than water and school) amounting to 
 $118,091.38. 
 
 In other words, the total "debt service" of Vancouver was in 
 1910, $575,476.50 out of a total budget of $1,942,227.26, i. e., about 
 30 per cent. It is partly due to such reasons that land speculation 
 still continues as indicated by figures which Mr. Dickey gives in the 
 magazine referred to above : 
 
 "Two lots on which were two modest buildings were mortgaged in Many sites 
 1904 for $1,600. In 1910 the property was sold for $55,000. In 1911 the in Vancouver 
 assessed value of these lots is $22,500, but they are on the market for are under- 
 $75,000. Three vacant lots were sold in August, 1909, for $75,000; in assessed. 
 April, 1910, for $115,000. They are assessed in 1911 at $63,125. 
 
 "Another lot was purchased in 1907 for $1,100. The owner has 
 refused $10,000 for it and is holding it at $15,000. It is assessed for 
 1911 at $3,000." 
 
 Mayor Taylor frankly recognizes the necessity of securing by Mayor Taylor 
 
 taxation more of the ground rent. He has told the writer person- believes that 
 
 ally that he expects to bring this about as soon as possible, that is the * ax - rate on 
 
 just as fast as public sentiment will permit. The first step, he says, couver should 
 
 will be to raise assessed values from 65 per cent, as at present, to ^ raised, 
 100 per cent, that is to full valuation ; and the next to increase the 
 tax-rate slowly but to a much higher one than the present, even at 
 full valuation. 
 
 In January, 1911, all buildings in Vancouver were restricted in And that 
 
 height to 120 feet, but not to exceed ten stories at the maximum restrictions on 
 
 while Mayor Taylor believes that no tenements should be over four " se t, 
 
 , . , land are also 
 
 stories high at most and that the practical ideal for the wage-earn- necessary 
 
 ers in cities on this continent is detached dwellings with gardens 
 and yards. The attainment of this practical ideal, too, he states, will 
 be helped by heavy taxation of land values, but involves also definite 
 restrictions on the use of land. 
 
 It is significant, too, that the leaders of the organizations which N ew York 
 have done most in this country to promote the construction of good Savings and 
 homes to be owned by wage-earners, the Savings and Loan Associa- Loan Associa- 
 tions heartily favor the Deduction of the tax-rate on buildings. Com- j tow<y . ' avor 
 menting on the criticism of the bill before the New York State l^rate on 
 Legislature to reduce the rate of taxation on buildings to one-half buildings. 
 the tax-rate on land, Mr. Walter L. Durack, Chairman of the Execu- 
 tive Committee of the Metropolitan League of Savings and Loan 
 Associations, says: 
 
Loaner of 
 millions on 
 buildings, says 
 halving the 
 tax-rate on 
 buildings will 
 help real 
 estate. 
 
 President of a 
 Savings and 
 Loan Associa- 
 tion says 
 halving of 
 tax-Sate on 
 buildings will 
 encourage the 
 loaning of 
 money on 
 buildings. 
 
 "I have paid taxes for twenty-five years on vacant and improved 
 land, and have never lost anything by reason of the assessment. Some 
 years I have paid as high as $1,000 in taxes. The halving of the tax- 
 rate on buildings will be a benefit to real estate as a whole in New 
 York City. 
 
 "I have loaned several millions on such property, and am sure that 
 halving the tax-rate on buildings will not in any way interfere with 
 loaning money for all legitimate purposes, whether on buildings or on 
 vacant land." 
 
 Mr. Charles O'C. Hennessy, President of the Franklin Society 
 for Home Building and Savings, says: 
 
 "So many misleading statements have been made as to the result of 
 making the rate of taxation on buildings one-half the rate of taxation on 
 land, as provided in the Sullivan-Shortt bills, by five equal reductions in 
 as many consecutive years, that I wish to express my judgment on the 
 matter, reached through twenty-five years of experience in the business 
 of placing loans, as an officer of a savings and loan association. During 
 this quarter of a century I have placed many millions of dollars in 
 loans on buildings. 
 
 "Even admitting that there would be a slight reduction in the value 
 of land, this will be only a small portion of the increase in the value 
 of new buildings. A difference is made in the rate of taxation, not in 
 the assessments. 
 
 "The other claim that mortgages would be called in upon a large 
 scale is also disproven by the past experience of the city. The average 
 increase in the rate of taxation on both land and improvements in most 
 of the boroughs of the city during the past three years has been as 
 great as the increase that would be involved in halving the tax-rate on 
 buildings and no panic has resulted. An increase of .09 per $100.00 on 
 assessed value of a tenement, assessed for $30,000, on a lot assessed for 
 $10,000, is $36.00. With the halving of the tax- rate on buildings, how- 
 ever, while the increase in the tax-rate on land will amount to about 
 $9.00 this year, the decrease in the tax on buildings is about $39.00 a 
 year, showing a net saving of $30.00 a year, or by the time the full half 
 tax-rate on buildings is in force, of about $150.00. Even when this rate 
 is in operation, however, the tax-rate on land will be only about $2.20 
 per $100.00 of assessed value. A building in moderately good order is 
 usually assessed for from two to three times the assessment on the land, 
 and the larger earning capacity of the buildings through reduced taxes 
 would encourage the lender of money to let his loan remain on the 
 property. To call this legislation 'confiscatory' in an economic sense is 
 illogical, since a tax of even $3.00 on land, or about half as much again 
 as would be required, would leave a margin of 5 per cent to 6 per cent 
 profit. If the tax were $2.20 per $100.00 value on both land and build- 
 ings, the Allied Real Estate Interests would probably not call it 'confis- 
 catory/ but it is the distinction in rate of taxation on land and buildings 
 which seems to perturb them needlessly. Mr. Robinson continues: 'Leg- 
 islation which is confiscatory in character as this is would drive such 
 investors out of the mortgage markets. As a result of this driving out 
 
 38 
 
of investment funds, there would be an inability to replace the mortgages 
 
 so called, and a panic in real estate price would ensue.' As has been 
 
 shown, loans on improved land would not be withdrawn, since they are 
 
 safer with a better return. The only real estate upon which there is 
 
 the remotest possibility of any such effect as Mr. Robinson predicts is 
 
 vacant and underimproved land. The effect of such a tax upon this 
 
 vacant land will be to compel the owner to improve it, and this is just 
 
 what it is intended for. Money is not lent, however, upon vacant land, 
 
 and so the slightly higher tax upon land will not affect the present loans 
 
 to any material extent. The cheaper the land, the more inducement 
 
 there is to the owner to improve it adequately, which is stimulated by 
 
 the lower tax-rate on buildings. It is evident that the exact reverse of 
 
 the calamity the Allied Real Estate Interests predicts would follow s t ea d O f a 
 
 the enactment of this bill, would actually occur, and that there would ca i am ity } as 
 
 be a marked stimulus to the construction of much needed tenements c \ a { mea by real 
 
 and homes and factories to relieve the fearful overcrowding of rooms es f a f e interests 
 
 in tenements such as the Congestion Commission reports, and the over- t ^ w ^ benefit 
 
 crowding of factories such as was an important cause of the recent fg nan ^ 
 
 disaster in the Triangle Shirt Waist Factory in the Asch Building."* 
 
 Mr. John Moody, editor of Moody' s Manual and Moody's Maga- John Moody 
 zine, states: says halving 
 
 the tax-rate on 
 
 "I am unhesitatingly endorsing the Sullivan-Shortt bill for grad- \ )U ii < a n g S { s the 
 ually reducing the rate of taxation on buildings and concentrating it on most j us f p{ ece 
 land values, for the reason that it appears to be, by every analysis, the O j \ e gi s \ a i{ on 
 sanest and most just piece of legislation proposed in many a long day. proposed for 
 
 "Every so often a lot of comfortable and well-meaning people a long time, 
 (many hailing from Wall Street, where I come from) suddenly awake and that most 
 to the fact that the housing conditions in this great city are deplorable tenetnent- 
 and that the congestion of population 'is most alarming.' Committees house legisla- 
 are appointed, campaigns are waged, public parks in the congested dis- twn increases 
 tricts are advocated, model tenements are proposed, and then, after all congestion. 
 these things are done, everybody is surprised to find that rents have 
 mounted still further, and the congestion is greater than ever. 
 
 "But here at last we have a bill which goes to the root of the situa- 
 tion. No one will dispute me when I say that I know something about 
 the meaning of speculation. An experience of over twenty-five years 
 in Wall Street, where the whole atmosphere is charged with speculation, 
 has taught me to do a little thinking now and then. And I know what I 
 am talking about when I say that nearly everything in Wall Street of 
 a really speculative nature is capitalized land value. I have for years 
 seen this land value grow, in the shape of stocks and bonds, until to-day 
 we have about eighty billions of dollars' worth of corporate stock in 
 this country, of which more than half the speculative half is based 
 on land values purely. 
 
 "What are these land values? Are they capital? Capital is simply 
 stored-up labor, and labor is the one thing which produces wealth. This 
 production of wealth is not a bad thing; it is a good thing. It is the 
 
 *Note. At a fire in this building, 143 girls lost their lives owing to 
 inadequate fire exits and fire protection. 
 
 39 
 
Mr. As tor 
 objects to 
 taxing land 
 values because 
 it would 
 reduce his 
 rents. 
 
 Mr. Moody 
 says taxation 
 of land values 
 tends to pre- 
 vent panics. 
 
 Transit lines 
 alone without 
 heavy taxation 
 of land values, 
 encourage 
 land specu- 
 lation. 
 
 cornerstone of our entire civilization, and why the people should be so 
 anxious to tax it is something I never could understand. Of course I 
 understand why landowners wish to tax it. Something must be taxed, 
 and Mr. Astor, who owns both lands and improvements, knows that as 
 long as labor keeps busy feeding and clothing itself in New York City, 
 his lands will grow in value without any effort on his part, and he will 
 be able to increase his rents in direct proportion to the increase in the 
 value of his lands. So why should he wish, through land value 
 taxation, to disturb his present satisfactory position? 
 
 "Some one has said that to take taxes off improvements and put 
 them on land values would be confiscatory. Confiscation is a great 
 word, especially in Wall Street. If taxing land values is confiscation, 
 why is not the reduction of the tariff also confiscation? To abolish the 
 tariff on steel would impoverish a whole lot of people who have invested 
 in Steel Trust stock at fancy prices, just as to tax the full speculative 
 value of land would impoverish many speculators who are working land 
 booms at the present moment. But on the other hand, abolishing the 
 tariff on steel products would give us cheaper steel, just as the lighten- 
 ing of the tax on buildings would give us lower rents and tend to 
 relieve congestion. 
 
 "I know something about panics and their causes, and I do not 
 hesitate to come out flat-footed and say that this is just the character 
 of legislation which will tend to prevent panics, as well as relieve 
 congestion." 
 
 2. "Adequate transit lines alone, will prevent speculation in 
 land without the taxation of land values." 
 
 If there is any subject upon which real estate owners, especially 
 owners of vacant land, have mesmerized the public in American 
 cities it is rapid transit. It is perfectly true that enough transit into 
 cheap land, that is, lines which bring land cheap at the time they are 
 projected into the market by reducing the time from such lands to 
 the business and manufacturing centers of a city might have some 
 effect temporarily only in reducing the price of land. Just the 
 reverse is the object of the owners of the vacant land who hound 
 municipal authorities to run transit lines out into their vacant land. 
 Wood, Harmon & Co., a prominent real estate operating company 
 recently advertised in several New York papers apropos of the 
 proposed extension of transit lines into Brooklyn where they own 
 or control 20,000 lots, assessed for about $15,000,000 that they 
 would guarantee the same increase in value of some of their lots 
 with the proposed transit, as had occurred in the Borough of the 
 Bronx where lots worth a few hundred dollars were increased in 
 value to four or five thousand dollars with the provision of rapid 
 transit. 
 
One touch of cupidity makes the whole landowning fraternity 
 akin, and every real estate owner throughout the country is striving 
 to secure the same special privilege of getting free transit to his 
 land, to increase its value and his resulting profits, and not primarily 
 to keep his land cheap for the healthy dwellings of wage-earners 
 and other workers. While self-preservation may be the first law of 
 nature, to get rich at other people's expense is the second. 
 
 Another point also deserves consideration, the fact that money 
 invested in transit is costing the city not only sinking fund charges, 
 but interest as well. Some transit companies in New York have 
 now reached the height of dependence in asking that the city shall 
 guarantee them net profits equal to those at least of an ordinary Free transit 
 industrial company. On the other hand, charitable experts like Mr. and guaranteed 
 
 Cyrus L. Sulzberger, for many years President of the United He- profit f to 
 
 /* * T . r 1 transit cow- 
 
 brew Chanties in New York, have suggested that transit in that city p an i es are 
 
 of such high land values and exorbitant rents should be as free as merely levies 
 walking in the streets. Naturally the land speculator cheerfully on tenants to 
 pronounces his benediction upon both suggestions because he makes increase the 
 money from the passengers coming and going under both proposi- ? r V J 
 tions. The "forgotten man" in the case is the millions of sweated 
 tenement dwellers who under our present system of taxing land and 
 buildings at the same rate pay the "guarantee" on the cost of super- 
 fluous transit and "free" passage for the few people with short hours 
 of work, who could take legalized joy rides at the taxpayers' expense 
 out to the cheap lands whose values rise but are taken by the land- 
 owner at just about the same rate as the tax-rate of the poorest 
 citizens who are left behind in crowded sections of the city. 
 
 One of the traffic experts of the Brooklyn Rapid Transit Com- A case in P oint 
 
 pany told the writer that that company in response to the demand n translt 
 r . . , . .. r . -, lines through 
 
 from citizens has planned lines far out from the center of Manhat- unusea \ ana t 
 
 tan which would not be needed for many years, at a total cost of at farm land. 
 least $12,000,000. Now 4 per cent interest and 2 per cent sinking 
 fund charges will mean a cost of $720,000 a year on this one invest- 
 ment, to be sure not a large sum for a city which refuses to think 
 in terms of less than millions, but nevertheless a preventable waste, 
 when there are scores of thousands of vacant or underimproved Cheaper to tax 
 lots within a short distance of the city's centers which would be land than ( 
 made available for business and tenement use by taxing them a * 
 
 little higher and taking taxes off buildings. 
 
 Superfluous transit is a waste in the cost of production which can 
 be largely eliminated by taxation of land values which will bring 
 available land into the market. 
 
 41 
 
Unused transit 
 facilities 
 should be 
 availed of be- 
 fore new lines 
 are constructed. 
 
 Removal of 
 factories from 
 city's centers 
 will distribute 
 population, 
 but will not 
 keep land 
 cheap. 
 
 The old plea 
 of unconstitu- 
 tionally. 
 
 The unused capacity of existing transit facilities in every Ameri- 
 can city should be availed of before more transit at the cost of the 
 citizens at least is suggested. The situation may be further illus- 
 trated by the growing tendency in American cities to decentralize 
 industries. Naturally this involves the construction of lines to 
 carry freight, or the expense of trucking and draying. There are 
 comparatively few cities in the country in which the municipality 
 constructs or owns such lines (San Francisco, Los Angeles, and 
 New Orleans being exceptions), but this is a much more economical 
 method of distributing population since, as Adam Smith remarked, 
 man is the most difficult luggage to move. Where freight belt lines, 
 as in Chicago and as contemplated in New York City, are con- 
 structed, however, by private initiative the need of taxing land val- 
 ues to keep the land thereby made accessible, availably cheap, is 
 more patent, although actually the need is practically the same 
 whether freight or transit lines are provided. 
 
 3. "The taxation of buildings and personalty at a higher rate 
 than land is not constitutional since it deprives people of their prop- 
 erty without due process of law and discriminates against one form 
 of property in favor of another." 
 
 In the first place it is impossible to foresee what laws will be 
 declared constitutional and what unconstitutional. The views 
 of state courts on confiscation of property differ widely. It is appar- 
 ent, however, that if any state legislature enact a law differentiating 
 between classes of property which it creates, this cannot be held to 
 be "without due process of law." The American people in their 
 effort to secure for themselves the right of self-government, of which 
 court decisions have to a certain extent deprived them, are in pretty 
 general agreement with Abraham's Lincoln's statement that if the 
 policy of the government upon vital questions affecting the whole 
 people were to be irrevocably fixed by decisions of the Supreme 
 Court, the people would have ceased to be their own rulers. In 
 point of fact the Supreme Court has seldom declared unconstitu- 
 tional any act to protect the public health passed by a state legis- 
 lature, and the taxation of land values has been pretty definitely 
 shown to be an important health measure. 
 
 A case recently before the United States Supreme Court on 
 which they delivered an opinion April 4th, 1910, upheld the right 
 of a state to differentiate in taxing (Southwestern Oil Co. vs. Texas 
 217 U. S. 11,430 Supreme Court 496, affirming 100 Texas 647). 
 A Texas statute imposed a 2 per cent tax upon gross receipts from 
 any or all oils, etc., sold at wholesale in the state and a tax amount- 
 
ing to 2 per cent of the cash market value sold or handled or dis- 
 posed of in any manner in the state. This was upheld by the state 
 court but appeal taken to the United States Supreme Court which 
 affirmed the state court in the following opinion : 
 
 "The Fourteenth Amendment was not intended to cripple the taxing The United 
 
 power of the states, or to impose upon them any iron rule of taxation. States Supreme 
 
 "This court will not speculate as to the motive of a state in adopt- Court has 
 
 ing taxing laws, but assumes the statute neither upon its face nor by affirmed that 
 
 necessary operation suggesting a contrary assumption that it was the Fourteenth 
 
 adopted in good faith. Amendment 
 
 "Except as restricted by its own or the Federal Constitution, a state wa * in 
 may prescribe any system of taxation it deems best, and it may, without 
 
 violating the Fourteenth Amendment, classify occupations imposing a . 
 
 tax on some and not on others, so long as it treats equally all in the 
 
 me states. 
 same class. 
 
 "An occupation tax on all wholesale dealers in certain specified 
 articles, does not on its face deprive wholesale dealers in those articles 
 of their property without due process of law or deny them the equal *"* ^ * 
 protection of the law, because a similar tax is not imposed upon whole- * ec 
 sale dealers in other articles, and so held as to the Kennedy Act of canno wan ~ 
 
 , 
 Texas in 1905, levying an occupation tax on wholesale dealers in coal *.? interfere 
 
 , . , M state 
 
 and mineral oils. 
 
 statutes on 
 "A federal court cannot interfere with the enforcement of a state q ues ^ ons o j 
 
 statute, merely because it disapproves of the terms of the act, questions judgment 
 the wisdom of its enactment, or is not sure as to the precise reasons 
 inducing the state to enact it." 
 
 A further point has been raised that by taxing buildings at a 
 different rate from that imposed on land a legislature is really creat- 
 ing a new kind of property since the term "realty" as generally used 
 includes both land and buildings. 
 
 A legislature would not be creating any new kind of property, 
 however, since there is a clear, vital and permanent distinction be- 
 tween buildings and land, but would be merely recognizing that 
 distinction. A legislature would appear, however, from the follow- 
 ing decisions of the New York State Court of Appeals to have au- 
 thority to create such different classes of property. 
 
 The power of the legislature in matters of taxation is broader p owers O f 
 than in almost any other field. state legisla- 
 
 In the case of Janet vs. City of Brooklyn, 99 N. Y. 300, the Court tures * n 
 of Appeals said: matters of 
 
 taxation are 
 "The power of taxation being legislative, all the incidents are within very broad. 
 
 the control of the legislature. The purposes for which a tax should be 
 
 levied ; the extent of taxation ; the apportionment of the tax ; upon what 
 
 property or class of persons the tax shall operate; whether the tax 
 
 43 
 
Discrimination 
 between dif- 
 ferent classes 
 of property is 
 recognized in 
 state laws. 
 
 Heavy taxation 
 of land values 
 is urged only 
 for municipal 
 purposes, other 
 unearned in- 
 comes should 
 be taxed for 
 state and fed- 
 eral purposes. 
 
 shall be general or limited to a particular locality, and in the latter case, 
 the fixing of a district of assessment; the method of collection, and 
 whether the tax shall be a charge upon both person and property, or 
 only on the land, are matters within the discretion of the legislature, 
 and in respect to which this determination is final." 
 
 Discrimination between different classes of property or different 
 kinds of transactions is generally recognized in our present tax law. 
 Thus in New York, transfers of stock are taxed, but not transfers 
 of general merchandise, inheritances are taxed at various rates ac- 
 cording to the value of the property affected and the relationship 
 of the beneficiary to the deceased owner. Mortgages are taxed 
 differently from other personal property, and this mortgage tax law 
 was upheld by the Court of Appeals in a strong decision in the Case 
 of People vs. Ronner, reported in 185 N. Y., page 285. Similar 
 differentiations exist in the tax laws of other states. 
 
 Relatively little fear need be felt as to the constitutionality of 
 the proposed measure, although it might perhaps be held by courts 
 that any sudden change, as the sudden abolition of all other forms of 
 taxation and the concentration of all the cost of government on land 
 values, would be confiscation, because upsetting the basis of business 
 transactions without giving any time for adjustment. 
 
 4. "Other sources of wealth are as much 'unearned' as the in- 
 crement of land values." 
 
 Prof. E. R. A. Seligman, discussing the "single tax" in his "Prin- 
 ciples of Taxation" urges strongly the injustice of taxing only land 
 values and exempting large fortunes made in speculation on stock 
 markets, etc., from heavier taxation. So, too, the fortunes acquired 
 through patent rights and copyrights, it has been claimed, should be 
 taxed more heavily as well as land values. With these contentions 
 the writer is in complete agreement, so long as and to the extent 
 that such sources of wealth are as unearned as is a large part of the 
 increment of land values. It must be remembered, however, that 
 the taxation of land values in cities is urged for municipal revenue 
 alone and not for state or national government. Proper sources of 
 revenue for national, state and municipal purposes should not be 
 confused any more than should political issues in these three politi- 
 cal districts. 
 
 The total appropriations by Congress for 1911 amount to $1,027,- 
 900,623. While the total Public Debt of the United States bearing 
 interest is only $913,317,490, the debt not bearing interest is $381,- 
 497583, and manifestly the disadvantages of a large debt justify 
 the finding of new sources of revenue for the federal government. 
 
 44 
 
Diminishing returns from the tariff will make this an urgent prob- 
 lem, despite any economies that may be made in federal expendi- 
 tures. Arguments which might pertinently be brought against a 
 single tax upon land for the support of all government in the 
 country, federal, state, county, municipal, etc., have no weight 
 in considering the propriety of taxing land values more heavily for 
 municipal purposes. Prof. Seligman himself in his argument before 
 the Committee on Taxation of the New York City Commission on 
 Congestion of Population seemed to favor a land increment tax, 
 for he stated : 
 
 "I do believe that if you were to have such a system as the tax on Prof. E. R. A. 
 the unearned increment, secure a large revenue from that, and with Seligman 
 that revenue institute certain proceedings which would make the suburbs endorses land 
 far more attractive to the citizen, you would directly or perhaps indi- increment tax 
 rectly accomplish great results. For instance, in some of the German to make 
 towns they utilize for the cities large sums secured in the main from suburbs 
 their insurance funds and the unearned increment tax, for the building attractive. 
 of model tenement houses, for the improvement of the suburban sec- 
 tion and for the development of transportation facilities. Those, it 
 seems to me, are the important points to be considered. How can you 
 make it possible for people now living in the slums to live in places 
 where land values are much less and at the same time attend to their 
 ordinary vocations in life?" 
 
 Mr. Chairman: "Was the raising or the expenditure of the money 
 to have the effect you speak of?" 
 
 "The expenditure would not have been made but for the increased ^ n d admits 
 revenues which were designed to afford the means for this increased social advan- 
 expenditure. The tax on the unearned increment in the German cities tages of such 
 has been too recent and too slight to warrant any conclusion, but it is tax - 
 expected, and on general principles it would be expected, that a tax on 
 unearned increment would of course prevent the appreciation to that 
 extent of the value of land and would therefore prevent any further 
 congestion." 
 
 With reference to a lower rate of taxation on buildings than on 
 land, Prof. Seligman said: 
 
 "Of course anything that would tend to decrease the capitalized 
 value of the land would tend so far, at all events, to reduce congestion. 
 If you could arrange the system of taxation in a way that is not pos- 
 sible under present constitutional methods, i. e., if you divide the city up 
 into districts and put different rates upon different districts, then you 
 could to that extent diminish the value of real estate of some districts 
 and of course increase it in others." 
 
 Mr. A. C. Pleydell, Secretary of the International Conference 
 on State and Local Taxation and the New York Tax Reform Asso- 
 ciation, says : 
 
 45 
 
Mr. A. C. Pley- 
 dell claims the 
 advantages 
 of municipal 
 improvements 
 to the land- 
 owners justify 
 the city in se- 
 curing more of 
 land values. 
 
 "Taxation of 
 land incre- 
 ments should 
 be accompanied 
 by recouping 
 owners for 
 decreased 
 land values." 
 
 The city is not 
 obligated to 
 participate in 
 land specula- 
 tion because it 
 taxes land 
 increments. 
 
 "One reason why it seems it would be fair for the land in a grow- 
 ing community to bear the higher rate of tax is that the benefits of 
 public expenditures go so largely to increase the value of improvements. 
 We need not talk of who gets the benefits of these increased values or 
 the amounts; that is an abstract question at the moment. The practical 
 question is that the city is collecting and spending every year an enor- 
 mous amount of money. A good deal of this is spent on things that 
 may not be easily seen to be reflected in the increased value of land, 
 but a great part of it is reflected in the higher land value as street 
 paving and such things, which we all know and admit tend to increase 
 materially the value of land. Public expenditures tend to increase the 
 value of land in the centers as well as in the outlying districts. There- 
 fore you ought to adopt the policy of taking a larger share of the value 
 of land. It is extremely hard to say just where the increase does 
 come, but we know it does come. We know public improvements will 
 increase the value of land some distance away from the improvement, 
 as well as nearby, because such improvements enable the people to reach 
 a business center. The Brooklyn Bridge, for instance, is a shining 
 example of the fact. It has increased values right around the Brooklyn 
 Bridge, but the Park Row rents are not nearly as high as the Broadway 
 rents or lots, and it has increased the value of the land in all down- 
 town districts. The increased tax upon these values would help to pay 
 for these public improvements, which in turn, when they are made, will 
 help to increase largely the value of the land." 
 
 5. "A land increment tax is unfair unless the city similarly re- 
 coups the owner of land for any decrease, especially when due to 
 changes in proposed public improvements." 
 
 The shifting of land values, decrease in one section and increase 
 in another section is constantly going on in many cities. 
 
 A decrease in value always where assessments are frequently 
 and carefully made results in decreased assessments, and hence 
 diminished taxes, while frequently such decreases are only tem- 
 porary and due to the transformation of the district from one use 
 to another as from residence to commercial purposes. There are 
 only a few spots in any American cities where there would not be a 
 demand for land if the ground rentals were not so high. Failure 
 of the city to prevent too intensive use of land as well as to tax 
 it adequately, tends to create fictitious land values, which naturally 
 slump later as any speculative values are apt to do. 
 
 A favorite objection, however, is that when a city projects a 
 transit line, a parkway, etc., to be constructed at the expense of the 
 entire city, and then changes its plan, the city should return to the 
 owner of land the value of which has been increased the proportion 
 of that increased value which it has taken. The defect in this 
 reasoning is apparent. The assessment is supposed to, and where 
 properly made, does merely register the actual open market value 
 
 46 
 
of the land. This value of land the city does not determine, nor has 
 the land any increased value merely because the transit lines are 
 planned, nor even after they are constructed, except that due to the 
 people who use it. A network of railways through a district where 
 people could not possibly exist would not increase the value of land 
 in that district. The owners of land which it is anticipated will be 
 needed, discount that value and attempt to secure it all. 
 
 The arguments for and against a land increment tax are suc- 
 cinctly stated by Mr. Robert Brunhuber of Cologne : 
 
 ist. The increase in the value of land is usually partly earned, Mr - 
 
 only in rare cases completely unearned. , n u er 
 
 ,. , discusses the 
 
 2nd. If the increase in the value is to be taxed, a decline in value i an( ^ { ncre . 
 
 is to receive compensation, and more particularly where the same in- ment tax. 
 dividual incurs a loss in selling one piece of property, this is to be 
 deducted from any gain secured by him on another piece of 
 property. 
 
 3rd. The tax will be shifted from the seller to the buyer. It 
 will raise the value of the land and so impede the progress of land 
 reform. 
 
 (1) Land value not only represents return on capital, but a A land incre- 
 ground rent which must be paid by the rest of the population to ment iax aoes 
 
 the owner of the land. In cases of land, more than any other form n ,* pe out 
 
 - , . . . the increment. 
 
 of ownership, great values are created by the activity of the com- but mere i y 
 
 munity or by mere chance. taxes it. 
 
 This form of taxing unearned increments does not propose to 
 wipe out by taxation the increase in value, it is simply to be taxed. 
 The increment tax is valued on a newly accruing income. It levies 
 no burden on the taxpayer; only lessening an existing largely un- 
 earned gain (when levied at time of sale). 
 
 / \ T* r i 1 , 1 ., . Decreases in 
 
 (2) Taxation of gams should be accompanied by compensation land va \ ues 
 
 for losses. Here Mr. Brunhuber points out that there should be through 
 
 a distinction as to whether loss in value has been directly due to governmental 
 
 public action (under certain conditions, where the erection of a gas act * on distinct 
 
 tank or a slaughter-house injures the neighborhood, there should from * hat due 
 
 ...--,': to other causes. 
 
 be certain compensation for the detriment of the property, but that 
 
 apparently should be made by suing the party constructing the gas Lan $ owner . 
 tank or slaughter-house, for damages to the property injured). ship doesn't 
 
 Since, however, as he asserts, there was not at the outset, any 9^e any right 
 right to have bridges, public markets or theatres in one neighbor- to pul}Uc 
 hood, any claim for compensation on the ground of their removal 
 is to be rejected. expense. 
 
 47 
 
The most important objection is the third that the tax will be 
 shifted from seller to buyer, and will serve not to lower the value 
 of land, but to increase it. 
 
 Now every check on land speculation tends to lower prices. This 
 effect is the greater, the higher the percentage of the tax and the 
 
 The increment g reater fa Q amoun t o f cash which consequently must be furnished. 
 tax is the , ., ., *. . , . 
 
 specific remedy While the details necessarily vary according to the special circum- 
 
 against land stances of the several cities, the value raising effect of the ordinary 
 
 speculation, taxes on monopoly of real estate is paralyzed by it under the modern 
 
 conditions of speculative buying. It is obvious that an increment 
 
 tax, since it opens the prospect that a large part of the increased 
 
 gains will be appropriated by the community, stands in the way of 
 
 artificial rise in rents and in real estate value. A substantial and 
 
 rapidly progressive tax of this sort hence tends to keep down the 
 
 price of land. 
 
 The possibility None the less, something more is to be said. It is to be admitted 
 
 of shifting the that some times there is such a demand for land that there is a pos- 
 
 land increment .,.,., P ,.-.,. , . 
 
 tax must be sl oihty of shifting the increment tax to the ground rent and so 
 
 met by land causing great economic evils. This possibility must not be neglected 
 reform. by the warmest advocates of the tax, the less so because the means 
 
 of obviating it are at hand. These are to be found in a firm policy 
 of land reform. The increment tax has been effective in keeping 
 land values down precisely where it has been accompanied by action 
 in this direction. 
 
 The yield from It should also be noted, on the financial side, that the yield of 
 land incre- taxes of this sort is likely to be variable. No doubt the yield is likely 
 
 ** tO increase on the whole > but not at an y regular rate. The local 
 bodies (and the Senate) must take this probability of fluctuation 
 into account, and must make use only of an average ascertainable 
 over a longer period or accumulate the funds for some specific 
 purpose. 
 
 Finally, we have to consider the effects upon land reform. All 
 taxation of sites, especially of site gains, works toward such reform. 
 I have already indicated why the increment tax will serve to check 
 speculation and to lessen the price of land. Every tax upon ground 
 rents tends to lessen the price of land ; the increment tax is further 
 beneficial in its effect on the ways of buying and selling land. Ac- 
 cording as the earlier or later stages of ownership are more heavily 
 affected ' this tax ma y serve to stimulate or to deaden the market 
 heavy and pro- for land * Mr ' Brunnuber states: "I believe that the tax should 
 gressive land begin with 10 per cent, should rise rapidly to 35 per cent (say 
 increment tax. for an increase of value of 50 per cent), while a tax of 50 per cent 
 
 48 
 
is entirely reasonable where the increase in value is 100 per cent 
 or more." 
 
 Mr. A. C. Pleydell comments on a land increment tax : 
 
 "I was rather surprised to hear the advocates of single tax speak Mr. Pleydell 
 in the same breath of taxing the unearned increment by taxing a cer- shows the 
 tain amount out of the value of land at the time of sale. All attempts difficulty of 
 to deal with the selling values of land in this way are dealing with estimating real 
 what in one sense is legal fiction. The only reason land has value at land increment 
 all is that you can get a certain rental out of it. If you keep people if i an d values 
 from collecting rents you destroy values. Now, how are you going to are heavily 
 tax the unearned increment which disappears wherever you increase a taxed. 
 tax on the rental value, is a problem I have not yet been able to under- 
 stand. It is interesting to see how that would work out. A man pays 
 a certain amount of money for his land based upon the estimated net 
 return, but if he is deprived of a certain amount of his net return by 
 an increase in the annual tax, the land will have its selling value 
 reduced. The intricacies would amuse one. And if you add a 50 per 
 cent tax on the unearned increment to the total tax upon the annual 
 value of the land, based on the selling value of the land in a lump sum, 
 it certainly would be a grinding between millstones." 
 
CHAPTER V. 
 
 Economic Reasons for Taxing Land Values 
 
 Heavily 
 
 The brief survey of some results of the present system of taxing 
 buildings at the same rate as land has shown the complexity. The 
 bill introduced in the New York legislature providing for making 
 the rate of taxation on all buildings one-half the rate of taxation 
 on all land was endorsed by many prominent business men, bankers, 
 manufacturers and professional men. In a statement supporting 
 this bill, entitled "To Free Industry and Encourage Enterprise and 
 Effort," they assign the following reasons for the enactment of 
 the bill : 
 
 "The proposition to make the tax-rate on all buildings half the tax- Business Men's 
 rate on all land in New York City offers an important measure of free- statement of 
 dom and incentive to the business men, manufacturers and constructors economic 
 of buildings in the city. They have long felt and expressed the desire advantages of 
 for relief from the growing burdens of taxes on business premises, halving the 
 factories and tenements for the heavy taxes on tenements reflects itself tax-rate on 
 in the necessity for higher wages. Such stimulation of business enter- buildings. 
 prises will be immediate and vital as soon as the proposed adjustment 
 of taxation is in force. To secure the total levy upon ordinary real 
 estate in 1910, in New York by taxing land double the rate on improve- 
 ments, including buildings of all sorts, the rate on land would have been 
 $2.193 per $100 of assessed value; on buildings, $1.096 per $100 of 
 assessed values. 
 
 "In addition to the saving in taxes amounting on different classes 
 of buildings to from one-sixth to one-quarter of the usual taxes, the 
 proposed halving of the tax-rate on buildings will have three distinct 
 beneficial effects on business and manufacturing. 
 
 "ist. It will bring more and cheaper land into the market for 
 business purposes. 
 
 "2nd. It will make the landowner improve his land with buildings 
 and cause competition for tenants, thereby decreasing rents. 
 
 "3rd. It will make the landowner and not the lessee pay the taxes, 
 because the tax on land can't be shifted to the tenant, and the tax on 
 buildings usually can. 
 
 "We therefore recommend to business men this halving of the tax 
 on buildings in the hope that they will consider it in relation to their 
 business interests, and support the demand that energy and business be 
 encouraged by the proposal to reduce by half the tax burden on all 
 improvements." 
 
 SI 
 
Why business 
 shouldn't be 
 taxed at the 
 same rate as 
 land values. 
 
 A tax on indus- 
 try is always 
 shifted. 
 
 Industry 
 doesn't yet 
 bear its 
 own 
 burdens. 
 
 Industry must 
 pay the cost 
 of its 
 accidents. 
 
 Industry must 
 pay fair 
 wages. 
 
 Industry 
 taxed will be 
 industry 
 gone. 
 
 Industry must 
 
 provide 
 
 safer working 
 
 conditions. 
 
 It will of course, be asked, "Why should industry not be made 
 to bear its fair share of the cost of municipal government by being 
 taxed at the same rate as land ?" 
 
 The reasons are: 
 
 1st. A tax on industry is shifted to the consumer or laborer 
 whenever possible. It is impossible to determine exactly who pays 
 a tax upon business but the tendency is inevitable to turn it over 
 on to whomever it can most readily be shifted, and this is frequently, 
 if not usually, those least able to bear it. 
 
 2nd. Industry has not yet begun to bear its own burdens. 
 
 There is a country-wide determination that business shall bear 
 its proper burden of the cost of industrial accidents and industrial 
 diseases. 
 
 While temporary setbacks to this popular mandate have occurred 
 in a few states through crude, or worse, court decisions, neverthe- 
 less it is the settled determination of the people to exempt the work- 
 ers of the country from hardships and suffering in their employ- 
 ment due to conditions over which they have no control. 
 
 Industry, too, has not paid fair wages to its workers. Labor 
 has been the last fixed charge on production, while an enlightened 
 public opinion is now demanding that it shall be, if not the first 
 fixed charge on industry, at least equal in its claim to that of the 
 capital invested. To pay a living wage under present conditions, 
 industry must increase its payment to laborers in this country by 
 hundreds of millions, and so long as the landowner, as well as the 
 government, is permitted to tax the manufacturer, this will con- 
 tinue and this tax will be shifted in large measure to the consumer. 
 
 3rd. Industry taxed will remove from the jurisdiction of the 
 taxing power, because industry takes risks and landowning does 
 not in the same sense or to a similar extent. 
 
 To secure factories is the highest ambition of most growing 
 cities, evidenced by the attractions offered new factories to locate, 
 such as exemption from taxes, reduced taxes, free sites, free water, 
 water power, etc. 
 
 4th. Industry must provide safer conditions for workers than it 
 has hitherto. Brutal and unhealthy overcrowding and dangerous 
 fire-hazards exist in most large manufacturing cities of the country, 
 the remedying of which will involve large expenditures by manu- 
 facturers. With a uniform rate of taxation on land and buildings 
 this will put a heavy and unjust burden upon industry which can 
 be prevented only by a lower tax-rate on buildings. In most states 
 250 cubic feet of air space only is required for every employee 
 
in a factory during the day, but there is practically no means of en- 
 forcing this law and often workers are so crowded that only 150 
 to 200 cubic feet of air space is afforded. In point of fact as much 
 air space should be required for factories as for tenements, and the 
 requirement for tenements in this country varies from 400 to 700 
 cubic feet per occupant. On a conservative estimate many manu- 
 facturers in large cities should be compelled to provide at least Taxing 
 double the amount of cubic air space now provided as well as to ^ 1 ^ 9S f' 
 furnish fire towers connecting or party walls and adequate exits, construct { on 
 while many buildings now used for manufacturing purposes cannot O f such safe 
 by any structural changes, be made safe, but should be demolished, factories 
 
 5th. Government already exercises through State Departments an( * **** 
 of Labor, the Interstate Commerce Commission, Public Utilities r 
 Commissions, etc. much closer supervision and control even now Comparative 
 
 over the business interests of the country than over the landed su P er<in si on 
 
 of State 
 
 Crests. Departments 
 
 Inadequate as is admittedly in many states the work of the De- O f Labor, 
 
 partment or Bureau of Labor, nevertheless their functions are con- the Interstate 
 
 stantly enlarging as the citizens of the state appreciate the need Commerce 
 
 for standardizing conditions of working and this appreciation ex- Commission 
 
 *. ir i 1^-1 1 t. -k J-.L- an & Public 
 
 presses itself in laws regulating hours of labor, sanitary conditions u t m t i es 
 of factories and providing for arbitration or mediation of indus- Commissions. 
 trial differences or disputes. Thirty-four states and the Philippine 
 Islands now have such a bureau. 
 
 The Interstate Commerce Commission has unique jurisdiction 
 based upon the police rights of government to regulate those rela- 
 tions which cannot be determined by private control and agreement 
 any more satisfactorily or equitably than can a single worker in the 
 higgling of the labor market ensure for himself a living wage. The 
 right of this Commission to review rates and adjudicate them, 
 however unfortunate some of the decisions may have been, is never- 
 theless the revival of the principle accepted by the fathers of the 
 country of the right of collective supremacy over individual caprice. 
 The exercise of that right was in abeyance for many years during 
 which the motto of the country was, as Mr. Herbert Croly states, 
 "individual aggrandisement and collective irresponsibility," but the 
 national disgust and apprehension of action in accord with that 
 motto is complete as the social results of such action have become 
 apparent. 
 
 The creation during the past few years of public utilities or serv- 
 ice commissions in seven states of the Union, and the partial 
 control of public utilities exercised in fifteen other states, as well 
 
 53 
 
Landowners 
 are practically 
 unregulated 
 and allowed 
 to prey on 
 business 
 interests. 
 
 High taxation 
 of land values 
 will release 
 money and 
 reduce interest 
 charges. 
 
 Money invested 
 in municipal 
 bonds to be 
 released by 
 taxing land 
 values. 
 
 Socialistic 
 alternatives 
 suggested as 
 substitute for 
 taxation of 
 land values. 
 
 as the fact that progressive cities such as Los Angeles, Kansas 
 City and St. Louis have created similar municipal utilities commis- 
 sions, emphasize the fact that the regulation of public services and 
 utilities by competition is no longer sufficient and that collective 
 control is essential. 
 
 In many respects private land ownership unregulated is more 
 dangerous than public utilities companies unregulated since the 
 threat of competition cannot be used to club land into public serv- 
 ice instead of extortion from the public. Land ownership is, however 
 comparativley unregulated; the chief exceptions being build- 
 ing regulations, and prohibition of the use of land for public nui- 
 sances. Landowners alone have the right to "tax what the traffic 
 will bear," even the injustice of our tariff being mollified by giving 
 manufacturers the right to levy only a specific or ad valorem tax 
 upon the public consuming their products. Heavy taxation of land 
 values is the most direct, cheapest and effective method of regulat- 
 ing the use of land, comparable to the regulative control exercised 
 in other fields by the governmental agencies enumerated. 
 
 6th. Adequate taxation of land values as will be shown later 
 in discussing the fiscal advantages of taxing land values will re- 
 lease large sums of money for other purposes and tend to reduce 
 interest rates. Prof. E. R. A. Seligman in his "Principles of Taxa- 
 tion" states with reference to the claim of single taxers that more 
 buildings would be constructed if land values were heavily taxed 
 or taxes on buildings abolished, that there is not any general fund 
 lying around loose seeking investment in buildings, and that no 
 such fund can be conjured up. If, however, New York City should 
 pay its debts as it goes along or even a large share of them, and 
 should issue only $31,000,000 of corporate stock a year instead of 
 $71,000,000, meeting the $40,000,000 additional annual expenditures 
 by taxing land values, it is apparent that $40,000,000 would be seek- 
 ing investment. 
 
 The $2,000,000,000 of municipal debt of the one hundred and 
 fifty-eight cities having in 1908 a population of 30,000 or over as 
 gradually paid off would naturally be seeking other fields of invest- 
 ment, and very few of these cities pay over 4 l / 2 per cent interest, 
 while many issues of corporate stock net only 3^ to 4 per 
 cent. A curious illustration of the alternatives which will be sug- 
 gested to prevent taxation of land values is found in the coincidence 
 that while preparing this book the writer received a letter from a 
 prominent real estate operator in Brooklyn deploring the high rate 
 of interest charged builders, especially in Brooklyn, and suggesting 
 
 54 
 
that the state or county should borrow money at 4 per cent and 
 loan it to builders at 4^ per cent (charging J^ per cent for the 
 risk and expenses) in the hope that the competition of lower rates 
 of interest would reduce the present interest and commission charges 
 to builders, amounting to 7 per cent to 8 per cent. This is a novel 
 suggestion of adding to the heavy burdens upon the poor, of the 
 state and county expenses involved in the present systems of taxa- 
 tion for state and county purposes, so as to encourage land specula- 
 tion, instead of taxing land values sufficiently so as to release mil- 
 lions of capital now loaned to the city which would reduce rates by 
 natural economic laws of supply and demand. 
 
 The suggestion amply demonstrates, however, that economic Economic 
 laws when their working is not hampered by economic injustice forces will be 
 are a sufficient corrective of many social evils. It is, of course, much released f r 
 easier and more profitable to loan large sums to the city secured *J^ 
 by the city's credit which in turn is based upon the industry of the taxation of 
 entire population, than to loan money in sums of $1,000.00 to $10,- land values. 
 ooo.oo, but when cities stop borrowing money so prodigally the nat- 
 ural result will be a lower rate of interest both to cities and to other 
 borrowers. It may be noted in passing that European and British 
 municipalities borrow money at 3^ and even 3 per cent. 
 
 55 
 
CHAPTER VI. 
 
 Some Fiscal Reasons for Taxing Land Values 
 
 Heavily 
 
 Adam Smith enumerated canons of taxation which have stood 
 the test of many years. Among the most important of his canons 
 is the first fiscal reason for taxing land values heavily. Heavy taxa- 
 
 "The patrimony of the state must not be impaired," while, too, tion f land 
 
 . i i values does not 
 
 "taxation must be equal. 
 
 This is more generally phrased to-day, "Don t tax anything that patrimony of 
 you want to keep or anything that can run away." Admittedly land the state and is 
 can't run away, nor can its amount or usefulness be lessened by a equal tax. 
 taxation, nor its uses. 
 
 Revenue from present sources in cities in this country and 
 abroad, as well as from many suggested sources, tends to drive in- 
 dustry out of a city and state and to reduce the taxable base, or 
 to involve a larger expenditure by the municipality. 
 
 Since the largest and most important levy in most American 
 cities is upon general property a consideration of the fiscal effects 
 of taxing buildings at the same rate as land must be considered. 
 The right of dependent citizens to support by the municipalities in 
 which they have a legal settlement is generally recognized. It is 
 equally generally recognized that it is more expensive to care for 
 a patient in a hospital than in a home, to try to patch up a broken- 
 down constitution than to keep the individual in good health. Rev- Revenue from 
 
 enue therefore, from taxes upon buildings which as has been shown taxes on bmld ~ 
 ..,.,. . ...... r M twas involves 
 
 are shifted upon the tenant even if he is trying to support a family i ncommensu , 
 
 upon a deficit, and from taxes which require him to pay more rent rate dty 
 
 thereby reducing his vitality through deprivation, and hence his expenditures 
 
 earning capacity, is a very expensive revenue because it compels 
 
 an expenditure by the city of many fold the total receipts from such 
 
 taxes to remedy the suffering and injury caused thereby. The se- 
 
 curing of revenue from such taxes on buildings which lessens the 
 
 supply and increases the cost of good ones while increasing the 
 
 profits from old ones is manifestly short-sighted. Waiving all con- 
 
 siderations of humanity and economy to be effected in industry, 
 
 from a purely fiscal point of view the city can't afford such extrava- 
 
 gance as paying $5.00 for hospitals and care of the poor to collect p ro p er t y i s 
 
 $1.00 from taxing houses. expensive. 
 
 57 
 
Former Commissioner of Public Charities in New York, Hon. 
 Robert W. Hebberd states the case not only for New York, but in 
 principle for every American city when he said: 
 
 "Congestion of population is contributing very largely to the 
 $10,000,000 a year which New York spends on her departments for the 
 prevention and the cure of disease." 
 
 High rents are a most fundamental cause of congestion of popu- 
 lation and room overcrowding. The same bad fiscal effect follows 
 the taxing of buildings used for commercial and manufacturing 
 purposes. 
 
 The total receipts of the one hundred and fifty-eight cities of the 
 United States which in 1908 had a population of 30,000 or over, 
 from special property and business taxes, business licenses (ex- 
 clusive of liquor licenses) and permits amounted to $20,764,643, or 
 about one-twenty-third of the total revenues of such cities in that 
 year. Such taxes militate against business and at the same time 
 against the city's best fiscal interests. 
 
 The proposal to tax foreign business corporations or individuals 
 doing business in a city, but living in an adjoining state is a slightly 
 different proposition, but nevertheless tends to discourage business in 
 the city levying such a tax. 
 
 Taxing per- New York City's system of taxing personal property and build- 
 
 sonalty and ^ Driven p rac ti c ally every large factory making heavy goods 
 buildings drives . . * , 1 vr T on.- 
 
 out factories suc " as macnmer y out of the city and over to New jersey. This 
 
 and reduces is fiscal suicide. 
 
 the city's tax- Heavy taxation of franchises is suggested, but in so far as cor- 
 able base. porations holding municipal franchises are limited to a certain net 
 Taxing fran- return any tax on such franchises merely tends to increase rates and 
 chises of reduce the grade of service, while cheap rates and rapid service are 
 companies both essential in American cities pending the distribution of fac- 
 ie; ose profits t or j es to improving the living conditions of workers therein, 
 and charges 
 
 are regulated ^ tax u P on automobiles for instance to take an illustration of 
 
 hits poor manifestations of "conspicuous consumption" cannot be shifted, but 
 
 people. if heavy would doubtless reduce the number of persons using auto- 
 mobiles and hence the demand for cars, chauffeurs, oil, garages, 
 etc., with all the labor employed in these lines of production, while 
 
 A graduated being a heavy tax upon industry in which they are extensively used 
 
 habitation tax and hence tending to drive factories out of the city levying such 
 
 will require taxes 
 
 mor I oithT ^ e ^ ew York Special Tax Commission which reported to the 
 
 C03t O f Legislature in 1907 recommended a graduated habitation or occu- 
 
 government. pancy tax, as a substitute for the personal property tax, to be levied 
 
 58 
 
upon homes or mansions based upon the assessed valuation of land 
 and buildings, but with a sufficiently high exemption so as not to 
 affect those who have only a moderate income. 
 
 Similarly a progressive tax upon skyscrapers or buildings which ^ progressive 
 exceed a certain cubage or volume is entirely feasible and not incon- tax on *" 
 sistent with the taxation of land values since a skyscraper is in the ^stfad as a 
 nature of a special privilege absorbing much of the capacity of both franchise lax. 
 streets and other means of transit which are both supplied at public 
 expense. A tax upon excess volume of buildings is therefore only a 
 species of franchise tax for a special privilege over the charges for 
 which neither city, state nor federal government exercises any 
 supervision or control. 
 
 Taxes on dogs, carriages, etc., are valuable as a means of driving 
 them out. 
 
 A too heavy inheritance tax, as the experience of New York 
 State during the past year has plainly demonstrated, drives capital 
 out of a state, and while from a moral point of view this should not 
 deter a state from imposing a right tax it is a fiscal mistake. 
 
 A progressive income tax for municipal purposes would also tend 
 to drive wealth out of a city, while an income tax is manifestly unjust 
 and an inheritance tax only slightly less so which fails to distinguish 
 between a lazy and an earned income. 
 
 On the other hand the heavy taxation of land values is a stimu- 
 lus to the improvement of land, thereby increasing its utilization and 
 the taxable base of the city. A heavy tax on land values increases 
 the patrimony of the state and is equal. 
 
 2. The tax upon land cannot ordinarily be shifted, and a tax ^ tax on 
 which can be shifted, and is hence uncertain, is always bad from a land can>t * be 
 fiscal point of view. 
 
 Starting with Adam Smith nearly all economists are agreed that 
 a tax on land cannot be shifted as the following quotations show : 
 
 "Though the landlord is in all cases the real contributor, the tax Adam Smith. 
 is commonly advanced by the tenant, to whom the landlord is obliged 
 to allow it in payment of the rent." Adam Smith, "Wealth of Nations," 
 Book V., Chapter II., Part 2, Art. I. 
 
 "A tax on rent would affect rent only; as it would fall wholly on Ricardo. 
 landlords, and could not be shifted. The landlord could not raise his 
 rent, because he would have unaltered the difference between the 
 produce obtained from the least productive land in cultivation, and that 
 obtained from land of every other quality." Ricardo, "Principles of 
 Political Economy and Taxation," Chapter X., Section 62. 
 
 "A tax on rents falls wholly on the landlord. There are no means 
 by which he can shift the burden upon any one else. ... A tax on 
 
 59 
 
Mill. 
 
 Thorold 
 Rogers. 
 
 Seligman. 
 
 Fillebrown. 
 
 Wall Street 
 fears the taxa- 
 tion of land 
 values. 
 
 Land can't be 
 hidden. 
 
 A land tax 
 is cheaply 
 collected. 
 
 rent, therefore, has no effect other than its obvious one. It merely 
 takes so much from the landlord and transfers it to the State." John 
 Stuart Mill, "Principles of Political Economy," Book V., Chapter III., 
 Section 2. 
 
 "The power of transferring a tax from the person who actually 
 pays it to some other person varies with the object taxed. A tax on 
 rents cannot be transferred. A tax on commodities is always trans- 
 ferred to the consumer." Thorold Rogers, "Political Economy, 2nd 
 edition, Chapter XXL, p. 285. 
 
 "The incidence of the ground tax, in other words, is on the land- 
 lord. He has no means of shifting it; for, if the tax were to be sud- 
 denly abolished, he would nevertheless be able to extort the same rent, 
 since the ground rent is fixed solely by the demand of the occupiers. 
 The tax simply diminishes his profits." E. R. A. Seligman, "Incidence 
 of Taxation," pp. 244, 245. 
 
 As Mr. C. B. Fillebrown states, "Ground rent is as a rule, 'all the 
 traffic will bear/ that is, the owner gets all he can for the use of his 
 land, whether the tax be light or heavy. Putting more tax upon land 
 will not make it worth any more for use, will not increase the desire 
 for it by competitors for its tenancy, will not increase its market 
 value." 
 
 Wall Street voices its realization of this fact and of the basis 
 of large fortunes in land values in the following statement in "Mar- 
 ket Letter" issued, August 2ist, 1911, by Mr. Byron W. Holt: 
 
 "While the land-tax value may be an excellent device for raising 
 city revenue, it will, if carried far enough, work havoc not only with 
 investors in real estate mortgages, but with investors in many railroad 
 and industrial stocks, the value of which comes largely from real 
 estate." 
 
 3. Land cannot be hidden as can other sources of revenue, and as 
 its value is always increasing automatically, it is a certain and definite 
 source of income which can be most readily and cheaply collected. 
 
 The assessed value of land in a city can be more definitely ascer- 
 tained than can any other conceivable form of city revenue. 
 
 Even making allowance in valuing buildings for age and de- 
 preciation, it is difficult to arrive at their fair valuation. Attempts 
 to assess personal property result in raising a race of liars instead 
 of raising revenue. 
 
 The sum that will be yielded from licenses for business, trad- 
 ing, bootblack stands, lodging houses, etc., is always an estimate. 
 Most cities in the United States recognize this fact and estimate 
 the amount to be raised from all other sources except the tax on 
 real estate and personalty and then upon the ascertained assessed 
 
 60 
 
value thereof determine the tax-rate to raise the revenue needed 
 to meet the city's expenditures. 
 
 The cost of collecting any other tax than the tax on land is 
 very much more expensive, since it involves not only a large 
 amount of bookkeeping but as well detective work in ascertaining 
 or guessing at wealth. 
 
 4. Taxation of land values is an adequate source of revenue 
 for every city in America. 
 
 If a fair rate of taxation on land were not sufficient to meet 
 all legitimate municipal expenditures there would be less point in 
 arguing for the adequate taxation of land values. 
 
 As has been stated earlier relatively few cities separate land 
 and improvement values, but the conditions in those which do 
 sufficiently prove the potentiality of this source of municipal rev- 
 enue. 
 
 NEW YORK CITY. 
 
 The total assessed value of land in New York City in 1910, 
 exclusive of "Real Estate of Corporations" and "Special Fran- 
 chises" was $4,001,129,651 while the total levy upon land and 
 buildings for all municipal and county purposes was $115,080,- 
 377-79- 
 
 The total ordinary budget of the city, that is the sum 
 
 appropriated by the city for current expenses, was $157,773,145-53 
 
 The "Corporate Stock" warrants paid amounted to 71,747,316.46 
 
 The Special Revenue Bond warrants amounted to 7,396,455-75 
 
 That is, these total municipal expenditures were $236,916,917.74 
 
 Other levies were, however, 
 On Special Franchises and Real Estate of 
 
 Corporations $9,804,795.50 
 
 On Personal Property 6,589,809.77 
 
 All other sources (estimated), including 
 
 revenues of Bank Tax, Mortgage Tax, 
 
 Excess of Excise Tax, State School Fund 
 
 and Previous Appropriations 32,030,989.45 
 
 _ , The rate to 
 
 Total 48,425,594.72 meetallo f 
 
 Amount to be raised by taxation on land alone $188,491,323.02 d't r 
 
 It will thus be seen that to raise the total expenditures of the f pl ould 
 
 . . , have been $5.90 
 
 city m 1910, including corporate stock and special revenue bond p er $ IOQ O j 
 
 warrants paid, by taxing land values alone the rate would have assessed land 
 
 been only $5.90 per $100.00 of assessed value which would not be values. 
 
 61 
 
entire confiscation of ground rent since i per cent to 2 per cent 
 would still probably have been made by the owners of the ground 
 rent, the landowners. This is "single tax" and paying all the city's 
 expenses by a tax upon land values alone. 
 
 It -should be noted, however, that land in New York was not 
 assessed at selling price in 1910 and its assessed valuation in 1911 
 was nearly $555,000,000 greater, so the tax-rate on full value 
 would have been much less. "Real Estate of Corporations" and 
 "Special Franchises" also are excluded from heavier taxation since 
 reduction in charges to the consumer by any corporation whose 
 charges and profits are determined and limited by a Public Serv- 
 ice Commission is more important than securing taxes to be shifted 
 to the ultimate consumer. Robbing Peter to pay Paul is an out- 
 grown game when governmental control and regulation is estab- 
 lished. 
 
 To raise the total expenditures in 1910 of New York City, 
 exclusive of the revenue from personal property and taxes on 
 "Real Estate of Corporations" and "Special Franchises" by tax- 
 ing land values, would have required a tax-rate of only $4.78 per 
 $100.00 of assessed value, while to have raised the so-called "bud- 
 get" exclusive of the Corporate Stock budget and the issues of 
 special revenue bonds, by a tax on land without taxing buildings 
 but taxing personal property, banks, mortgages, etc., as was done 
 would have required a tax-rate of only $2.87 per $100.00 of as- 
 sessed value. The important point which has been fully established 
 is that a much higher tax-rate can be safely imposed on land than 
 at present and all taxes on buildings can be abolished without 
 in any way "confiscating" ground rents, and it should be noted 
 that this is not the "single tax." 
 
 BOSTON. 
 
 The figures prepared by Mr. C. B. Fillebrown for Boston in 
 1907 are so graphic and convincing that we reproduce them. He 
 found that 125 pieces of real estate in various sections of the city 
 were sold at prices averaging one-fifth higher than their assessed 
 valuation, indicating that they were assessed at five-sixths of their 
 true value, and concludes. 
 
 "Based upon the foregoing ratio, the following conservative estimate of 
 the gross land value of Boston is submitted for scrutiny and criticism : 
 
 62 
 
A CONSERVATIVE CALCULATION OF BOSTON'S 
 GROUND RENT. 
 
 If the assessed valuation* of Boston's land for 1907, which 
 is in round numbers $653,000,000 
 
 Is five-sixths of its selling value, then the addition of 
 one-fifth 130,600,000 
 
 Would give us as the net selling value $783,600,000 
 
 Adding to this the capitalized value of the amount of tax 
 now on the land, $15.90 per thousand on $653,000,000, 
 or $10,382,000 at twenty years' purchase 207,600,000 
 
 Would give as the true capitalized ground-rental value $991,200,000 
 
 Add moderate estimate for franchises, say 108,800,000 
 
 And we should have as a basis of assessment under the 
 single tax a total capitalized ground-rental value of at 
 least $1,100,000,000 
 
 At 5 per cent this would indicate for Boston a ground 
 rent of 55,000,000 
 
 Or considerably more than double the total taxes of Boston.t" 
 
 Putting this in another way: To secure the total levy of $20,- Boston's city 
 886,335 on lan d, buildings and personalty by taxing land values on and state iax in 
 the basis of the assessment at five-sixths of the actual value, would ^^ ^"uired 
 have required a tax-rate on land of $3.19 per $100.00 of assessed a tax-rate on 
 values, while on the real value of land, the tax-rate would have full land values 
 been $2.66. of only $2.66 
 
 per $100. 
 
 * The official figures are : 
 
 Valuation. Rate. Tax. 
 
 Land $652,995,300 $15.90 $10,382,700 
 
 Buildings 417,869,400 15.90 6,646,200 
 
 Personalty 242,606,857 15.90 3,857,435 
 
 $1,313,471,557 $20,886,335 
 
 t Boston's income from taxation in 1907 was : 
 
 Land values $10,382,628 
 
 Buildings and other improvements 6,644,212 
 
 Personal estate 3,857,449 
 
 Polls 369,066 
 
 Corporation taxes 1,087,793 
 
 Liquor licenses 1,079,585 
 
 Boston's total city tax (including state tax) $23,421,542 
 
 63 
 
Chicago could 
 in 1911 have 
 raised its 
 budget by a 
 $4.88 tax-rate 
 on full land 
 values. 
 
 CHICAGO. 
 
 The assessed land value of Chicago in 1911 is $395,911,111, 
 but Assessments are only about one-third of true value, so that the 
 full value is $1,187,733,334. 
 
 The total municipal budget in Chicago in 1911 is $58,054,000, 
 To have raised this total budget by a tax on land alone would 
 have required a rate of only $4.88 per $100.00 of full assessed 
 value, though the rate on the valuation used would have been 
 $14.66. Chicago's net bonded indebtedness in 1910 was $30,897,000. 
 Naturally the " full value " of land is a relative matter, depending 
 upon many factors, and the estimate that the full land values of 
 Chicago were three times the assessed valuation may be a little 
 high; but the important point is that even on the basis of the 
 assessed value of $395,911,111, the total tax-rate to raise Chicago's 
 budget for 1911 by taxing land alone would have been $14.66. 
 
 BUFFALO. 
 
 The assessed value (full) of land in 1910 was $169,340,615 
 
 The assessed value (full) of improvements in 1910 was 165,462,150 
 
 Total $334,802,765 
 
 The city budget in 1910 was $7,704,137.03. 
 
 To have raised the total municipal budget by a tax upon land 
 values alone would have required a tax-rate of only $4.55 per 
 $100.00 of full assessed value, while to raise the actual levy upon 
 land and buildings for all purposes, amounting to $7,332,180.55, 
 would have required a tax-rate of $4.33 upon land. 
 
 The net bonded debt of Buffalo in 1910 was $22,168,128.58, 
 while the total principal received from sale of bonds during the 
 year amounted to $3,635,241.89. 
 
 OMAHA, NEBRASKA. 
 
 The assessed value of land in Omaha in 1910 was $12,218,095 
 
 The assessed value of buildings 12,723,471 
 
 Total $24,941,566 
 
 Both land and buildings are assessed, however, at anly one- 
 fifth of their full value, and the tax-rate on both for city pur- 
 poses in 1910 was $6.29 per $100.00 of assessed value, the tax yield 
 
 64 
 
being $1,568,824.50. To raise the levy by taxing land only the 
 rate would have been per $100.00 of full assessed value only $2.57. 
 
 WORCESTER, MASSACHUSETTS. 
 
 The full fair value of land in Worcester in 1910 was $47,032,750 
 
 The full fair value of buildings 63,414,450 
 
 Total '. $i 10,447,200 
 
 The levy on land and personalty was $1,971,838.06, and to 
 raise this by taxing land values alone, the tax-rate would have 
 been $4.19. 
 
 WASHINGTON, D. C, (City and County.) 
 
 The assessed value of land in 
 1910 was $151,711,966 ; real value, $227,567,949 
 
 The assessed value of improve- 
 ments was 133,441,805 ; real value, 200,162,707 
 
 Total assessed value in 1910 was... $282,153,771; real value, $427,730,656 Washington 
 
 The total real estate tax for the fiscal year ending June 3Oth, could have 
 
 1910, was $4,277,306.57 and the personal tax, $1,007,022.41 ; total raised m I9I 
 
 $5,284,328.98. To have raised this sum the tax-rate upon the full ^ndbttildings 
 
 value of land would have been $2.33 per $100.00 of full assessed and' personalty 
 
 land value, while the actual tax-rate upon land, buildings and by a $2.33 tax- 
 
 personalty was only $1.50 upon a two-thirds valuation: rate on full 
 
 land values. 
 
 SPRINGFIELD, MASSACHUSETTS. 
 
 The assessed full value of land in 1910 was $48,704,680 
 
 The assessed full value of improvements in 1910 was 46,279,080 
 
 Total $94,984,660 
 
 The municipal budget in 1910 was $1,830,420. 
 
 To raise this budget by taxing land alone would have required 
 a tax-rate of only $3.76 per $100.00 of assessed value, instead of 
 the actual tax-rate of $1.58. 
 
 The assessed value of land increased from 1910 to 1911 by 
 $3,407,080 or almost exactly 7 per cent. 
 
 KANSAS CITY, MISSOURI. 
 
 In 1910 the assessed land value was $60.355.420 
 
 The assessed value of buildings was 49,614,480 
 
 The total net municipal expenditures were only $3,091,901.11, 
 and to raise this sum the tax-rate on assessed land values alone 
 would have been $5.12 per $100.00. Land in Kansas City is, how- 
 
 65 
 
ever, assessed for only 15% to 40% of its real value, and taking 
 even the conservative figure of 50%, the tax-rate on full land values 
 to meet the city's budget would have been only $2.56. The actual 
 tax-rate on all property in the city is $1.25 per $100.00 of assessed 
 value, while a 25c tax-rate is levied on land values alone for park 
 maintenance. 
 
 Land values While data is given for only a few cities, it is evident that 
 
 are an adequate a jj ^e revenue now raised by taxing land, buildings and personal 
 source of muni- . . . _* * -111 1 --i 
 
 .. , property could be raised by taxing land values alone without ap- 
 
 cipal revenue r r j j r 
 
 in American proximating confiscation. It is equally patent that in most cities 
 
 cities. merely to make the rate of taxation on buildings and personal 
 
 Cities should P ro P ertv one-half the rate of taxation on land without increasing 
 
 include many municipal expenditures to meet the city's full social obligations, 
 
 deferred and without paying by current taxation for many public improve- 
 
 payments in ments now paid for by long term bonds, will not enable the city 
 
 annual budgets. to secure anv material proportion of the ground rent now taken 
 
 by the landowners. That this must be taken gradually is no more 
 
 apparent than that the alternative to such adequate taxation of 
 
 land values in order to enable the city to secure these ground 
 
 rents, is municipalization of land. 
 
 If 6 per cent net is now considered a fair return upon land 
 values, a tax-rate of 2 per cent while the property yields 8 per 
 centy or should yield 8 per cent, to be divided between the city 
 and the landowner, is too low a tax-rate. There is a grim but 
 dire irony in the fact that the constitution of New York state lim- 
 its the tax-rate for municipal purposes to $2 on every $100.00 of 
 Six per cent assessed value exclusive of expenditures for debt service. Even 
 net profit on under such a provision, however, the tax-rate on land values in 
 assessed land 1910 could have been $4.51, which would have yielded the con- 
 values would s iderable sum of $180,488,541.97, instead of the actual levy of 
 New York $7>753> 2 3 I - 2 4- Six per cent net profit on the assessed land value 
 landowners ^ New York in 1910 (a low assessment) would have yielded to 
 An 1910 the owners $240,067,689.06. There are probably very few who 
 
 $240,067,000,00. would claim that the rights of the nearly 5,000,000 people who 
 contribute to the land values of the city are to the rights of the 
 York City owne rs of ground rents only, as $70,753,231.34 are to $240,067,- 
 
 689.06, the potential value'to the ground rent owners. They agree 
 more than one- 1- 
 
 fourth of the tnat a different division of the profits of land values is in order. 
 
 potential rev- While in few other cities is the contrast so striking, the principle 
 enue from land holds in all of them. 
 
 5. Heavy taxation of land values would reduce the annual muni- 
 cipal expenditures for the acquisition of land for municipal pur- 
 
 66 
 
poses. There is not an American city which to-day owns enough Heavy taxa- 
 
 land for municipal purposes, but every progressive city is con- hon f land 
 
 stantly acquiring land for dock and harbor improvements, parks Deduce ost of 
 
 and playgrounds, sites for schools and other municipal buildings \ an ^ f or p u bn c 
 
 and other public purposes. Such expenditures frequently total purposes. 
 one-tenth to one-fifth of the aggregate corporate stock budgets of 
 most American cities, that is sums of $1,000,000 to $8,000,000. 
 
 "Excess condemnation" has been suggested as a method of "Excess con- 
 enabling the city to secure land without any cost, that is the con- demnation" of 
 
 demnation by the city of more' land than is needed for the specific an ls on y a 
 ... " . * partial method 
 
 purpose for which it is acquired, and the resale or leasing of at ^ est O j 
 
 such surplus land as a means of recouping the city for its outlay, taxing land 
 Under certain conditions, excess condemnation may be feasible, values. 
 but it is inadequate as a means of securing sufficient land for 
 the city in several respects. Excess condemnation does not reduce 
 but rather increases the price of land since the courts which 
 determine the price to be paid always favor the individual owner 
 of property rather than the city, while the city has to pay also 
 for the land to be resold a price considerably higher than a private 
 owner would. This means that the city would have to resell 
 its property for which it already has paid a super price, so to 
 speak at a heavy advance in order to repay the cost of the same 
 super price which it has paid for the property it reserves for its 
 own use. In developed sections of the city land is already very 
 expensive and even the slight increase in value is unwise since Some limita- 
 as has been pointed out healthy conditions of living and working tions of 
 are as essential as revenues from land. Excess condemnation " Excess 
 in such sections of a city would naturally be used chiefly for c 
 street widening, transit purposes, and a few public buildings. It 
 is equally important that land in outlying residence sections of 
 a city where the city would acquire holdings for schools, public 
 buildings, parks, etc., should be kept cheap. More expensive land 
 means higher rents under the present system of taxing land and 
 buildings at the same rate. In any part of the city therefore the 
 landowner would gain materially under a system of excess con- 
 demnation, while the ultimate user of the excess land purchased 
 would have to pay higher rents. All the city attempts to do by 
 excess condemnation is to prevent the owners of a small amount 
 of land from making as much profit on the land as they would 
 otherwise do, and the city does it in a very costly way. 
 
 By taxing land values, however, so heavily as to retain most 
 of the economic rent, land will be much cheaper, and the owner 
 
 67 
 
Cities run into 
 debt because 
 they don't tax 
 land values. 
 
 The change 
 from incurring 
 debt to taxing 
 land values 
 should be 
 gradual. 
 
 of land will have an economic motive to sell it to the city for a 
 very low price, just exactly as he will have a motive to use his 
 land for some productive purpose so as to secure a revenue there- 
 from. With the present system, moreover, of paying for so-called 
 improvements by corporate stock issues to run usually forty to 
 fifty years, and bearing 3^ per cent to 4j^ per cent interest every 
 acquisition of this nature puts a load of unnecessary debt upon fu- 
 ture generations and excess condemnation would tend to increase 
 this debt, the only alternative being that the user of land shall bear it. 
 
 6. Heavy taxation of land will facilitate the reduction of city 
 debts. 
 
 It is largely owing to failure to tax land values that cities have 
 piled up their enormous debts instead of meeting the current and 
 recurring expenses by taxation. In 1908 the funded debt of the 
 one hundred and fifty-eight cities in the United States having in 
 that year a population of 30,000 or over, was $1,937,284,018, 
 which is more than twice the interest bearing debt of the country 
 on June 3Oth, 1910, vie., $913,317,490. 
 
 The temporary nature of most of the improvements and ex- 
 penditures for which this debt was incurred is surprising. 
 
 City buildings, exclusive of schools and other departmental 
 
 buildings $50,788,879 
 
 Police and Fire Departments 24,444,256 
 
 Sewers and sewage disposal 133,262,790 
 
 Street pavements 23,792,014 
 
 Bridges and abolition of grade crossings 74,227,876 
 
 Other highway purposes 187,788,081 
 
 School buildings and sites 220,751,095 
 
 Libraries, art galleries and museums 22,220,615 
 
 Parks and gardens 132,826,822 
 
 Miscellaneous purposes 96,779,353 
 
 Funded debt and special assessment loans I5M35>677 
 
 Water supply systems 312,216,444 
 
 Electric light power and gas supply systems 6,893,500 
 
 All other 241,474,805 
 
 For f undings and ref undings 252,917,661 
 
 It is not, of course, suggested that it is practicable immediately 
 to pay off city debts nor to pay for all city improvements as they 
 are acquired. Most of the corporate stock issued in recent years 
 and bearing 3j^ per cent to 4^2 per cent, has been for a period of 
 forty to fifty years, and a large part of the debt has been incurred 
 within the past decade. There are practically no improvements which 
 should not be paid for within thirty years, and twenty years is usually 
 a long enough term, while pavements and constantly recurring needs 
 
 68 
 
and improvements such as schoolhouses, parks and playgrounds The adoption 
 should be paid for within five to ten years, preferably the former JfJJ*o/ 
 period. Of course, no one would suggest either that current obli- meeting current 
 gations and debts incurred by cities should be paid so long as obligations by 
 cities have the present system of taxation which crushes the lives '^^^ 
 out of the poorer classes of their citizens. A small increased tax- ^ ^ J^' 
 rate on land values would have obviated, however, any such debt qmte taxation 
 burden as the existing one. One effect of the unholy alliance be- of land values. 
 tween the land and the loaning interests in American cities which 
 has created such huge debts is the payment in 1908 by the cities 
 referred to of $82,272,249 in interest on debt, that is about one- 
 fifth of the total general city expenses. The increase in net debt 
 during the year was $185,877,856, nearly one-half of the total 
 general city expenses. 
 
 7. Higher taxation of land values would encourage the logical Higher taxa- 
 and economic development of cities. * f land 
 
 As every observer of American cities, especially those with a JJJJJJj^ eco _ 
 large area, knows, their growth has been determined chiefly by the nomic dty 
 landed and other real estate interests. These interests secure the planning and 
 laying out of transit lines to their land in outlying sections of the city development. 
 and immediately urge the needs of the district for schools, sewers, 
 etc. Thousands, and in many cities tens of thousands, of available 
 lots are left unimproved. The development of the city instead of 
 being concentric, that is from the center out in all direc- 
 tions, is sporadic and irregular. This involves a much greater 
 expense to the city in constructing streets, sewers and 
 in providing transit lines as well as policing these new 
 districts. With such taxation of land values as would 
 secure a large proportion of the ground rent of cities, there would Wasted garden 
 not be any occasion for such competition with its costly waste and agricul- 
 to the city, because the net return to the owner of land would tural areas in 
 be more nearly equal. There are in most American cities and 
 this will be increasingly true, as adjacent areas are incorporated 
 under schemes for city planning large areas which for many years 
 should not be used for housing or commercial purposes, but which 
 would yield a large net profit if used for intensive agriculture. The 
 way in which several American cities have attempted to meet this fllogical tneth- 
 situation by different tax-rates is illogical. Thus in 1908, Phil- 
 adelphia had three tax-rates per $1,000 of assessed value, $15.00 
 on city property, $10.00 on suburban and $7.50 on farm property. ^ y Different 
 Pittsburgh had also three similar types of property with tax-rates tax-rates. 
 
 69 
 
Heavy taxa- 
 tion of land 
 values will 
 prevent land 
 booms and 
 premature 
 building. 
 
 Faulty 
 valuation of 
 agricultural 
 lands. 
 
 Yields from 
 
 intensive 
 
 gardening. 
 
 Americans 
 laggards in 
 intensive 
 gardening. 
 
 Land specu- 
 lators prevent 
 logical and 
 profitable use 
 of land. 
 
 respectively of $9.50, $6.33 and $4.75 with several additional rates 
 for separate political divisions.* 
 
 There were in all in 1902 forty-two cities having two or more 
 different tax-rates. 
 
 If land were assessed equitably, that is at full selling price in 
 the open market, and taxed at a uniform and high rate the owners 
 of what is properly still agricultural land in cities would realize 
 that the stimulus to buildings in the centers of the city and dis- 
 tricts near the centers of a higher rate of taxation on land, would 
 be so potent that it wouldn't pay them to construct high tenements. 
 
 A relatively small investment yields a large return in intensive 
 agriculture when mixed with brains. 
 
 As Mr. H. B. Fullerton, the Director of Agricultural Develop- 
 ment of the Long Island Railroad has pertinently put it: 
 
 "For some reason, as far as we can find out, absolutely unknown to 
 any one, farm land is considered worth about $100.00 per acre, and 
 this price is a very common figure, whether the acre be 60 miles from 
 the post-office or neighbor, or whether it be close to a big market and 
 within a mile of a post-office, railroad station and schoolhouse, whether 
 it be a muck soil of unknown depth or a sandy soil 8 inches deep or a 
 clay soil 2 feet deep or an ideal mixture of clay and sand, as upon Long 
 Island, 3 feet in depth. 
 
 "Few are the potato growers on Long Island who do not get from 
 150 to 200 bushels annually which are sold, practically always, at 50 
 cents or more per bushel, and the price as a rule runs from 65 cents to 
 90 cents, and a yield of 300 bushels is common and 400 bushels per acre 
 is occasional.- 
 
 "Market gardening in this country is just starting Americans, as 
 a rule, know practically nothing of intensive gardening. The market 
 gardeners about New York are mainly foreigners, the greater 
 part of them Germans, with some French, some Belgians, some Hol- 
 landers, some Slavs, and even Chinese and Japanese. Some of these 
 men make the soil return as great a dividend as do the most expert 
 gardeners who are situated in the environs of Paris and who on three 
 acres have raised $3,000 worth of crops in one year. This yield of 
 $1,000 per acre has been surpassed many times in this country on fruit, 
 on berries, on asparagus and on many other single crops. 
 
 "Long Island's waste land is, much of it, held now by speculators 
 who, paying no taxes to speak of and undoubtedly in many cases none 
 at all, can afford to wait for the natural rise in land value that must 
 invariably come to every square foot lying as near New York City, and 
 especially rapid will be the increase on Long Island because of its 
 climate, tempered by the great bodies that surround it, and the soil, con- 
 trary to tradition and science, our experimental farms has proven to 
 be 3 feet in depth." 
 
 Pittsburgh has this year, however, abolished this classification. 
 
 70 
 
Many other American cities can duplicate these conditions. It 
 is extremely suggestive that a State Senator .from the agricultural 
 county of Queens with the approval of many citizens of his county, 
 
 and of the other agricultural district of New York City, Rich- Bureau of 
 
 mond County, are trying to secure the creation of a Bureau of A 9nculture 
 
 Agriculture and Horticulture in the city of New York to stimu- ^ practical 
 
 late and direct the proper and profitable use of acreage holdings i n ^ew York 
 
 and vacant lots in these two boroughs for intensive gardening. City. 
 They state in their brief for such a bureau that the proposed 
 
 higher taxation of land values will necessitate such use of land Normal hous- 
 
 and mention that some of the most successful and profitable gar- ing conditions 
 
 dening in the world is carried on in these two boroughs which don>t require 
 
 are a political part of the most congested city in the civilized Me immediate 
 
 world, while they equally recognize that the adoption of a normal c {t ?$ vacant 
 
 standard of housing will not create a demand for all vacant land \ an ^ f or hous- 
 
 in the city for many years to come. ing purposes. 
 
CHAPTER VII. 
 
 Some Social Reasons for Taxing Land Values 
 
 Heavily 
 
 That the permanent improvement of Social reasons 
 living conditions awaits more fundamental readjustments, and f r heavy 
 
 changes than our country has hitherto essayed is the dominant ta * atlon f 
 , . - , - , . r~ land values. 
 
 note of social work of this century. To secure to every producer 
 
 the fruit and enjoyment of what he produces, to make possible 
 initiative and independence, is the goal of social organization. 
 That many steps and many methods will be needed to reach this 
 goal is self-evident. Since over one-third of the nation's popula- 
 tion is living in cities, over one-fourth in the one hundred and 
 fifty-eight cities concerning which figures have been presented in 
 this discussion, and the indications are unmistakable that the trend 
 to large and small cities will continue, the freeing of the land for 
 use deserves most careful consideration. 
 
 The endowment of the Russell Sage Foundation for the Improve- Investigations 
 
 ment of Living Conditions was heralded as the harbinger of better are no 
 
 times. With a few conspicuous exceptions that body has failed ue j or 
 
 . . . . * f 1 obvious needed 
 
 either to recognize or, if recognizing, to deal with the fundamental 
 
 causes of poverty. One of their latest experiments is an effort to 
 
 provide model homes for people of moderate means in the agricul- 
 
 tural borough of Queens some seven miles from Manhattan at For-- 
 
 est Hills. The operating company known as the Sage Foundation Sage Founda- 
 
 Homes Co. has skipped over tens of thousands of vacant lots near tion Homes 
 
 Manhattan held for speculative increases and gone out to upset land C m P an y- 
 
 values in what should have been farming country for some years 
 
 to come. They found the land speculator on the agricultural ground 
 
 ahead of them, and they paid speculative prices and profits. The 
 
 running time from the Pennsylvania station, the prospectus of the 
 
 company announces "is from 13 to 15 minutes. The commuta- 
 
 tion rate is $6.80 a month, 5O-trip tickets cost $9.25, round trip 
 
 tickets 45 cents." In addition, of course, 10 cents a day or $2.60 
 
 a month will be necessary for carfare in Manhattan for most people, 
 
 making a total of $9.40 a month or $112.80 a year; as much for 
 
 carfare as many working people can afford to pay for rent. Rents 
 
 in that charmingly exclusive place will run from about $20.00 to 
 
 73 
 
Experience 
 should have 
 reduced rents, 
 if possible. 
 
 A business 
 concern, not a 
 charity. 
 
 Perpetuating 
 poverty -for the 
 joy of inves- 
 tigating it. 
 
 $50.00 per month or $240.00 to $600.00 a year that is carfare and 
 rent will total at least $350.00 a year or nearly half the wages of 
 unskilled workmen. It is understood that the company has given 
 up its intention of supplying the need for good housing at reason- 
 able rents for wage-earners, a crying need not being met by any 
 force or agency in the city at present. It is quite natural that they 
 have done so since a worker can't afford to pay over one-fifth or a 
 maximum of one-fourth of his income for rent including as should 
 be done, carfare, and five times $350.00 is $1,750 a year, while four 
 times $350.00 is $1,400. Unskilled workers in New York earn only 
 $550.00 to $700.00 a year and skilled $800.00 to $1,500.00; while 
 clerks get from $1,200 to $2,000 at the most. 
 
 It should be impossible to claim any inefficiency or waste in the 
 laying out of this company's tract of land consisting of 142 acres, 
 because it was done by a landscape architect of international fame, 
 Mr. Frederic Law Olmsted. As they state too, ''the fortunate 
 location of the place on the border of Forest Park has, of course, 
 made it wholly needless to provide any large park within the tract 
 itself," but they have nevertheless provided a small one. Economy 
 of construction has also been assured by the fact that Mr. Grosve- 
 nor Atterbury has been the architect. Everything has been favorable 
 to the provision of homes at reasonable rentals for wage-earn- 
 ers, that is $12.00 to $14.00 a month at the maximum, but pri- 
 vate charity here again as in the case of the City and Suburban 
 Homes Co. has shown that it cannot compete with an unjust system. 
 The Sage Foundation Homes Company admits that its proposition 
 is purely a business one, since it states in its prospectus under the 
 heading, "Business Undertaking": 
 
 "The undertaking is primarily a business enterprise in which certain 
 trust funds have been invested in the definite expectation of securing an 
 adequate business profit, to be applied to the purposes of the trust. The 
 fact that those interested in this development hope, at the same time, to 
 demonstrate that it is possible to develop a more attractive plan and 
 better type of houses than those commonly found in commercial devel- 
 opments makes it, if anything, more important to insure financial success 
 of the venture. Owners of land elsewhere could not be expected to 
 follow the example of this company unless it can show a profit satis- 
 factory to the average investor." 
 
 It has been pretty clearly demonstrated that "an adequate busi- 
 ness profit" in real estate means all that the traffic will bear, and 
 that to improve permanently the living conditions of wage-earners, 
 the net return upon land must be greatly reduced. It may be quite 
 possible for this company or any others "to carry out its aims in 
 
 74 
 
creating a homogeneous and congenial community," but no general 
 social advance can be secured by their methods. Lots can be ob- 
 tained for from $800.00 up to $2,000.00 in Forest Hills and not only 
 has the company been obliged to pay speculative prices for land, 
 but it is asking those who buy land there to pay an advance on real 
 values. The Sage Foundation Homes Co. is not entitled to a 6 Wage-earners 
 per cent business, or even a 4 per cent philanthropic profit upon the prefer the 
 land values which the people of New York create. It should be reduction of 
 
 said in fairness to some of the developers of land in the borough groun t d nts * 
 
 & t investigation 
 of Queens, near Manhattan, that they do not charge any such by the Sage 
 
 exorbitant rents yet, though they are organized upon the same prin- Foundation. 
 ciple of charging every bit that they can. 
 
 Russell Sage used to advise people to buy land and wait for the Results of 
 increase in value. Whatever may be the motives of the Sage Foun- ^ ussel1 Sage's 
 dation Homes Company they have learned probably by this time 
 and have certainly demonstrated to every informed person who has 
 watched their operations that for a city to permit people to follow 
 Mr. Sage's advice is an insuperable obstacle to the general improve- 
 ment of living conditions. Partly because people have followed the 
 advice quoted this company has provided beautiful homes for peo- 
 ple with incomes of $2,000 to $5,000 a year or more, a negligible 
 percentage of New York's five millions, but when they attempt, if 
 ever they do, the imperative task of providing good homes for the 
 city's millions they will appreciate even more fully the immorality 
 of Mr Sage's advice to reap where one has not sown. It is to be 
 hoped they will not as their prospectus indicates they now plan to tio ^ can ' t 
 do attempt to make money to study causes of poverty by one of a ff or ^ to ^ e 
 the fundamental causes of poverty, charging as much for the use of unjust. 
 land values as for buildings. 
 
 The social unrest among social workers is the most striking fact Social unrest 
 of social work in which is included the anti-tuberculosis campaign, amon ff social 
 the housing campaign, charitable and relief organizations, settle- 
 ments, church and other institutional work, etc., throughout the 
 country. To be sure some leaders who have salaries of $5,000 to 
 $10,000 a year are still cheerful as to social conditions and able to 
 endure the continuance of suffering on the part of the poor with 
 a most commendable degree of equanimity, on the infrequent occa- 
 sions when they come within sensing appreciation of the existence 
 of poverty, save as a pathological anomaly. Some members of 
 boards of directors of charitable societies who are profiting by 
 the system and conditions which make charity necessary, naturally 
 view with some perturbance the changing of these conditions, while 
 
 75 
 
Is the 
 
 alternative 
 Socialism ? 
 
 Public, not 
 personal vices, 
 chief causes of 
 poverty. 
 
 Taxation of 
 land values is 
 not the only 
 method of 
 preventing 
 poverty. 
 
 others are honest with themselves. For instance, although the sec- 
 retaries of the three largest relief-giving societies in Manhattan, the 
 New York Charity Organization Society, the United Hebrew Chari- 
 ties and the New York Association for Improving the Condition 
 of the Poor endorse the halving of the tax-rate on buildings ; the 
 Boards of these societies officially have not done so, although they 
 may later. 
 
 The visiting nurses and doctors, however, and the investigators 
 for relief agencies, the settlement and church workers in the midst 
 of the real poverty and deprivation of tenement life in American 
 cities appreciate the existence of poverty. They are becoming in- 
 creasingly socialists in the sense of believing that the government 
 should own and operate all means of production, as the only method 
 of wiping out monopoly and ensuring decent conditions of living for 
 the wage-earners of city and country alike. Most of these humbler 
 workers and in their courageous moments the leaders of social work 
 admit that poverty, that is the inability to secure employment at 
 wages which enable a family to maintain a reasonable standard of 
 living, a minimum standard for national efficiency, is due not to 
 personal defects of character in any appreciable number of cases, 
 but to social conditions over which the poor have no control. Drunk- 
 enness, thriftlessness, laziness and vice are the causes of poverty in 
 some cases, and the results in others, it is generally agreed ; but lack 
 of steady employment, sickness, low wages, industrial accidents, 
 unsanitary dwellings, high rents, high cost of food and clothing, 
 and immigration are the symptoms of causes usually recognized now 
 to be the really important causes of poverty in American cities. 
 With remedying or removing several of these causes the heavy taxa- 
 tion of land values in cities so as to secure most of the ground rent 
 has admittedly little connection. Industrial accidents must be pre- 
 vented and industry made to bear the burden of its own careless- 
 ness and risks, instead of compelling the individual workman to 
 do so. The series of middlemen each of whom takes a profit on 
 farm produce and manufactured goods, and thus increases the cost 
 of food to the consumer and reduces the profits to the producer, 
 must be eliminated, by some other action than the higher taxation 
 of land values, although such taxation will encourage the utilization 
 of vacant land in cities for intensive gardening and tend to reduce 
 the cost of garden truck in cities. 
 
 The higher prices extorted through protective duties on articles 
 consumed by the working classes must be lowered by other action, 
 too, than adequate taxation of land values, while such taxation alone 
 
 76 
 
will not solve the difficulties of assimilating in American cities 
 hordes of immigrants ignorant of our language, and untrained to 
 earn even the minimum wage essential to a living standard. 
 
 What part then does the recovering by the city through taxation But is the first 
 of most of the ground rent have to do with the problem of poverty? S *?P m l 
 Although it has been discussed somewhat in the chapter on "The 
 Land Question and Housing Reform" further illustrations will 
 show other relations. 
 
 THE SECURING OF GROUND RENTS BY TAXATION WILL : 
 
 ist. Reduce rents and make homes cheaper. 
 2nd. Compel landowners not tenement tenants to pay taxes. 
 yd. Take a heavy burden off industry and permit the payment 
 of higher wages. 
 
 4th. Encourage the appropriate use of vacant land. 
 
 $th. Safely permit the provision of social needs by the city. 
 
 The student of social conditions realizes that something besides 
 mere geographical position makes the minimum living wage in New 
 York City $700.00 to $800.00 for a family of father, mother and three "Living wage" 
 children under working age, while this minimum is from $50.00 to c t f?\ Delude a 
 
 
 
 $150.00 less in other cities of the country. He appreciates too that to / 
 secure a living wage whatever amount that may be in any city, does owneYm 
 not mean necessarily that the sum now required, should be required. 
 If wastes can be eliminated the cost of living can be reduced. It is 
 just as effective in maintaining the standard of living to reduce the 
 rents $50.00 as to increase wages by this amount. Manufacturers 
 should pay a living wage, but that living wage cannot be made to 
 include permanently 6 per cent net return upon the value of land 
 used by their workers and other producers. If it does include 
 such net return the price of goods will include this charge, and the 
 consumers among whom are the workers on the manufactured ar- 
 ticles will pay higher prices. 
 
 Schedule "K" comprising the iniquitous tariffs on woolen goods Schedule "K" 
 was advocated by some because it enabled the nearly 5,000,000 peo- and 
 pie directly and indirectly concerned in the manufacture of woolen 
 goods to receive better wages. But schedule "K" was indefensible 
 because based upon privilege, and schedule "K" also compelled those 
 engaged in the manufacture of woolen goods as well as others to 
 pay higher prices for these goods. The same conditions obtain with 
 reference to ground rents, except that relatively few people profit 
 by private confiscation of 'ground rents, while every one has to pay 
 more because of such confiscation. The right to private confiscation 
 
 77 
 
Landowners 
 are now the 
 largest 
 
 ultimate bene- 
 ficiaries of all 
 economies, 
 inventions, etc. 
 
 Social aspects 
 of lower 
 rents. 
 
 Competition 
 building 
 stifled by 
 taxing 
 buildings. 
 
 of ground rent is claimed to be permanent, by the confiscators there- 
 of. Tariffs may be reduced or abolished, economies may be effected 
 in construction of buildings, inventions may reduce the cost of 
 living in a thousand ways, efficiency may eliminate waste in produc- 
 tion, but the right to ground rent if admitted, is to all intents and 
 purposes eternal. No matter what economies or savings may be 
 effected in cost of production of any material the tendency is for 
 the landowner, that is the owner of ground rents, to be the residual 
 legatee or beneficiary of such economy or saving under the present 
 system of permitting the owner of land to secure the ground rent, 
 or a large proportion thereof. Private right to ground rent is now 
 being questioned throughout the civilized world for social reasons 
 because the securing of ground rents by taxation will : 
 
 IST. REDUCE RENTS AND MAKE HOMES CHEAPER. 
 (Assessments in all these illustrations are taken at full value.) 
 If a tenement assessed for $25,000, on land assessed for $15,000 
 nets 6 per cent return (above taxes, vacancies, etc.), the total net 
 return is $2,400, $1,500 on the tenement and $900 ground rent. If 
 the owner of the site of the tenement received only 2 per cent profit 
 on the cost of the land his total ground rent would be only $300. That 
 is, the ground rent would be reduced an average for each of twenty 
 families, who might rent the entire tenement, from $45.00 to $15.00. 
 Evidently this saving of $30.00 a year would be worth while to a 
 family whose earnings are only $600.00 to $700.00 a year. Equally 
 evidently the sum required for a living wage irrespective of these 
 differing amounts in different cities would be reduced by this sum, 
 from the amount required to pay the owner of land 6 per cent net 
 ground rent. A further result of taxing land values heavily would 
 be to compel the owner of land in a built-up neighborhood to improve 
 it with buildings that would yield some return, whether they be 
 factories, office buildings or tenements. The general knowledge 
 the owner of land has of the development and needs of the neigh- 
 borhood would determine what improvement he should make, but 
 naturally in a district already supplied with many factories and office 
 buildings, tenements would offer a better investment. This com- 
 petition of tenements for tenants would also tend to reduce rents 
 and save the tenant money. A net return of 4^ per cent on a 
 building and 2 per cent on the site of a building would be better than 
 no return upon the joint investment and the economic motive would 
 impel the owner to secure some return, even if it be only this 
 lower one. The saving in rent represented by the difference between 
 
a 6 per cent net return upon the investment in the building and a 
 4^2 per cent net return amounts to $18.75, to a family renting a 
 tenement apartment, whose average value is $1,250.00. This with a 
 2 per cent, instead of 6 per cent net return, on a site whose propor- 
 tionate value is $750.00, totals $48.75, and this saving of $48.75 
 a sufficiently heavy taxation of land values would unquestionably Charity in 
 effect. It must be sorry consolation to appreciate that the total ex- American 
 penditure for charities, public and private, in most American cities c . se om , 
 does not equal the ground rent confiscated by landlords from the rent exiorte ^ 
 beneficiaries of such public and private charity and others living from its 
 below the standard of efficiency. From the social point of view "beneficiaries!' 
 which is concerned more directly than either fiscal or economic con- 
 siderations with the psychology of character, it is worthy of note 
 that any approximate method of justice is better than the most per- 
 fect administration of charity. Five years' work by the writer in 
 the Philadelphia Society for Organizing Charity and the Society 
 to Protect Children from Cruelty, and visits to "case committees" 
 of societies in New York, Chicago, Boston, Philadelphia, and Balti- 
 more, with a large acquaintanceship among workingmen, have con- 
 vinced him that there is no more effective blow to the self-respect 
 of any workingman than recourse to, or intervention in his family 
 by any charitable agency. No matter how frank the admission by 
 the relief agency that they do not blame the applicant to them, or 
 the "needy case" referred to them for relief, for causes over which Taxation of 
 he has no control, regardless of the tact with which the remotest 
 relatives and clumsiest clues of the victim of the twin evils of 
 poverty and charity are hunted down, the knowledge that his name 
 is down on the books of any charitable society for time and eternity 
 or until such time as high rents compel the society to save room 
 by destroying its wealth of records of poverty, is a blow to his 
 independence and a permanent disgrace to the honest laboring man 
 who would be independent. Nor can even the fact that it costs from 
 one-eighth to one-third or over of the relief dispersed by charitable 
 agencies to convince them of honest poverty, assuage the wound to 
 his self-respect, though being human he doesn't envy the investigator Accurate 
 but rather congratulates him upon having a "steady job at some- records of 
 thing that pays him a living." The one hundred and twenty thousand *y are no 
 immaculately accurate records of families and individuals who have , causes O j 
 applied for relief to different charities of the city now filed in the poverty. 
 Registration Bureau of the New York Charity Organization Society, 
 would be less by several scores of thousands had landowners in 
 this city been unable to confiscate ground rents as they have in the 
 
 79 
 
Most interim 
 relief for the 
 poor is really 
 payment of 
 ground rent 
 to landowners. 
 
 Immigration 
 not chief 
 cause of 
 poverty. 
 
 Home life and 
 taxation of 
 land values. 
 
 Easier for 
 wage-earners 
 to pay higher 
 tax on land to 
 city than to 
 landowner. 
 
 past, and for every reduction in the number of these records there 
 would be a larger number of families, and single men and women, 
 with an untarnished record of economic independence. Relatively 
 few families in New York City or any other American city are per- 
 manently dependent, that is pensioners, and only a small per cent 
 apply for relief, while of those applying, the majority seek only what 
 the charities with scientific inaccuracy call "interim relief," but which 
 scientific accuracy would denominate "payment of ground rent to 
 the landowner." To be sure such "interim relief" seldom equals 
 the confiscation of the landowner, for $48.75 is a large sum for 
 "interim relief" it is a month's to six weeks' wages for an unskilled 
 wage-earner depending upon where he lives, but the confiscation of 
 a month's or six weeks' wages in ground rents is an injustice which 
 no civilized community should tolerate. 
 
 Not even immigration can be assigned as the chief cause of 
 poverty in American cities, for while the value of the product of an 
 untrained immigrant may not justify the payment to him of the cost 
 of living in New York City, it is nevertheless true that with a world 
 market the value of the product of the untrained immigrant in most 
 lines of manufacture is as great in Omaha, Springfield, St. Joseph, 
 Waterloo, Iowa, and New Haven, Conn., as in New York City, 
 while the cost of living is much less in all of these cities than in 
 New York. In all these cities, however, as in New York the con- 
 fiscation of ground rent by the landowner whether it be on a large 
 or small value is a cause of poverty. 
 
 The desirability of home life in small houses is generally con- 
 ceded by social workers. As has been shown in the discussion of 
 the relation between land values and housing reform, the heavy 
 taxation of land values will benefit substantially the man who wants 
 his own home. A social point of view does not condone congestion 
 per acre as does Mr. Veiller, the Secretary of the National Housing 
 Association, who maintains that it makes little difference how many 
 people are housed per acre providing the dwellings are sanitary. 
 The most extortionate owner of ground rent could hardly advance 
 a more anti-social argument, but the consensus of opinion in this 
 country as abroad is so emphatic in favor of the detached dwelling 
 that the help of heavy taxation of land values in securing the de- 
 sideratum will be generally invoked. The effect of heavier taxation 
 of land values in cheapening land will also inure to the benefit 
 of the prospective home owner since he can buy his land cheaply, 
 for the prices of land represent only the capitalized net return, and 
 it is easier for the workingman to pay 3 per cent, or even 5 per cent 
 
 80 
 
on the land values he owns year by year in taxes as he uses the land 
 than to advance this use value capitalized when he acquires the plot 
 of ground, since with this tax-rate on land, buildings could be largely 
 or entirely exempted from taxation. 
 
 2ND. COMPEL LANDOWNERS, NOT TENEMENT TENANTS, TO PAY 
 TAXES. 
 
 The injustice of robbing by taxation widows, consumptives, and Taxing build- 
 children is less defensible from a social than from even an economic *W robs 
 
 r . . A f . widows, chil- 
 
 or fiscal point of view. dmt ^ 
 
 The Committee on the Prevention of Tuberculosis of the New consumptives. 
 York Charity Organization Society in urging recently the appropria- 
 tion of a small proportion of the sum needed to provide additional 
 beds for consumptives in the city says that in no other way can the And ^ ^ Q 
 death rate from consumption be reduced. Admittedly more hospi- crue i an ^ 
 tal beds for consumptives and better means of segregating them are costly way to 
 necessary to reduce the death rate from consumption, but is that prevent con- 
 
 all, and does the provision of beds for advanced consumptives by su P tlon > <* nd 
 i . , . .... relieve widows 
 
 increasing the taxes which other consumptives must pay quite justify and c ^i^ ren 
 
 itself? That committee in common with similar committees in cities 
 throughout the country have sought by exhibits, street car transfers, 
 lectures and other means to convince the public that sunshine, fresh 
 air, rest, good food and relief from anxiety are essentials to prevent The irony of 
 consumption. The irony of their remedy has appealed to many tuberculosis 
 besides the victims of America's national sin, whom they are trying exhibits while 
 to help, for the obviousness of poor people's inability to secure the build #s are 
 essentials to the prevention of consumption is patent to any fair- 
 minded person. 
 
 In the striking pamphlet that the New York Committee on the 
 Prevention of Tuberculosis have prepared advocating the provision 
 of hospital beds they present several photographs of tuberculous 
 patients. 
 
 One is a flashlight of a victim in bed, with drawn features, his 
 projected eyes peering into the unknown future. Under this they 
 ask, "Shall men like this be discharged from hospitals to die in 
 tenements ?" with the indictment "Frederick R. discharged from hos- 
 pital August 25th, died August 3Oth." Another picture of a man 
 and his wife and three small children centers indignation over the 
 explanation, "This helpless consumptive allowed to leave the hospital J** Clty robs 
 to make room for others, thus insuring the infection of his chil- Motives to 
 dren." A third picture is of "Five delicate children in daily contact bury dead 
 with a dangerous consumptive father, an advanced case, unable to consumptives. 
 
 81 
 
Taxing build- 
 ings penalizes 
 preventive 
 philanthropy 
 and business 
 alike. 
 
 Larger 
 municipal 
 social 
 programs. 
 
 Shall progress 
 be made by 
 increasing 
 deficits of the 
 poor or reduc- 
 ing unearned 
 surpluses of 
 the rich? 
 
 Strikes show 
 small savings 
 of skilled 
 workers. 
 
 work, shares bed with one of his children." Further questions the 
 Committee have forgotten or neglected to ask : 
 
 "Shall the 40,000 known consumptives in New York City with 
 their families be taxed to provide the nearly 4,000 additional beds 
 needed for consumptives, in addition to supporting the present 3,200 
 beds and the victims cared for therein, or shall we tax land values 
 and let landowners share their community created wealth, and so 
 save the lives of consumptives ? Since sunshine is essential, this com- 
 mittee claims, to the prevention and cure of consumption they might 
 appropriately ask: "Shall we continue a system of taxation which 
 puts a premium upon dark rooms or shall we encourage the con- 
 struction of healthy, well lighted tenements by reducing taxes upon 
 them through taxing land values?" 
 
 With the hearty endorsement of many large charitable societies, 
 American cities are now facing their responsibility to provide ade- 
 quate relief in their homes to their dependent citizens pending the 
 organization of social insurance and the assumption by industry of 
 its full burdens. 
 
 The acceptance by cities of their proper responsibility, will in- 
 volve for some years at least, a large increase of municipal expendi- 
 tures. 
 
 Shall this additional burden be extorted from the families now 
 on the verge of starvation, from those hovering on the verge of 
 dependence or existing far below the standard of national efficiency, 
 are questions of compelling social import. That these classes will 
 pay much of the cost of a larger and proper municipal program 
 under the present system of taxing land and improvements at the 
 same rate is conceded, but social justice cannot concede that long 
 usage transforms injustice into justice but rather demands that the 
 wealth of land values the poor help to create shall be adequately 
 taxed since such taxation is the only method by which the owners 
 can now be made to share equitably with the producers. 
 
 3RD. TAKE A HEAVY BURDEN OFF INDUSTRY AND PERMIT THE 
 PAYMENT OF HIGHER WAGES. 
 
 Should relief agencies give relief to families while the wage- 
 earner is on strike has been debated in most large cities in which 
 one or more strikes have during the past ten years cost the finan- 
 cial independence of families, self-respecting hitherto, and revealed 
 the narrow margin between economic dependence and independence 
 among many skilled wage-earners. 
 
 It is true that labor union members are usually the last to appeal 
 to organized charity for relief, because they have their own relief 
 
 82 
 
funds, and the more serious problem of relief is that of the perma- Permanently 
 nently underpaid, largely because unorganized, laborers who are underpaid 
 
 chronically below the standard of efficient citizenship. The ground wo ^ kers 
 
 .. e ... exist on a 
 
 rent taken from their employers, if manufacturers, will vary from ^ e fi c ^ 
 
 2 per cent to 8 per cent of their pay-rolls, and while it is not sug- 
 gested that manufacturers would necessarily pay higher wages they 
 obviously would be better able to do so if released from double taxa- 
 tion by the landowner as well as by the city. That an increase of 
 2 per cent to 8 per cent in wages would be an important raise for 
 both skilled and unskilled, organized and unorganized workers must 
 be admitted. 
 
 4TH. ENCOURAGE THE USE OF VACANT LAND. 
 
 The disinclination for the country, for gardening and for agricul- Vacant land 
 ture, which migrants from country districts to cities manifest, is not * n Clties 
 
 shared by many peasant laboring immigrants. They appreciate the afford 
 
 J \ J t and needed 
 
 opportunity to raise vegetables, as successful market gardens worked em pi oymen t if 
 
 and in some cases managed by immigrants testify. Vacant lots as- highly taxed. 
 sociations in several cities have performed an important service in 
 bringing people and land together. Such efforts would be greatly 
 helped by the heavier taxation of land values, since with even the 
 present low taxation land can be secured, but a heavier tax-rate will 
 compel it to seek users. The incentive to economic and effective 
 use will be in very direct ratio to the increase in the tax-rate and 
 the provision of employment thereby created would be of utmost 
 benefit to those classes of the community who need outdoor employ- 
 ment, with the added advantage of training for farm life. In his This employ- 
 evidence before the Committee on Health of the New York City ment would be 
 Commission on Congestion of Population, Dr. Wm. H. Park, Di- f^j^ t 
 rector of the Research Laboratory of the city's Department of Health f ^ f ^red of 
 stated, "It is even dangerous for a tuberculous person who has consumption. 
 recovered after leaving the city to return to it and go back into office 
 work or any of the ordinary city occupations. The fact that a person 
 has had consumption proves that he was susceptible, and he will 
 usually remain susceptible." 
 
 Since this holds true for all cities as for New York, and yet Death by 
 death by starvation is as deadly as death by consumption, in every starvation as 
 
 city of the union, the social benefit of forcing vacant land in out- , ea , y ^ s 
 , . . ' death by con- 
 
 lying sections of a city into use for those citizens handicapped by 
 
 bad housing conditions and predisposition to consumption is great. 
 The natural encouragement to live under healthier conditions in 
 new sections of a city closer to such work is a marked additional 
 advantage. 
 
 83 
 
Conclusion.; 
 Total ground 
 rent of a city 
 is maximum 
 amount that 
 can be extorted 
 from most 
 productive 
 use of land. 
 
 Present ground 
 rent should 
 be divided 
 between the 
 city, user of 
 land and owner 
 of land. 
 
 Landowner's 
 share of 
 ground rent 
 should be re- 
 duced to the 
 minimum, 
 which would 
 encourage 
 private owner- 
 ship of land 
 for use. 
 
 Poverty cannot 
 be exterm- 
 inated while 
 landowners 
 secure the 
 ground rents 
 they now do. 
 
 5TH. SAFELY PERMIT THE PROVISION OF SOCIAL NEEDS BY THE 
 CITY. 
 
 In conclusion the social viewpoint justifies the correlation of 
 the advantages of securing most of ground rents as follows : 
 
 The total ground rent of a city is the maximum sum that can be 
 secured by the owners thereof for the most intensive and profitable 
 use to which each section is best adapted. This ground rent, actually 
 derived or potential, varies from 6 per cent to 8 per cent, or more. 
 Naturally this cannot be taken entirely by the city through taxation, 
 while at the same time the tenant user of land secures the gain of 
 reduced rents through avoidance of the payment of all taxes. No 
 increase in the city budget paid by taxes on land values alone, how- 
 ever, will be shifted upon the tenant. Hospitals for consumptives, 
 municipal social service departments, exemption from taxation of 
 public utilities whose net profits are kept by governmental regula- 
 tion at a low figure with resultant reduction of charges to the public 
 for products or service rendered, are feasible when land values are 
 adequately taxed. Ground rents should by taxation of land values 
 be so reduced that only so much will be left to the owners of land 
 as to encourage the use of land for productive purposes. This may 
 be i per cent, i l / 2 per cent, or 2 per cent, but it is the token and 
 substance of private ownership in land for use and not for specula- 
 tion or unearned gain. Every increase in the rate of taxation on 
 land values tends to reduce the amount to be charged as rent for 
 any building since the owner of land must use his brains to secure 
 gain therefrom, instead of using without payment the labor of others. 
 
 In most cities land entirely vacant is equal in value to from one- 
 twentieth to one-tenth of the total assessed value of land. In 1910 
 for instance, wholly unimproved land in New York City was worth 
 considerably more than one-eighth of the total assessed land value 
 of the city and the increased revenue from a high tax-rate on this 
 vacant land will materially reduce the tax-rate on buildings. The 
 social reasons justify and even compel the full taxation of land val- 
 ues, as the next step in the extermination of poverty, and poverty 
 cannot be abolished while landowners secure the ground rent they 
 now do. 
 
CHAPTER VIII. 
 
 Sources of Municipal Revenue in Some Foreign 
 
 Cities 
 
 The sources of Municipal Revenue in many foreign cities should 
 be considered in their relation to the welfare of the community since 
 they may be suggested by landowners in their desire to postpone 
 heavier taxation of their land values, as substitutes for the taxation 
 of land values. 
 
 Budapest has a 3 per cent tax on the rent paid by tenants, an Budapest. 
 additional tax on the income derived from real estate, and a 4 per 
 cent tax for the removal of garbage, and an octroi tax levied on 
 food products as well as one levied on the weight of vehicles enter- 
 ing the city. All of these taxes, of course, are largely shifted on 
 to the tenant. The writer was informed by the city statistician, 
 three years ago when in Budapest that rents were unendurably high 
 in the city and many rooms had four to six occupants while specu- 
 lation in land was most profitable. Other revenues in Budapest are 
 from industrial licenses, dog licenses, water supply, etc. 
 
 Vienna illustrates well the fallacy of trying to conduct municipal Vienna. 
 trading for profit, although the city derives considerable revenue 
 therefrom, while failing to secure revenue from normal sources. 
 
 The principal taxes are taxes on real property and taxes on 
 personal property and trade. 
 
 Taxes on houses are assessed on the amount of the annual rents, 
 and on land on the estimated cadastral revenue. 
 
 A trade tax amounting to 10 per cent on the net profits is levied 
 on joint stock companies. 
 
 An income tax is assessed on the entire receipts of the taxpayer 
 from whatever source derived, although incomes of less than 
 $244.00 per annum are exempt. 
 
 The octroi tax yields a large revenue. Most of Vienna's taxes, 
 however, can be shifted to the ultimate consumer. 
 
 In Germany, the main municipal taxes are the income tax, the 
 real estate tax, industrial tax, tax paid by restaurants, drinking sa- 
 loons and hotels where liquor is sold, department store tax, dog 
 tax, brewing malt tax, temporary vendor's tax and exchange of 
 property tax. 
 
 85 
 
Berlin. In explanation of the large number of taxes upon industry in 
 
 Berlin and the relative exemption of land values from taxation, it 
 should be stated that the undemocratic system of votes according 
 to value of property owned still obtains. 
 Prof. Frank J. Goodnow states : 
 
 "In Berlin, the Prussian city in which the voters constitute the 
 largest proportion of the population, in 1900 only 1,227 qualified voters 
 were in the first class, 20,821 were in the second class, while 310,471 
 constituted the third class. Or, to put it in another way, 22,048 voters 
 could elect two-thirds of the members of the council, while 310,471 
 voters could elect the other third. Finally, in actual practice, the two 
 upper classes participate more generally than the third class in the 
 election. Thus 34% of the third class, 50.2% of the first class, .and 
 39.4% of the second class of voters actually voted in 1898. This may 
 be due in some degree to the fact that the vote Is an open and not a 
 secret vote." 
 
 On incomes from $214.20 to $249.90 an income tax of $1.43 is 
 levied and so on until on those from $428.40 to $499.80, $7.38 is 
 levied. It will be noted that the rate upon small incomes is much 
 higher proportionately than upon higher ones. For 1906-7 the 
 yield of the municipal income tax was $8,227,148. 
 
 The United States Consul-General at Berlin, A. M. Thackara 
 explains the real estate and industrial tax in Berlin as follows : 
 
 "The real estate tax is based upon the value of real estate as 
 appraised by a permanent committee appointed for the purpose in each 
 of the kreise, or counties. The appraised value of real estate is deter- 
 mined by deducting 8 per cent of the gross income from the property, for 
 expenses, such as taxes, sewerage, interest, etc., and multiplying the net 
 income by 16 to 22, according to whether the location of the property 
 is good or bad. When there is no income from the property, the value 
 is estimated by the committee and taxed accordingly. The tax in 1908 
 was 75 cents per $238 of the appraised value of the property, and in 
 1909 the rate was about 72.4 cents. The rate is fixed by the tax com- 
 mittee. The amount collected in 1906-7 was $5,523,869. 
 
 "There are four classes of industrial taxes, depending upon the 
 capital invested or upon the amount of net annual profit, as follows: 
 Fourth class, from $357 to $952 net profit or $714 to $7,140 invested 
 capital; third class, from $952 to $4,760 net profit or $7,140 to $35,700 
 invested capital; second class, from $4,760 to $11,900 net profit or $35,7oo 
 to $238,000 invested capital; and first class, over $11,900 annual profit or 
 over $238,000 invested capital." 
 
 The revenue to the city from the industrial tax in 1906-7 was 
 $2,449,119. The revenue from taxing saloons and department 
 stores is small. 
 
 86 
 
A unique tax is that on the change of ownership of real estate by 
 sale or otherwise, amounting to i per cent of the value of improved 
 and 2 per cent of the value of unimproved property, which yielded 
 in 1906-7, $1,612,974. 
 
 The revenue from the city's gas works in 1906-7 amounted to 
 $1,967,788, from the waterworks to $785,240; from stockyards and 
 abattoirs to $189,968, while the 8 per cent on gross earnings of street 
 car lines for the use of the streets amounted to $819,416 in 1906-7. 
 
 The Berliner Electrisitats Werke, a private company which fur- 
 nishes electric light and power to the people, pays the municipality 
 for the use of the streets 10 per cent of its gross net earnings 
 amounting in 1906-7 to $899,957. 
 
 For the fiscal year 1906-7 Berlin had a surplus of $3,486,595, 
 a little more than the total receipts from the city gas and water 
 works and the revenue from the 8 per cent tax on the gross earn- 
 ings of street car lines for the use of streets. It is self-evident that 
 these three necessities of life are used by practically all of the work- 
 ing people of Berlin and that they paid higher prices to yield these 
 net profits. Berlin is the paradise of land speculators in Germany as 
 New York is in this country, while the zone system of fares on 
 lines of transit gives them an exceptional opportunity to confiscate 
 land values. 
 
 The income tax both for state and municipal purposes is based 
 upon income from personal property, that is business as well as 
 upon real estate, land and buildings. Even in the case of the 
 real estate tax when there is no income from property, the estima- 
 ted value by a committee representing a legislative body dominated 
 by realty owners is usually quite low. The 2 per cent on transfer 
 of unimproved property is of course in the nature of a land incre- 
 ment tax although a very low one, but is paid by the purchaser. 
 
 The basis of the present fiscal system of Paris was enacted im- Paris. 
 mediately following the revolution of 1789. The taxes are of two 
 classes, direct and indirect. 
 
 The impot fonder, a direct tax on land and buildings, averages 
 about 3.20 per cent and it is paid by the owner of the property, 
 but is subject to a complicated system of temporary exemptions for 
 certain improvements. 
 
 The impot personnel mobilier or tax on unoccupied houses is di- 
 vided into two parts, the personal tax due from the occupant of the 
 premises and assessed upon all residents of France, and the "con- 
 tribution mobiliere" or furniture tax, assessed upon the rentable 
 value of the personal domicile. 
 
 87 
 
Consumer the 
 
 Paris has also a tax on doors and windows, and a license to 
 transact business assessed upon the practitioners of all professions, 
 trades and avocations except the liberal arts. As part of this tax a 
 percentage is assessed upon the rentable value of the domicile, store, 
 warehouse, shop, factory, etc., occupied by the person taxed as a 
 place of business. 
 
 The direct taxes are those based upon the sale, transfer and 
 introduction of articles of commerce which as Mr. Frank H. Mason, 
 United States Consul-General at Paris states, "although primarily 
 paid by the manufacturer, the importer, or the dealer are ultimately 
 
 ultimate payer, paid by the consumer." As Mr. Mason states further : 
 
 "The octroi is considered an annoying and troublesome form of 
 taxation, and is unpopular with the public and costly to administer, as 
 it entails delays at the city gates and employs an army of inspectors and 
 collectors, but it yields in an average year about 109,000,000 francs, or 
 $21,037,000, a sum which, it appears, this expensive municipality cannot 
 spare or derive from any other source without reorganizing the present 
 system of municipal taxation." 
 
 London. 
 
 Tenant pays 
 the rents. 
 
 The following comment on the system of taxation in London 
 is made by Consul-General John L. Griffiths: 
 
 "The annual rates levied in the different parishes in London vary 
 from $1.50 to $2.57 in every $4.87 of the assessed rental value of the 
 property. There have been fluctuations in the rates from year to year 
 in the different parishes, but they are not as great as might be antici- 
 pated. This is owing to a disposition to increase the valuation of the 
 rentals of all property to meet growing expenditures necessitated by the 
 development of new needs and functions rather than to augment the 
 rates. The rates are levied on real property, or rather upon a proportion 
 of its rental value. 
 
 "The tenant usually pays the rates, or the greater portion of them, 
 so that if the rental of an office, or a dwelling or a business house is 
 $1,200 a year, he must pay in rates ordinarily about one- third or $400 
 more. 
 
 "An equalization fund was established for London in 1894. This 
 fund is raised by a rate of about 2.^/2 cents on the dollar of the ratable 
 value levied annually on the whole county of London. The fund so 
 raised is redistributed on the basis of population. A poor district 
 with a congested population and a low ratable value may receive several 
 times as much out of this fund as would go to a more advantageously 
 located district, from a sanitary point of view, in another part of the 
 city with a similar population and a heavier ratable value. 
 
 "The greater portion of the revenue required for the carrying for- 
 ward of the government of London is raised out of rates, but there are 
 also further sources of revenue in the way of market tolls, rentals of 
 corporation property, building fees, contributions by the fire insurance 
 companies to the corps of the first brigade, penalties, costs recovered, 
 
 88 
 
etc., and a certain amount which is received from the imperial 
 exchequer. About 65 per cent of the revenue is derived from the rates, 
 
 g l / 2 per cent from imperial taxation, and the balance from other sources. 
 "The total receipts of greater London, exclusive of loans, of all the 
 local authorities for 1906-07, amounted to $126,449,949, divided as 
 follows : 
 
 Public rate $74,918,652 
 
 Imperial funds 14,195,250 
 
 Tramways 6,921,088 
 
 Markets 1,336,988 
 
 Electric-lighting undertakings 2,703,132 
 
 From other local authorities 15,531,022 
 
 Other sources 10,843,808 
 
 "The expenditures, exclusive of loans, during the fiscal year 1906-7 
 amounted to $119,022,146, distributed as follows: 
 
 EXPENDITURES. AMOUNT. 
 
 Administration of justice $801,172 
 
 Education 
 
 Elementary $16,894,303 
 
 Higher 3,328,900 
 
 Electric lighting (other than public) 1,275,315 
 
 Fever and small-pox hospitals 2,064,403 
 
 Fire engines and brigades 1,146,996 
 
 Highways, bridges, etc 8,663,757 
 
 House refuse, removal of 1,821,044 
 
 Housing of the working classes 504,340 
 
 Lighting (public) 1,895,351 
 
 Lunatics and lunatic asylums 3,193,879 
 
 Markets 643,327 
 
 Parks, etc 961,052 
 
 Police and police stations 9,11 7,554 
 
 Poor relief 13,077,639 
 
 Sewerage and sewage disposal works 2,018,673 
 
 Tramways 5,168,661 
 
 Loan charges 19,149,230 
 
 Other works and purposes 1 1,968,281 
 
 Total $103,693,877 
 
 Payments to other local authorities, etc 15,328,269 
 
 Grand total $i 19,022,146" 
 
 It will be noted that the expenditures for poor relief total nearly 
 one-ninth of the city's total expenditures, and this expense with the 
 cost of lunatics and lunatic asylums and loan charges (what we 
 designate "debt service") was $35,420,748 or nearly one-third of 
 the total municipal expenditure and one-half of the total receipts 
 from the public rate, of which as Mr. Griffiths remarks: "The 
 
 89 
 
The land incre- 
 ment tax in 
 Germany. 
 
 Methods and 
 rates of land 
 increment tax 
 in German 
 cities. 
 
 tenant usually pays the rates or the greater portion of them." To 
 the $8,258,076 receipts from tramways and markets a large propor- 
 tion of the wage-earning population of London contribute, and the 
 direct result of lowering the standard of living by running these 
 public necessities for a profit, is obvious. It is not strange that Mr. 
 Lloyd-George advocated a land tax as a means of securing some 
 revenue since the landlord "does not contribute a penny out of his 
 income toward the local expenditure of the community which has 
 thus made him wealthy." 
 
 TAXATION OF LAND VALUES. 
 
 The most important and general method of taxing land values 
 abroad is the land increment tax. 
 
 The following summary of the extent and progress of taxing 
 land increment in Germany is taken from the Report to the Special 
 Tax Commission of Illinois by Prof. John H. Fairlie: 
 
 "The taxation of the increment of land values was first attempted 
 in a practical way in Germany. A tentative step was taken in 1898 in 
 the German Colony of Kiautschou in China; but this attracted little 
 attention. More general interest was aroused when, in 1904 and 1905, 
 the two important cities of Frankfort and Cologne enacted ordinances 
 for the taxation of the increase in land values. These have been fol- 
 lowed by a considerable number of municipalities, including both large 
 and smaller cities. Dortmund and Essen adopted the new tax in 1906; 
 Breslau and Kiel in 1907; and Hamburg in 1908. ... In Berlin 
 itself, the Board of Magistrates in 1907 proposed the introduction of 
 the tax; but the project was defeated through the influence of the House 
 and Land Owners Association in the Municipal Council. 
 
 "In July, 1909, the increment tax was in force in fifteen of the 
 forty-one German cities of more than 100,000 population, and in at least 
 forty smaller places. In all the more important states of the Empire, 
 the higher administrative officials have given attention to improving the 
 details of the tax. 
 
 "The several local tax ordinances vary not a little in details; but 
 certain main features appear in all of them. The object upon which the 
 tax is levied is the unearned increase of value of real estate. From 
 the total increase in value, as measured by the differences between the 
 price at a transfer and the price or value at a previous change of 
 ownership, reductions are allowed for the expense of permanent im- 
 provements, street building and sewer connections, transfer charges, and 
 sometimes for other expenses. There are certain exemptions, both for 
 some kinds of transfer (as inheritances or judiciary sales) and for small 
 increases in value. The tendency is to tax increases in value of vacant 
 land more highly than those of land which is built upon. Special pro- 
 visions are often made for a lower tax or for exemption, where the 
 preceding transfer occurred a good many years ago. The incre- 
 
The accompanying table shows the proceeds of the increment 
 tax in a few German cities from 1906 to 1908. 
 
 H S 
 
 U 
 
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Appeal to 
 conservatism 
 of land 
 increment tax. 
 
 The land 
 increment 
 tax in Great 
 Britain. 
 
 ment tax is always levied on the principle of progression at a higher 
 rate for the higher proportionate increase in value. Minimum rates are 
 from 3 to 10 per cent; maximum rates are from 15 to 30 per cent. 
 
 "The rapid adoption of the increment tax in the German cities indi- 
 cates that this form of taxation has appealed to the conservative offi- 
 cials and members of councils in that country, in spite of the opposition 
 of real estate owners, a class which exercises a strong influence in 
 municipal government. The tax has, however, been in force for too 
 brief a period to demonstrate very clearly what the effective results will 
 be. From the table below, showing the proceeds of the tax in half a 
 dozen of the larger cities, it will be seen that the revenue shows wide 
 fluctuations; and it forms as yet but a small fraction of the income of 
 any city. The largest amounts are for Frankfort-on-the-Main (1,104,997 
 marks in 1906) and Hamburg (1,500,000 marks for 1908). 
 
 "The Imperial Government of Germany has incorporated the incre- 
 ment tax in the new finance legislation of 1909. One of the financial 
 measures passed on July isth of that year provides that the Empire 
 shall receive twenty million marks from such a tax by 1912. Cities in 
 which the increment tax was in operation before April i, 1909, will be 
 compensated for five years after the Imperial Act goes into effect by an 
 amount equal to the average annual yield of the municipal tax prior to 
 April i, 1909. But these compensating payments will be made only from 
 surplus to be realized over and above the twenty millions to be collected 
 for the Imperial Treasury." 
 
 Prof. Fairlie summarizes the new land taxes in Great Britain 
 from the Parliamentary Debates, 1910, as follows : 
 
 "The British Budget for 1909-10 (which finally became law April 
 29, 1910) provides for new taxes on the increment of land values, on 
 the site value of undeveloped land and on mineral rights. 
 
 "A valuation of all real property in the United Kingdom is to be 
 made, as from the 3Oth of April, 1909; and on any increment value 
 accruing after that date a tax or duty of one-fifth (20 per cent) of that 
 value will be taken on the occasion of a transfer, or a lease of more 
 than fourteen years in the case of land owned by incorporated or unin- 
 corporated associations. The increment value is the increase in value by 
 any other cause than the landowner's own labor or capital ; but the first 
 10 per cent of this 'unearned increment' is not to be taxed, nor will the 
 increment duty be charged 'in respect of agricultural land while that 
 land has no higher value than its value for agricultural purposes.' This 
 tax is expected to fall mainly on urban building land and mining lands. 
 
 "Another tax, called a reversion duty, of 10 per cent, will be charged on 
 
 the benefit accruing to a lessor on the determination of a lease of over 
 twenty-one years. 
 
 "A third provision imposes an annual duty of one-half penny in the 
 pound (about two mills on the dollar) on the capital site value of unde- 
 veloped land exceeding in appraisement $50.00 an acre. 
 
"The mineral rights duty is imposed at the rate of 5 per cent on the 
 rental value of all rights to work minerals and of all mineral way 
 leaves." 
 
 In the speech on the proposed land tax, Mr. Lloyd-George stated, 
 "The yield in the first year will necessarily be small and I do not 
 think it safe to estimate for more than 50,000 for 1909-10. -The 
 amount will increase steadily in future years and ultimately become 
 a further source of revenue." 
 
 In his Budget Speech, however, he discriminates between agri- 
 cultural and urban land and between the extortions of urban land- 
 owners and owners of agricultural land. 
 
 "Agricultural land has not, during the past twenty or thirty years, Distinction 
 appreciated in value in this country. In some parts it has probably gone between agri- 
 down. I know parts of the country where the value has gone up. But cultural and 
 there has been an enormous increase in the value of urban land and of urban land. 
 mineral property. And a still more important and relevant considera- 
 tion in examining the respective merits of these two or three classes of 
 claimants to taxation is this. The growth of the value, more especially 
 of urban sites, is due to no expenditure of capital or thought on the 
 part of the ground owner, but entirely owing to the energy and the 
 enterprise of the community. Where it is not due to that cause, and 
 where it is due to any expenditure by the urban owner himself, full 
 credit ought to be given to him in taxation, and full credit will be given 
 to him in taxation. I am dealing with cases which are due to the 
 growth of the community, and not to anything done by the urban pro- 
 prietor. It is undoubtedly one of the worst evils of our present system 
 of land tenure that instead of reaping the benefit of the common 
 endeavor of its citizens, a community has always to pay a heavy penalty 
 to its ground landlords for putting up the value of their land. 
 
 "There are other differences between these classes of property which 
 are worth mentioning in this connection, because they have a real bear- 
 ing upon the problem. There is a remarkable contrast between the 
 attitude adopted by a landowner toward his urban and mineral property, 
 and that which he generally assumes towards the tenants of his agri- 
 cultural property. I will mention one or two of them. Any man who 
 is acquainted with the balance-sheets of a great country estate must 
 know that the gross receipts do not represent anything like the real net 
 income enjoyed by the landowner. On the contrary, a considerable 
 proportion of those receipts are put back into the land in the shape of 
 fructifying improvements and in maintaining and keeping in good repair 
 structures erected by him which are essential to the proper conduct of 
 the agricultural business upon which rents depend. Urban landlords 
 recognize no obligation of that kind, nor do mineral royalty owners. 
 They spend nothing in building, in improving, in repairing, or in upkeep 
 of structures essential to the proper conduct of the business of the occu- 
 piers. The urban landowner, as a rule, recognizes no such obligation. 
 I again exclude the urban landowner who really does spend money on 
 
 93 
 
The land tax 
 in the 
 Australian 
 Common- 
 wealth. 
 
 Higher tax- 
 rate on land 
 than buildings 
 in Adelaide. 
 
 his property; that ought to be put to his credit. The rent in the case 
 with which I am dealing is a net rent free from liabilities or legal 
 obligations. Still worse, the urban landowner is freed in practice from 
 the ordinary social obligations which are acknowledged by every agri- 
 cultural landowner towards those whose labor makes their wealth." 
 
 Dr. Albert Bushnell Hart in the "American Year Book," 1910, 
 summarizes the proposed land tax in the Australian Commonwealth. 
 
 "The progressive land tax is the most important feature of the 
 Labor Party program. The tax is to be levied on 'the reasonable mar- 
 ket value of the land, assuming that the actual improvements thereon 
 had not been made.' The rates run from id. in the pound on estates 
 between 5,000 and 10,000 in value, to 4d. on estates above 50,000. 
 Absentee landowners (including corporations in which more than two- 
 fifths of the shares are held by absentees), pay taxes on the whole 
 value of the property and id. extra on every pound of valuation; others 
 pay taxes on market values less 5,000. The usual exemptions are 
 made in favor of land held for charitable, religious, or public purposes. 
 The taxpayer must make his own valuation, which may be amended by 
 a commissioner, who has power also to make independent valuations or 
 to use those made by any state authority. The taxpayer may appeal to 
 the High Court against overvaluation; the commissioner may also 
 appeal to the High Court for a declaration allowing the Commonwealth 
 to resume at the owner's valuation land willfully undervalued. The tax 
 is a first encumbrance and may not be evaded. Mortgagors pay it; the 
 mortgagee is not liable unless he has entered into possession. Willful 
 understatements involve a fine of 500, plus treble tax; and estimates 
 more than twenty-five per cent below the finally ascertained value are 
 deemed willful. The avowed purpose of the land tax, in addition to 
 revenue raising, is to stimulate immigration, and enforce the subdivision 
 of large estates which have never been placed under cultivation." 
 
 Several of the provinces of Australasia have increased the rate 
 of taxation on land with the following results. Mr. Arthur Searcy, 
 Deputy Commissioner of Taxes in Adelaide, reports in 1906 the 
 results of increasing the tax on land from y 2 d. to y$ d. in the : 
 
 "Considerable areas of suburban land, formerly the property of 
 large owners, have been subdivided, and many persons have purchased 
 a plot of land for residential purposes and built thereon. For years 
 past there has been a gradual closing up of all vacant land around the 
 city, a great deal of which may be attributed to the land tax, more 
 particularly since the application of additional and absentee land taxes 
 in conjunction with the increased rates of income tax imposed at the 
 same time; but much of the movement would have occurred irrespective 
 of taxation, with gradual growth and advancement of the state. 
 
 "The effect on the building trade has been beneficial owing to the 
 subdivision of suburban lands and the building of residences, as 
 previously mentioned. 
 
 94 
 
"In regard to land speculation, the tax must certainly have a deter- 
 rent effect, but as a burnt child dreads the fire, so are the people of 
 South Australia chary of land speculation after the losses generally 
 sustained with the collapse of the 'Land Boom' of the early eighties." 
 
 Mr. L. S. Spiller, the First Commissioner of Taxation in Syd- 
 ney, says that by the tax on land : 
 
 "Values of residential properties have been reduced principally in 
 the city and immediate suburbs by reason of the development of the 
 more outlying area. Vacant sites have suffered a reduction in value in 
 many districts. The tax has considerably affected land held solely for 
 speculation and has certainly compelled many owners to sell for a lower 
 figure than previously required. In the city and suburbs very little land 
 speculation has been in operation. Buyers now in view of the Land 
 Tax mostly secure properties with the definite idea of speedily making 
 a home, and not as heretofore, waiting for a rise in values. 
 
 "In the country the effect has been to break up a number of land 
 monopolies and secure improved conditions of larger and closer settle- 
 ment with considerable profit to the speculator and advantage to the 
 purchaser." 
 
 The Marquis of Salisbury stated before the Royal Commission 
 on the Housing of the Working Classes, in 1884: 
 
 "A proposal to remedy overcrowding for which the state is largely 
 responsible by utilizing a gain on enhanced value of land which is due 
 to density of population can hardly be called eleemosynary. It more 
 closely resembles the provision of compensation than the offer of a gift." 
 
 The Select Committee on the Land Values Taxation, etc. (Scot- Scottish Select 
 land) Bill (1906) favored a higher taxation of land than improve- Committee 
 ments, and state: favor higher 
 
 tax-rate on 
 
 "The desirability of taking land on the basis of valuation does not land. 
 depend solely upon the question of the allocation of the burden between 
 parties. The most valuable economic advantages of this reform follow 
 from the change of the basis of rating. We have already referred to 
 the nature of these advantages, which may be thus summarized: 
 
 "First. Houses and other improvements would be relieved from the 
 burden of rating. This would encourage building, and facilitate 
 industrial developments. 
 
 "Second. As regards the large towns, it would enable land in the 
 outskirts to become ripe for building sooner than at present, and would 
 thus tend very materially to assist the solution of the Housing problem. 
 It would also have a similar effect in regard to Housing in rural districts. 
 
 "In our opinion these advantages depend upon the alteration of the 
 basis of rating, and are not dependent upon the question as to what 
 proportion ought to be contributed by the various persons interested in 
 the property. Without seeking to minimize the importance of that ques- 
 
 95 
 
Municipal 
 ownership 
 of land. 
 
 Cities without 
 taxes. 
 
 tion, we think it right to point out that the taxation of land values is 
 advocated equally by persons who take different views upon this aspect 
 of the question." 
 
 An indirect method of taxing land values or securing for public 
 use the ground rent of land in vogue in foreign countries, especially 
 in Germany, is extensive municipal ownership of land. This is 
 technically "municipalization" of land and not taxation of land 
 values. It is the avowed intention of many German and Swiss 
 municipalities to own practically all the land within the city, and 
 large tracts outside the city in territory to be annexed as the city's 
 population increases. In addition to reducing the tax-rate or even 
 in some cases enabling cities to conduct government without any 
 tax-rate by the revenue from the municipally owned land, such a 
 policy enables the city, it is claimed, by competing with private land- 
 owners to prevent land speculation, and to keep land cheap and 
 rents low. 
 
 The following table gives the acreage and per cent of the city's 
 area owned by several German cities and by Vienna and Zurich 
 in 1908: 
 
 Total Area Total Amount of Proportion of Total 
 
 of Land Owned by City Area. 
 
 City. City. Within City Without 
 
 Acres. Acres. Boundary. Boundary 
 
 Berlin 15,689.54 39,151.28 
 
 Munich 21,290.24 13,597-02 
 
 Leipzig 14,095.25 8,406.84 
 
 Strassburg 19,345.45 11,866.98 
 
 Hanover 9,677.25 5,674.90 
 
 Schoneberg 2,338.60 1,633-33 
 
 Spandau 10,470.37 4,480.79 
 
 Zurich 10,894.64 5,621.52 
 
 Vienna 67,477.57 32,062.48 
 
 It is part of the policy never to part with any land the city 
 acquires so that it may secure not only the ground rental of the 
 land at the time of acquisition but as well the increased ground 
 rental due to the small, but natural increase of the land values 
 with increasing population. Professor Adolph Damaschke gives 
 two cases of cities, one with very low taxes, the other with prac- 
 tically none: 
 
 "From Hagenau (Alsace), a town of about 12,000 inhabitants, I 
 received the following particulars: 'In 1891-92, Hagenau obtained 
 14,256 from its public land. To this add the produce of the water 
 system, 1,075, and the gas, 850. Local rates and taxes practically 
 negligible on account of these possessions. 
 
 96 
 
 9.2 
 
 240.8 
 
 23.7 
 
 37-8 
 
 32.3 
 
 274 
 
 33-2 
 
 28.1 
 
 37-7 
 
 20.4 
 
 4.2 
 
 65.1 
 
 3.05 
 
 42.9 
 
 26.0 
 
 25-9 
 
 13.4 
 
 54-8 
 
"Gorlitz (Schlesia) takes the most favorable place of all German 
 towns of over 50,000 inhabitants with regard to local rates and taxes. 
 The total local rates per inhabitant came in 1890-91 to 8 marks 35 
 pfennigs; in 1891-92 to 8 marks 2 pfennigs; in 1892-93 to 7 marks 28 
 pfennigs. 
 
 "The reason lies in the circumstance that this town has obtained a 
 landed property of 77,127 acres, from which, in 1892, 33,028 went to 
 the common chest." 
 
 97 
 
CHAPTER IX. 
 
 Possible Methods of Taxing Land Values in 
 American Cities 
 
 The admonition to "hasten slowly" is a short way of saying that 
 evolution is better than revolution in securing social justice which 
 is always, in the long run, economic justice. 
 
 The separate assessment of land and improvement values is, Separate 
 of course, the first step to secure a fair assessment even of land Assessment of 
 values. A bulletin of the Census Bureau states that in the fol- ^ Mt -^ w s th 
 lowing states of the Union in 1902 separate assessment of land first step in 
 and improvements is provided for: Arizona, Arkansas, California, adequately 
 Idaho, Indian Territory, Indiana; in certain cities only in Kentucky; taxing land 
 in Maryland, Massachusetts, Montana, Minnesosta, Nebraska, Ne- 
 vada, may be assessed in New Jersey; in New Mexico, since 1903 
 in New York; in North Carolina, North Dakota, Ohio, Pennsyl- 
 vania, South Dakota, Utah, Virginia, Washington, West Virginia 
 and Wyoming; that is in twenty-six states and territories. Illinois 
 has since made such provision. In very few cities of these states, 
 however, is such separate assessment made. 
 
 Several methods and degrees of taxing land values are possible : Taxing land 
 
 ist. Lower assessment of buildings than of land, and deduc- quest i on O f 
 tion in assessment for depreciation of buildings through age. method and 
 
 2nd. A lower rate of taxation on all buildings and personalty degree, 
 than on land. 
 
 $rd. Exempting all buildings entirely from taxation. 
 
 4th. Exempting from taxation certain buildings which con- 
 form to a high standard of excellence, either for a term of years' 
 or permanently. 
 
 $th. Assessing all public improvements upon property bene- 
 fited. 
 
 6th. Excess condemnation of land. 
 Jth. Taxation of increment of land value. 
 Sth. Municipal ownership of land. 
 
 99 
 
The Vancouver 
 method of 
 
 Proposed 
 Referendum in 
 Missouri on 
 exempting 
 ui ings from 
 taxation. 
 
 The Chicago 
 Tribune on 
 "Some Var'vi- 
 tions on 
 
 theory"*** 
 
 Proposed 
 referendum in 
 Seattle, on 
 exemption of 
 buildings from 
 taxation ' 
 
 Exemption of 
 
 reduces a city's 
 
 borrowing 
 
 capacity. 
 
 IST. LOWER ASSESSMENT OF BUILDINGS THAN OF LAND AND 
 DEDUCTIONS IN ASSESSMENT FOR DEPRECIATION OF BUILDINGS 
 THROUGH AGE. 
 
 This is the method employed in Vancouver where in 1896, 50% 
 o f tne va i ue o f improvements was exempted from taxation; ten 
 years later in 1906, the exemption was increased to 75 per cent, and 
 in 1910 the exemption was made complete. A referendum has 
 been prepared to be submitted to the voters of Missouri, provid- 
 ing that after 1913, no personal property of any kind which does 
 not belong to public service corporations be subject to taxation. 
 After 1913, all owners of improvements are to be entitled to an 
 
 exem p t j on o f $3 ooo on the value of their improvement and by 1922 
 
 VOf 
 a sliding scale will cut off all taxes on improvements. It is pro- 
 
 vided further that no lands except those of public service corpora- 
 tions shall ever go untaxed. The property of public service cor- 
 porations, real and personal, is to be assessed at its true value and 
 the price it would bring at a voluntary sale and a levy on one-half 
 that value is to be made, but whenever these corporations accept 
 regulation of their charges, and the values of the franchises be so 
 reduced that the companies shall make only a reasonable return 
 on the actual value of their physical holdings, further exemptions 
 mav be made. The Chicago Tribune reporting on this proposal 
 says editorially : "It will be seen that the amendment contains some 
 variations on the George theory, variations made necessary by mod- 
 ern conditions of business, and the relations of corporations to the 
 state." The poll tax is to be abolished and no licenses to be col- 
 lected from any business not requiring police regulation, as a fur- 
 tner met hod of taxing land values in Missouri. A referendum vote 
 is to be taken in Seattle next March on exempting 25 per cent of the 
 value "of all buildings, structures and improvements or other fix- 
 
 tures of whatever kind upon land" from taxation in 1912 and 1913, 
 
 t . . ^ 
 
 5 per cent m J 9 14 an( * I 9 I 5' 7$ P er cent m I 9 l &> anc * IO P er 
 cent thereafter. 
 
 The exemption of $3,000 of the assessed value of all improve- 
 ments from taxation is a favorite proposal to secure a higher taxa- 
 tion on land values, and bills to this effect have been introduced 
 in many state legislatures. * 
 
 Exemption, moreover, reduces the taxable base of the city, 
 
 Sm e ^ may be fairly claimed that although a lower rate of taxa- 
 t * on on buildings than on land would not reduce the assessed valua- 
 tion of the buildings, exemption from taxation would do so, and 
 thereby reduce the borrowing capacity of the city which is limited 
 
 100 
 
usually to a certain per cent of the assessed valuation of real estate. 
 While the desire to run into debt to avoid taxation of land values 
 obsesses owners of land in American cities as at present, it will 
 be difficult to secure any general endorsement from business men 
 of a proposal to limit such extravagant high finance, although they 
 appreciate the justice and advantages of taxing land values higher. 
 
 2ND. A LOWER RATE OF TAXATION ON ALL BUILDINGS AND 
 
 PERSONALTY THAN ON LAND. 
 
 P Land values in 
 It will have been evident by this time that the present rate of American 
 
 taxation of land in most American cities can hardly be called taxa- c ^ es are 
 
 tion of land values since practically none of the economic rent of undertaxed, 
 
 land is secured by taxation. Probably the most feasible way for not taxed. 
 
 American cities to encourage the construction of buildings and to R a t e O f t axa . 
 
 secure a larger proportion of the cost of city government by taxing tion on land 
 
 land values is to tax land at a higher rate than buildings, although values will be 
 
 this is not incompatible with reducing the assessment on buildings determ<ined y 
 
 _ , , ,. sentiment 
 
 due to depreciation through age. Just how much lower a rate of against taxing 
 
 taxation on buildings than on land should be sought depends chiefly industry, and a 
 
 upon the degree to which the community realizes the justice of community's 
 
 such encouragement to industry and check on the confiscation of ability to secure 
 
 ground rents by the owners of land. In most American cities there soctal *** 
 
 is at present a strong sentiment on the part of tenants, including *esentatives 
 
 business men and manufacturers, in favor of this procedure which 
 
 , . . , ,. Advocates of 
 
 only needs organization and direction. "taxation with- 
 
 Naturally any increase, however slight, in the rate of taxation out represen- 
 on land will be opposed by owners of vacant property, and by those tation" oppose 
 who still claim the right to acquire the fruit of other people's labor taxation of 
 and industry without paying them for it. It is well known that land values - 
 at present the land and loaning interests control the government of Halving the 
 
 most American cities and are at least almost equally powerful in ^ x - rate on 
 
 .. , buildings and 
 
 most state legislatures. It is manifestly better to make any change persona i ty in 
 
 in the rate of taxation gradual, and perhaps as moderate a change fi ve years a 
 
 as could reasonably be suggested is that of the New York City Com- reasonable 
 
 mission on Congestion of Population, that the rate of taxation on proposal, 
 
 all buildings and personal property in the city be made in 1912 and doesjl 
 ninety per cent of the rate of taxation on all land whether improved ^ undue 
 
 or not, and a similar reduction be made in each of the four follow- jj ur d e ns. 
 ing years so that in 1917 the rate of taxation on buildings and per- 
 sonal property would be one-half the rate of taxation on all land. ism f \ 
 
 J . one test of a 
 
 This would involve only about the same increase each year in the success f u i 
 tax-rate on land that has actually occurred in New York City, for municipal ad- 
 each of the three years from 1907 to 1910, although this increased ministration. 
 
 101 
 
Rate of taxa- 
 tion of land 
 values is 
 adjustable and 
 changeable. 
 
 Wall Street 
 naturally 
 against taxing 
 land values. 
 
 Conservative 
 organisations 
 in New York 
 City favor 
 halving the 
 tax -rate on 
 buildings. 
 
 Heavier taxa- 
 tion of land 
 values the just 
 method of 
 reducing city 
 debts. 
 
 tax-rate has been levied upon land and buildings alike, and the 
 assessed value of land has also been markedly increased during the 
 past three years, thus making the total taxes to be paid upon land 
 much higher. Tax-rates in most progressive American cities are 
 increasing now, but industry is bearing an undue proportion of the 
 cost of the enlargement of municipal functions essential to municipal 
 progress and development. 
 
 It is apparent, however, that it is possible for any city either 
 to stop when the rate of taxation on all buildings and personal prop- 
 erty is only one-half the rate of taxation on all land, or to continue 
 the reduction, depending upon the public's control of legislation. 
 It is probable that few communities would decline to continue 
 reducing the tax-rate on buildings after a few years of experience 
 with such lower rate. On the other hand, every community in 
 the country has to guard against the dominance of the great monied 
 interests which can secure the reversal of the policies best for the 
 interests of the community, but opposed to their own special inter- 
 ests. The justice of the ''halving of the tax-rate on buildings" has 
 been readily appreciated by a large proportion of New York's voters, 
 although the proposal has been before them for only about four 
 months, but it has been discussed with some fair degree of thorough- 
 ness in the metropolitan press and in the scores of meetings through- 
 out the city. The bill providing for the gradual reduction of the 
 tax-rate on buildings as explained above has been endorsed by such 
 conservative organizations in the city as the Citizens Union, the 
 City Club, and the Federation of Churches and Christian Organiza- 
 tions, as well as by many of the most prominent merchants, manu- 
 facturers, business and professional men of the city, by all of the 
 largest labor unions of the city, by taxpayers associations and 
 boards of trade, as well as by social workers, including the secre- 
 taries of the three largest relief organizations in the city, and by 
 savings and loan associations. 
 
 The fiscal policy of a city with reference to meeting its current 
 obligations has a very important bearing on the taxation of land 
 values. This is discussed more at length under fiscal advantages 
 of taxing land values, but should be referred to here. The post- 
 poned payments of most cities amount to from one-third to nearly 
 one-half of their current budgets, and naturally the total tax levy 
 would be increased by the amount of such postponed payments as are 
 included in the sums to be raised each year by taxation and from 
 other sources. The inclusion of even half of the postponed payments 
 of any city would materially increase the tax-rate for a series of 
 
 102 
 
years until the termination of heavy interest and liquidation charges 
 for past postponed payments shall offset such increase. In New 
 York City, for instance, the "debt service" is equal now to about 
 one-half of the total annual postponed payments. The inclusion of 
 at least a part of such postponed payments should be part of the 
 effort to tax land values so as to avoid the egregious mistake of 
 Vancouver in keeping such a low tax-rate on land values as not 
 to secure any appreciable part of the economic ground rent. The 
 payment by fifty or even forty yearly installments, of the cost of Postponed 
 
 paving streets, or catching up with a city's needs for schools, parks Py***** the 
 
 t i 1- . e ostrich method 
 
 and other public purposes is contrary to any proper conception of , concealin 
 
 taxation of land values. In a community where the land values mun i c ip a \ 
 represent a large proportion of the total assessed value of the city expenditures. 
 a larger portion of the deferred payments should be included in 
 the annual budget to be met by current taxation, and at least one- 
 half of the cost now met by such payments should be included when 
 the rate of taxation on buildings and personal property has been 
 reduced to one-half or less of the rate of taxation on all land. The 
 following statement by the president of one of the largest mort- 
 gage companies in New York City, regarding the halving of the 
 tax-rate on buildings indicates the advisability of a gradual reduc- 
 tion of taxation on buildings from the point of view of conserva- 
 tive business interests, which admit the injustice of the present sys- 
 tem of taxing land and buildings at the same rate: 
 
 "Going into effect gradually through a period of five years there ^ mortgage 
 
 should be no danger of unsettling mortgages or wiping out equities, ex- company 
 
 cept a possible sentimental effect, while the added fact that the real Presidents 
 
 estate market is quiet and there is no active speculation or building view t e $ ec 
 
 movement would tend to minimize any possible inconvenience to owners * ia vin9 le 
 
 r tax-rate on 
 
 of property. , ., ,. 
 
 buildings. 
 
 3RD. EXEMPTING ALL BUILDINGS FROM TAXATION. 
 
 To attempt to do this immediately in any developed American The injustice 
 city would doubtless precipitate a very serious panic since no injus- of taxing 
 tice long established and hence the basis for transactions and busi- bm M9 s at 
 ness can be changed immediately. That ultimately all taxes upon fl ^ ^^ ^^ 
 buildings and personalty will be abolished in American cities is b e en ded at 
 as certain as that it is unwise to attempt such abolition otherwise once. 
 than gradually. In a new city, however, the case is different. Cities 
 like Gary, Indiana, and other rapidly developing industrial com- 
 munities might safely start in without taxing buildings at all. This 
 would not, however, be the single tax. On the other hand, the 
 
 103 
 
writer has suggested to President Taft and Congressman George 
 that the single tax should be tried out in the districts known as 
 Controller Bay. 
 
 4TH. EXEMPTING FROM TAXATION CERTAIN BUILDINGS WHICH 
 CONFORM TO A CERTAIN HIGH STANDARD OF EXCELLENCE, EITHER 
 FOR A TERM OF YEARS OR PERMANENTLY. 
 
 Exemptions Aside from the result of exempting buildings from taxation upon 
 
 are contrary to the borrowing ability of a city, exemption even of "model dwell- 
 the American i n g s " so-called, is contrary to the American spirit. To be sure there 
 Equality are at P resent so * ew m del tenements or other buildings in large 
 
 American cities that their exemption would not seriously affect any 
 city's borrowing capacity, the proposal being entirely different from 
 the exemption of $3,000 on all buildings and the total exemption of 
 all buildings assessed for $3,000 or less. Americans are rather keen 
 on equality before the law, theoretically at least always, and vig- 
 orously when any one is going to get a better chance than them- 
 Exempting selves. The exemption of model dwellings moreover puts a heavier 
 some buildings burden upon other buildings, and tends to increase rents in them 
 puts a h earner without providing any appreciable incentive to substitute model for 
 thers. unsan i tar y tenements, unless the exemption is permanent. The ques- 
 tion of how long model buildings stay model even when they start 
 out so designated is another point to be considered, since with age 
 even buildings with adequate sanitary provisons tend to deteriorate. 
 
 Assessment of 5TH. ASSESSING ALL PUBLIC IMPROVEMENTS UPON PROPERTY 
 
 public im- BENEFITED. 
 
 provements on 
 
 property in so * ar as tne property upon which the cost of public improve- 
 
 benefited puts ments is assessed is unimproved, land values are taxed by assess- 
 
 a heavy ment for streets, sewers, sidewalks, parks, etc. These costs are often, 
 
 lurden on however, assessed upon buildings. It is not customary, however, to 
 
 assess schools, and other public buildings nor rapid transit upon the 
 
 Cost of assess- property benefited thereby, and it is perfectly clear that all of these 
 
 public improvements benefit property. The attempt to determine, 
 
 benefitd ' precisely, in cities how much a street increases the value of land 
 
 very great m t ^ ie neighborhood and how much sewers, parks, etc., do so, has 
 
 been conspicuously unsuccessful. At times the cost of ascertaining 
 
 the area benefited by a public improvement such as a driveway, and 
 
 assessing the cost of the improvement thereon with mathematical 
 
 precision, has been more than the cost of the improvement. The 
 
 proposal to assess transit lines upon property benefited has been 
 
 hailed as a solution of the transit problem, since in few instances is 
 
 the effect of public improvement more immediately and strikingly 
 
 104 
 
illustrated than in the case of transit lines the values of land on 
 
 such routes being doubled and trebled sometimes in a few years. 
 
 The increased traffic to the termini of such routes, however, increases 
 
 land values there, and each additional extension to a line which has 
 
 its terminus in the center of a great city benefits, not alone the ter- Determination 
 
 ritory through which the lines run, but as well the blocks within f ar ben ~ 
 
 walking distance of the terminal. Thus the Hudson Tubes from ^^J^ y 
 
 New Jersey to New York which have a terminal in lower Manhat- difficult. 
 
 tan increased materially the value of land in the vicinity. The cost 
 
 of determining how much the increase of land value during the past 
 
 decade in Manhattan below Brooklyn Bridge is, however, due to the 
 
 Hudson Tubes, how much to the opening of the bridges, how much Causes which 
 
 to the completion of the subway under the East River and how much create land 
 
 to high pressure water service, etc., would be very great. Similar 
 
 difficulties exist in other cities. Of course, these items can be de- 
 
 termined, just as in oriental countries where labor is cheap and 
 
 women plentiful, women pick all the seeds out of currants to make 
 
 a delicious smooth paste at the cost of about an hour's labor to a 
 
 teaspoonful of paste while in countries where time is money, they 
 
 strain currants. 
 
 Land values can be taxed by assessing each separate improve- 
 ment, and even assessing the cost of schools upon the families in 
 the districts served according to the number of children in the fam- 
 ily, but it is a somewhat cumbersome method. 
 
 6TH. EXCESS CONDEMNATION OF LAND. 
 
 This subject has already been sufficiently discussed under fiscal . 
 
 . - e . Excess cow- 
 
 advantages of taxing land values so that only a passing reference is ^emnation of 
 
 needed to the fact that the acquisition by the city of more land than i an ^ provides 
 
 is needed for a specific purpose and its rental or resale by the city only a partial 
 
 to recoup itself for the cost of the land to be used by it, has only method of 
 
 limited application and is an extremely unfortunate substitute for taxln 9 land 
 general heavy taxation of land values, although of value in securing 
 land cheaply. 
 
 7TH. TAXATION OF INCREMENTS OF LAND VALUES. 
 
 This proposal which is not by any means novel, having been Taxation of 
 
 suggested by John Stuart Mill, is feasible, though difficult admit- increases in 
 
 tedlv of application in most American cities. The working of this , 
 
 '. . . . 1 * A 11 endorsed by 
 
 tax in foreign countries has already been explained. A small um- j j in 
 
 form land increment tax or even a moderate progressive tax would 
 not permanently secure a large revenue for a city, but it would 
 have certain additional advantages, such as keeping land cheap as 
 noted in the answers to objections to this method of taxing. 
 
 105 
 
Taxation Com- 
 mittee of 
 New York City 
 Congestion 
 Commission 
 advocated 
 small land in- 
 crement tax, 
 and that pro- 
 ceeds be 
 devoted to 
 building 
 transit lines. 
 
 Professor 
 Davenport 
 defends land 
 increment tax, 
 but says the 
 single tax 
 doctrine is 
 merely a 
 method for 
 appropriating 
 socially pro- 
 duced values. 
 
 Various de- 
 grees of taxing 
 increases in 
 land values. 
 
 The New York City Commission on Congestion of Population 
 were strongly urged, they state in their report, to recommend an 
 unearned increment tax, and the Committee on Taxation of which 
 Prof. Frank J. Goodnow was Chairman did recommend an "annual 
 increment tax at a low rate, say 5 per cent, the proceeds of which 
 shall be devoted to the building of the transit lines of which the city 
 is in so great need." 
 
 Professor H. J. Davenport of Chicago University recently stated : 
 
 "The social appropriation of the unearned increment of land values 
 must be worked out not by a tax upon the capitalized worth of the 
 rental income but by direct process against the rental income. Not so 
 much in general purpose and in general principle as in theory and in 
 method is the single tax program defective. 
 
 "But even so, the principle is practicable only as applied to location 
 rents. To burden the " fertility must work the progressive exhaustion 
 of this fertility. Only the irremovable bases of value can be safely 
 burdened and this only upon the condition that the position rent be 
 kept strictly separate from the fertility rent. Otherwise the owner will, 
 by the 'skimming' process, deteriorate to the utmost possible extent, 
 with the purpose of transferring his value investment into an untaxed 
 form. 
 
 "Rightly understood, the single tax doctrine is not a tax doctrine 
 at all; it merely urges the employment of the tax machinery and 
 administration for the appropriation of socially produced values." 
 
 The following table shows the amount and per cent of increase 
 of assessed land values for a year in a few American cities : 
 
 INCREASE IN ASSESSED LAND VALUES FROM IQOQ TO IQIO. 
 
 Amount. Per cent. 
 
 New York $115,402,444 2.9 
 
 *Chicago 43,678,609 4.3 
 
 Boston 23,189,800 3.5 
 
 Springfield (Mass.) 3,407,080 (1910 to 1911) 6.1 
 
 Washington, D. C 298,084 0.19 
 
 Los Angeles 33,999,840 (1910 to 1911) 17.04 
 
 Buffalo 1,210,505 0.9 
 
 The average annual yield, however, of a land increment tax is 
 at best uncertain, depending upon whether the tax is a flat rate, 
 and whether the rate is high or low, whether it is a progressive tax 
 depending upon the per cent of increase of land values, and if so 
 upon the initial rate, the rapidity of progression and whether a large 
 per cent is levied upon all increase above a certain minimum, as 
 well as whether the tax is levied equally upon increases in land 
 values of improved and unimproved properties. Other disturbing 
 
 * Average annual increase for the four years, 1907 to 1911. 
 
 106 
 
and not determinable factors may enter into the computation of 
 the yield from a land increment tax. If levied at time of transfer, 
 the rate in foreign countries usually varies according to the length 
 of time since the last transfer, a higher rate often being levied 
 abroad upon land held in the same ownership for a long term of 
 years. 
 
 The simplest land increment tax is doubtless a uniform tax lev- The simplest 
 
 ied, annually upon all increases in the assessed value of land. This land crement 
 
 , -ill- *. t. i iax ls a fl at 
 
 is, of course, possible only in cities where assessments are annual ; fatg u . 
 
 as they should be in all cities, to ensure proper increased assessments annual increase 
 of land, and adequate decrease due to depreciation of buildings. in assessed 
 
 Deductions should be made in arriving at the increases in value va ues ' 
 for all expenditures by the owner of land whether improved or not, Proper deduc- 
 for transit, sewers, street paving, sidewalks, and any other similar tions should 
 public improvement, as well as for any assessments against property ma e ' 
 for such improvement. It is supremely important to secure such 
 careful separate assessment of land and improvements as has been 
 secured in New York City by Hon. Lawson Purdy, President of 
 the Commissioners of Taxes and Assessments. The levying of a 
 land increment tax is also much easier where real estate is assessed 
 at its full value. American cities could with fairness secure at least 
 5 per cent to 10 per cent of the annual increase in assessed land 
 values above expenditures enumerated above. The yield from such 
 a tax would doubtless tend to diminish in a few years if assessments 
 are full value and especially if land values are taxed $3.00 to $5.00 
 per $100.00 of full value. For a few years, however, such a tax 
 could yield a few hundred thousand dollars in some cities having a 
 population of 500,000 or over, and several million dollars in New 
 York and Chicago, under the conditions that land values are taxed 
 heavily and the Vancouver type of land speculation and "land 
 boom" thereby avoided. The difficulties of imposing a land incre- 
 ment tax are admittedly great but not insuperable. 
 
 Although the effects of the land increment tax in Frankfort-on- 
 the-Main are complicated by many provisions as to rates, exemptions 
 progression, etc., it is interesting to note that the yield from this 
 tax which was in 1905, 833,629 marks and in 1906, 1,104,997 marks, 
 fell in 1907 to 498,183, in 1908 to 198,042, and in 1909 to 305,593 
 
 marks. 
 
 Municipal 
 
 STH. MUNICIPAL OWNERSHIP OF LAND. ownership of 
 
 land for 
 As suggested in the reference to the methods of taxing hind p u bn c purposes 
 
 values abroad this is technically municipalization of land and not important. 
 
 107 
 
Municipal 
 ownership of 
 land to prevent 
 land specula- 
 tion a ques- 
 tionable policy. 
 
 The remedy 
 for land 
 monopoly 
 is taxation of 
 land values. 
 
 Dummy own- 
 ership in 
 American 
 cities. 
 
 Social evils of 
 land monopoly 
 for unearned 
 increment as 
 serious as use 
 of buildings 
 for immoral 
 purposes. 
 
 taxation of land values. Probably no American city now owns as 
 much land as it should have for public purposes, schools and other 
 public buildings, parks and playgrounds, docks and piers, etc., but 
 should secure adequate land for such purposes long in advance of 
 actual need so as to avoid paying the speculative increase of value. 
 On the other hand to acquire enough land to enable a city to prevent 
 speculation in land is contrary to American principles and a very 
 questionable policy. Exercise of the police power through stricter 
 building regulations and through direct and immediate taxation of 
 land values is much more feasible in America, and probably will be, 
 until, at least, we have installed better systems of accounting and 
 administering the business of cities. Even when cities are efficiently 
 run, both as to scope and administration of activities, however, and 
 when special interests, such as transit, gas and real estate companies 
 have ceased to exert their present dominant influence over city ad- 
 ministrations, municipalization of land will be objectionable, because 
 striking at the basic principles of private initiative and effort. The 
 remedy for land monopoly is not government ownership, but suf- 
 ficiently heavy taxation of land values. 
 
 INSTANCES OF CONCENTRATION OF LAND VALUES IN AMERICAN CITIES. 
 
 Unfortunately the device of holding property in the names of 
 dummies makes it extremely difficult to learn the large owners of 
 vacant or improved land in American cities, and the extent and 
 value of their holdings. The desire of some few people to conceal 
 the fact that they own property because of its condition or the use 
 to which it is put is sufficient explanation of such concealment of 
 ownership. The social evils resulting, however, from land monopoly 
 to secure unearned gain in American cities are well nigh as serious 
 as those resulting from the most immoral uses of improved property. 
 While large acreage holdings in the outlying sections of a city are 
 not so valuable as a single plot in a built-up section, the first repre- 
 sents prospective unearned value, the second actual unearned value, 
 in private possession. It is frequently asserted that there is no 
 land monopoly in American cities, but the following figures prove 
 the existence of monopoly either of land values or land acreage or 
 both in several American cities. This data has been secured from 
 various reliable sources, chiefly city records. 
 
 NEW YORK CITY. 
 Concentration 
 
 of land values Eight families, estates and corporations recently owned about 
 in Manhattan, one-nineteenth of the assessed land value of Manhattan, i. e., one- 
 
 108 
 
nineteenth of $2,707,862,301. The total population of Manhattan is 
 now nearly 2,500,000. 
 
 Twenty-three families, estates and corporations owned about 
 one-ninth of the total area of the Bronx, i. e. f of 26,017 acres. 
 
 In 1910, fifty-seven families, estates and corporations owned Concentration 
 
 about one-sixth of the land in Richmond, about 6,000 out of 36,600 f acrea 9* 
 
 holdings in the 
 acres. agricultural 
 
 One real estate corporation with stockholders all over the coun- borough of 
 try advertises that it owns or controls 20,000 lots in Brooklyn on Richmond. 
 future subways and on five-cent fares, ten times the amount in the 
 control of any other corporation or individual in that borough, and 
 that the assessed value is $15,000,000. 
 
 Several companies and individuals own 50 to 500 acres each in 
 Queens, and one company recently owned nearly 1,000 acres here. 
 
 CHICAGO. 
 
 In 1907, the full assessed value of the sites of the following nine 
 well known buildings in Chicago, The Marshall Field Retail Dep't 
 Store, The Fair, Palmer House, Siegel, Cooper & Co. Dep't Store, 
 Auditorium Hotel, Congress Hotel, Republican Office Building, 
 Champlain Office Building, Stratford Hotel, was $29,182,370, out 
 of a total full assessed land value for the city of ^3/139,056,69^ r/j, j/ 
 or nearly one one . hundredth. *#c<A3^.^q/tc: 
 
 Messrs. Raymond Robbins, a member of the Chicago Board of 
 Education, Philip Angelen and John C. Harding, former members 
 of the board, made the following statement in 1909 : 
 
 "In 1818 the United States Government gave the square mile 
 between State, Madison, Halsted and Twelfth Streets to the state of 
 Illinois, to be held in trust for the support of the public schools and 
 the education of the children of Chicago. 
 
 "Except for one block, between Madison, Dearborn, State and 
 Monroe Streets, nearly all of this square mile was sold about seventy 
 years ago for less than $40,000. 
 
 "Within fifteen years after it was sold this square mile was worth 
 six million dollars. 
 
 "To-day its value is hundreds of millions of dollars (without 
 
 improvements). 
 
 How land 
 
 "The rent from this square mile of land would be sufficient to monopoly 
 support for all time the entire school system of the state of Illinois increases 
 without an additional dollar of taxation." taxes. 
 
 109 
 
Concentration 
 of land values 
 in Boston. 
 
 Washington 
 belongs not to 
 the nation, 
 but to a few 
 families 
 there. 
 
 BOSTON. 
 Mr. C. B. Fillebrown gives the following statistics for Boston : 
 
 "The assessed value of land in Boston in 1907 was $652,995,300, 
 while the land at the southwest corner of Winter and Washington 
 Streets was assessed at $537,600, or one-twelve-hundredth of the total 
 value of land in Boston. 
 
 "The total valuation of the land on both sides of Winter Street, 
 including the lands on the Tremont and Washington Street corners, 
 was $5.142,600 in 1898, and this has increased to $8,272,000 in 1907. 
 
 "This represented an increase of 58 per cent in yalue in the nine years 
 that this privileged area represented approximately one-eight-hundredth 
 of the total assesed land value of the Hub." 
 
 The net funded debt, city and county, of Boston, January 31 st, 1909, 
 was $72,036,984.50. 
 
 WASHINGTON. 
 
 SOME LARGE HOLDINGS OF LAND IN THE DISTRICT OF COLUMBIA. 
 
 July, 1910. 
 
 Acreage. 
 
 A 224.88 
 
 B 145-00 
 
 C 341-63 
 
 D 476.33 
 
 E 342.69 
 
 F 152.00 
 
 G 148.00 
 
 Total 1,830.53 
 
 About 7 per cent of all the land exclusive of parks, governmental 
 reservations, streets and exempt land, is owned by seven families, 
 companies and estates. Over 10 per cent of the 44,800 acres in the 
 National Capital is owned by seventeen companies, families and 
 estates. 
 
 The assessed land value of the site of the New Willard Hotel 
 was in 1908, $472,144 out of a total assessed land valuation for 
 Washington City of $114,673,401, i. e., the site of this one building 
 was worth about one two-hundred and forty-third of the site of 
 the National Capital. 
 
 BUFFALO. 
 
 The total value of land in Buffalo, (assessed at about 100 per cent 
 of its real value) was in 1910, $168,130,110; of improvements, 
 
 no 
 
$160,592,425 (excluding exempt property), total, $328,722,535 exclu- Site of one 
 sive of franchises. block in 
 
 The assessed land value of the site of the great Ellicot Square Bu ff alo > orth 
 s-^rr- T-. < 1- 111 rtvo 1 i on e two-hun- 
 
 Office Building, covering a block, was $845,200, that is, about one- dred , cif , s 
 
 two-hundredth of the total assessed land value. i an( j values. 
 
 CONCLUSION. 
 
 The most immediate, practical, economic, and just, method of 
 taxing land values in American cities in which land and improve- 
 ments are separately assessed is a heavier rate of taxation on land 
 values through a lower rate of taxation on all buildings and 
 personalty. 
 
 Halving the tax-rate on buildings and personalty within the next How to secure 
 few years is the next step towards securing freedom from existing freedom from 
 land slavery. The total exemption of buildings and personalty from e ^^ in ff land 
 taxation will properly and naturally follow gradually. The land 
 increment tax, despite its great administrative difficulties, is a prac- 
 tical and universal method of recovering for the community its fair 
 share of the community created and earned land values. The other 
 methods enumerated are limited in their application, or cumbersome Heavier direct 
 at best, and do not conform to the American standard and ideal taxation of 
 of equality and justice, although temporarily feasible. Heavier di- l and values 
 
 rect taxation of land values and a land increment tax will furnish and a land 
 
 j f ,. . . 1 . , . increment tax 
 
 adequate revenues for every American city and be the most effective ^^ ^ 
 
 step that cities, as governmental entities, can take, to exterminate adequate 
 poverty and to regain their cities for the people. revenue. 
 
 TIT 
 
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 Table Showing 
 Budgets 
 
 TAX- RATE 
 TO MEET 
 
 BUDGET 
 
 ASSESSED 
 AND VALU 
 
 ft :S8 S : I'SS'ft^^ 
 
 31 
 
 rtOvO TJ-VOOO (N 
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 112 
 
INDEX 
 
 PAGE 
 
 ALLIED REAL ESTATE INTERESTS of New York 38 
 
 Adequacy of taxation of land values for municipal revenues 61-66 
 
 Agriculture, intensive in cities 7~7 I 
 
 Australian Commonwealth, proposed land tax in 94-95 
 
 Australasian Provinces, taxation of land in 95 
 
 Assessment of land and buildings separately 99 
 
 Assessing all public improvements upon property benefited . . 104 
 
 BERLIN, sources of municipal revenue in 86 
 
 Budapest, sources of municipal revenue in 85 
 
 Business interests, governmental control over 53 
 
 Business men's endorsement of halving the tax-rate on buildings in 
 
 New York 51 
 
 Brunhuber, Carl 47-49 
 
 Buildings, incidence of taxes on 18, 25, 27, 30, 57, 58 
 
 Buildings, result of taxing at the same rate as land 12, 18, 27, 30, 32, 54 
 
 Boston 21, 22, 62-63, 1 10 
 
 Buffalo 64, iio-in 
 
 "CORNERS" in Land 12 
 
 "Confiscation" involved in heavy taxation of land values 15, 20, 40 
 
 Constitutionality of heavier tax-rate on land than on buildings 42-44 
 
 Congestion, and taxation of land values 2, 12, 18, 58 
 
 Chicago 4, 22, 64, 109 
 
 City Planning 69 
 
 Consumption and taxation of land values 81-83 
 
 Campbell-Bannerman, Sir Henry 13 
 
 Concentration of land values in American cities 108-111 
 
 DEVINE, Dr. E. T 9, 10 
 
 Dangers of too low tax-rate on land 36, 37 
 
 Durack, Walter L 38 
 
 Decentralization of industry and taxation of land values 42 
 
 Dickey, Mr. Luther S 33 
 
 ECONOMIC laws and taxation of land values 55 
 
 Excess Condemnation of Land 67, 105 
 
 England, Land Increment Tax in 93-94 
 
 Exemption of buildings from taxation 103-104 
 
 FEDERATION OF CHURCHES on moral aspects of taxing land values 24 
 
 Fire protection and taxation of land values 30-32 
 
 Fillebrown, C. B 17, 60, 62 
 
 Franchises, Taxation of 58 
 
 Fairlie, Prof. John H 90, 93 
 
PAGE 
 
 GERMAN Land Increment Tax 90-93 
 
 Goodnow, Prof. Frank J 86, 106 
 
 George, Henry 17 
 
 HOME ownership and taxation of land values 6, 8, 9, 35, 80 
 
 Housing, English Royal Commission on 13 
 
 Housing Reformers and Taxation of land values I 
 
 Housing standard for American workmen 6 
 
 Hennessy, Charles O'C 38-39 
 
 Habitations, graduated tax on 58 
 
 Hart, Dr. Albert Bushnell 94 
 
 Halving the tax-rate on buildings i, 51, 101-103 
 
 INDUSTRY, result of taxes on 42 
 
 JOINT interest of wage-earners and employers in taxing land values... 32 
 KANSAS CITY 65-66 
 
 LAND values, causes of 15, 17, 21, 24, 46 
 
 Land speculation and how to prevent it 6, 10, 13, 47-48 
 
 London, sources of Municipal Revenue in 88-90 
 
 Landowners' Risks 16 
 
 Land Increment Tax 48, 90-94, 105 
 
 Landowners' Profits 16, 20-23 
 
 Land Monopoly in American cities 108-1 1 1 
 
 Lloyd-George 21, 93 
 
 Land values, taxation of, no substitute for restrictive and safety 
 
 regulations 3 1 , 4, 23-24 
 
 Landowners' "rights" to improvements at public expense 47 
 
 Land values, incidence of taxation on 6, 7, 8, 24, 30, 34, 48, 56 
 
 Lower assessment of buildings than of land 100-101 
 
 Lower tax-rate on buildings than on land 101-103 
 
 MANUFACTURERS, regulation of 12, 53 
 
 Mill, John Stuart 25, 50 
 
 Municipal social activities 25 
 
 Moody, John, on halving the tax-rate on buildings 39~40 
 
 Municipal debts and taxation of land values 36, 54, 68 
 
 Money market and taxation of land values 54 
 
 Mewes, Dr. Wilhelm, on land speculation 10 
 
 Municipal landownership 96-97, 107 
 
 NATIONAL HOUSING ASSOCIATION i 
 
 Nettlefold, Councillor John S n 
 
 New York City 2, 18, 19, 22, 24, 28, 51-52, 61, 66, 108-109 
 
 OMAHA, Nebraska 64 
 
 PARIS, Sources of Municipal Revenue in 87 
 
 Panics, and taxation of land values 33~39 
 
 Private Property and Taxation of land values 17 
 
 Pleydell, A. C 46, 49 
 
 Poverty 76, 77, 79, 80 
 
 Pittsburgh 22, 78, 80 
 
PAGE 
 
 ROBINSON, ALLAN 19 
 
 Rents and taxation of land values 7, 8, 10, 12, 27 
 
 Room-overcrowding and taxation of land values 13 
 
 Referendum, need of popular on taxation of land values 23 
 
 Ricardo 59 
 
 Rogers, Thorold 60 
 
 SELIGMAN, Prof. E. R. A. 
 
 On the single tax 44 
 
 On the land increment tax and lower tax- rate on buildings 45 
 
 On the incidence of taxation 18, 60 
 
 Savings and Loan Associations' Officers endorse half tax-rate on 
 
 buildings 37, 38 
 
 Sage Foundation Homes Co 73-75 
 
 Salisbury, Marquis of 95 
 
 Standard of living and taxation of land values 26, 28, 29 
 
 Socialistic alternative for taxing land values 54-55 
 
 Springfield, Mass 65 
 
 Skyscrapers, graduated tax on 59 
 
 Smith, Adam 57, 59 
 
 Sulzberger, Cyrus L 41 
 
 Social unrest 75 
 
 Scottish Select Committee on Taxation of Land Values 96 
 
 TENEMENT HOUSE, Prevention vs. Reform of 24 
 
 Transit vs. taxation of land values 40-42 
 
 Tenement house restrictive legislation, results of 3 
 
 Tenancy in American cities 27 
 
 Taylor, Mayor L. D 33-37 
 
 UNSANITARY Tenements and taxation of land values 45 
 
 "Unearned increments" from other sources than land values 44 
 
 VANCOUVER, Single Tax in 33-37 
 
 Veiller, Lawrence 2-3 
 
 Vienna, Sources of Municipal Revenue in 85 
 
 WAGES and taxation of land values 26, 30, 82 
 
 Wall Street and taxation of land values 39, 60 
 
 Washington, D. C 4, 65 
 
 Worcester, Mass 65 
 
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