The ideals of individual Liberty and Freedom, long cherished by mankind, are being constantly challenged today by the Communist totalitarianism. All freedom loving people of the world are therefore greatly exercised over finding out the best means and ways of combating this menace to modern civilisation. The great American Economist and thinker, Henry George, (1839 -1897) was one of those great minds that applied themselves to this serious problem. The remedy that he suggested in his epoch-making book “PROGRESS & POVERTY (1879)” has come to be known as “Single Tax” and his followers now call themselves “Single Taxers”.
In tune with the moral law
It is generally agreed that communism and its mild variety [of] socialism thrive well in a society in which extreme poverty of the many prevails side by side with the great affluence of the few. So all leading democratic countries of the world have evolved elaborate and complicated systems of taxing the rich heavily for the benefit of the poor. But this method, as experience has shown, has its own serious defects. The special tax on the rich, can be evaded in more ways than one, or a large portion of it can be passed on to the poor consumers, who are made to pay higher prices of goods they purchase in the market. The worst part of it is, that it dries up the springs of industry and enterprise. Henry George, therefore, did not favour it.
After mature thought and study, his acute mind lighted upon an effective method of taxation which would at once remove the appalling poverty of the workers, without obstructing the smooth running of the wheels of modern industry and also would supply the modern governments with necessary funds to discharge their public functions. The reform that he proposed was “to appropriate rent by taxation and to abolish all taxation save that upon rental values.” (“PROGRESS & POVERTY” Book V, Chapter II)
In this reform, Henry George saw perfect harmony between the moral, law and the economic law. The amazing phenomenon of persistence of poverty in the midst of plenty, resulting from modern industry, led him to infer that “in the social organisation, moral law has been defied and the natural rights of man have been ignored.” (H. George—’Social Problems’ Chapter—’Rights of Man’). In this view, social institutions, in order to have a healthy growth, must conform to the great absolute moral laws. He implicitly believed in the malienable human rights of “Life, Liberty and the pursuit of Happiness”, as set forth in the American Declaration of Independence, and heartily agreed with the diagnosis of social evils made in the Declaration of Rights of the French National Assembly (1789), that “ignorance, neglect or Contempt of Human Rights are the sole causes of public misfortunes and corruptions of Government”.
He held that these equal rights of all to life and liberty were flagrantly violated by denying to man the right to the free and equal use of land, which was as much of nature’s bounty as sunshine and air. A few land-owners monopolised all land and unjustly took rent from the tenants for its use and thus deprived the producers of their full share in the produce of their labour. This rent was a social value attached to the land, created by the presence of the community and its social and economic activities. Rents rose high with the growth of the population. Therefore, this social value should properly go to the community and the State would be perfectly justified in assessing a tax on land, equal to its annual rental value, and using it for the benefit of the community. Thus alone would the equal rights of the people to the equal use of the land, basically essential for the pursuit of life and happiness, be fully assured and protected.
This rent, according to this theory, did not include the consideration paid by the people to owners for the use of the buildings, industrial structures raised and other improvements made by the owners on the land with their capital and labour. So improvements and such other forms of wealth were to be exempted from taxation, since they constituted the private property of the individuals in the real sense of the term, on which the State could lay no claim. This “Single Tax” was to be assessed on all lands whether used or kept out of use by landowners, out of speculative considerations, since what was to be taxed really, was not merely the actual rent yielded by the land but also the potential rental value of every land in use or out of use.
The benefits of ‘Single Tax’
The immediate beneficial effect of this tax would be to reduce the sale prices of land to nominal ones. Landowners would no longer find it profitable to keep for themselves idle lands, since they would have to pay taxes for them equally with the rest. So lands would be available to the farmers and industrialists on easy terms. New industries would spring up; production would rise to great heights and wealth would increase by leaps and bounds. The element of rent, having been largely eliminated from the prices of commodities, the cost of living would go down considerably. Workers would be in a position to employ themselves on easily accessible lands. They would no more be compelled to sell their labour for a minimum wage. Hence, competition would not be one-sided among the labourers only, but employers also would be competing with one another for getting good and efficient labour. This would tend to increase workers’ wages, bring about a fair distribution of wealth, and normalise the relations between capital and labour. Consequently, the intervention in such matters, of the Trade Unions which Henry George called “Trade Trusts” would become outmoded and unnecessary.
Industrial prosperity, thus induced in a natural way, would stop the periodic paroxysms of booms and slumps overtaking trade and industry. Industrial stability and full employment at home, would pave the way for international free-trade and consequently for international peace, amity and goodwill. Moreover, Georgians claim that this “Single Tax”, if properly assessed on land values or annual rentals, would provide ample funds even to modern governments for carrying out their manifold duties.
His confession of faith
After the publication of “PROGRESS & POVERTY”, Henry George came in for a good deal of criticism at the hands of Herbert Spencer and others, that he was no better than a Communist, out for nationalisation of land. In a spirited rejoinder to such criticism, Henry George succinctly and precisely made his confession of faith in the following words :
“I have never been a land nationalist. I have never advocated taking of land by the State or the holding of the land by the State, further than needed for public use. From my first word on the subject, I have advocated what has come to be widely known as the ‘Single Tax’, i.e raising of public revenues by taxation which, as far as possible, and as far as practicable, should be made to absorb economic rent, and take the place of all other taxes.
I have been an active, consistent and absolute free-trader and an opponent of all schemes that would limit the freedom of the individual. I have opposed every proposition to help the poor at the expense of the rich. I always insisted that no man should be taxed because of his wealth and that no matter how many millions a man might rightfully get, society should leave him every penny of them.” (Henry George in “THE PERPLEXED PHILOSOPHER” page 66).
He did not detest capital. It was to him the ‘hand-maid’ of labour. He did not set a ceiling on wealth as our Indian Government and our socialist friends are seeking to do. In fact, he denounced communism as “robbery that would bring destruction.”
Nor did he base his system on charity or “Dan” as we call it in India. This reform rested solely on human rights and moral justice. He was not opposed to the accumulation of riches. He wrote “I would not have it dinned into his (rich man’s) ears that it is his duty to help the poor. What he does with his wealth is his own business.” (‘Social Problems’). Our ‘Bhoodan’ and trusteeship faddists, who are never tired of sermonising to the rich and the well-to-do that they should hold their wealth and property in trust for the poor, may well ponder over these wise words of a great economist, moralist and humanitarian.
His means of achieving the ends were legislation, persuasion and education of public opinion and appealing to the sense of duty which was “more potent for social improvement than the idea of self-interest, that in sympathy is a stronger social force than selfishness.” Therefore the communist methods of appealing to the narrow and selfish class interests and of violent class conflict had no use for him.
The great law of progress
A close study of ancient civilisations of Rome and other countries enabled him to discover the important law of progress which he expressed in the telling phrase “Association in Equality”. It meant humanity progressed through mutual association among men and this association could be effective only among equals. Inequality bred fruitless struggles and conflicts and frittered away the creative energies of people needed for the building of a healthy society. This law, he held, explained the growth and decay of all civilisations ancient and modern, “all diversities, all advances, all halts and retrogressions.” (“PROGRESS & POVERTY” Book VI Chapter III).
Radical cure for a deep-seated malady
Georgians look upon ‘Single Tax Reform’ as the most natural and radical cure for the disease of the poverty of the masses. Communist remedies, in their opinion, are at most palliatives and may in the end, do more harm than good. This reform movement is gaining influence in all industrialised democratic countries of the world like America, Australia, Denmark, Canada, New Zealand and South Africa, especially in consequence of the ever increasing burden of taxation on the people in the aftermath of the Second Great War. There are, according to ‘Encyclopaedia America’, a million ‘Single Taxers’ throughout the world today.
India, too with her traditional respect for ‘Dharma’ that is to say the Moral Law, which is also the central core of Henry George’s teachings, will find in the ‘Single Tax’ much that is useful and instructive in her present endeavour to end poverty and to catch up industrially and materially with the progressive nations of the world.
This essay is part of a series from the Indian Liberals archive, a project of the Centre for Civil Society. This essay is excerpted from the journal “The Indian Libertarian”, published in January 1960. The original version can be accessed here.