Who Pays All Taxes?
C. Villalobos Dominguez
[Reprinted from The Freeman, October, 1941]
All Georgists should find material for deep reflection in the
general failure of limited taxes on land values to bring about an
improvement in the economic condition of the people. This failure is
courageously admitted by Peach in his article on "The Slums of
Sydney" which appeared in The Freeman (issue of January,
1941). The United States is fortunate in possessing a Georgist journal
in which can appear such searching self-criticism.
It is highly important that we trace to its cause this disappointing
effect. It has occupied my own thoughts for a long time, and I have
already suggested in my published works that these failures might have
been expected. My interest has been recently revived in the course of
a study of the final incidence of taxation -- a study prompted by the
current increased expenditure for armaments.
It is a fact that the increase of taxes for armament does not result
in a burden upon either labor or capital. The burden can be only upon
landowners. It is perfectly obvious that the present enormous military
expenses and taxation in Great Britain and the U. S. A. do not depress
wages or the standard of living, nor do they create unemployment. But
the same can be said of all taxes at all times.
The statement is, it seems to me, indisputable. Henry George pointed
out clearly that no improvement of production or the means of
production ever benefits the workers. He said correctly that "whatsoever
be the increase of productive powers, rent steadily tends to swallow
up the gain." Again, "If labor saving inventions and
improvements could be carried to the very abolition of the necessity
for labor, what would be the result ? Would it not be that landowners
could then get all the wealth that the land was capable of producing,
and would have no need at all for laborers, who must then either
starve or live as pensioners on the bounty of the landowners?"
The converse is true also. Any force which inhibits permanently (or
for a considerable time) the production of wealth must cause rent to
If, for instance, we imagine a country without taxes, (where the
expenses of government were met, for example, by selling mineral water
from a publicly owned spring) wages and interest in that country would
not be higher than elsewhere. (See Progress and Poverty, Book
VI, chapter 1, section 1.) Only rent would be greater. But if, due to
the eventual exhaustion of the spring, the government imposes customs
duties, income taxes or whatever else, the total rent of land must
eventually fall by an amount equal to the taxes. Wages and Interest
cannot be depressed; they are already a minimum. The final incidence
of the taxation must therefore be upon landowners.
It would seem, then, that the anxiety of workers, merchants, etc., to
oppose increases in taxation is misplaced; at long last, the landowner
has to pay the bill anyway. Conversely, landowners (provided they
admit the necessity of increased public expenditures) ought not to
oppose land value taxation; they will have to pay eventually, if not
in higher taxes, then in depressed rents. Indeed, they should be the
most vigorous advocates of land value taxation because of the
practical economies which the system would make possible. The whole
question of "single taxation" or "multiple taxation"
is of secondary importance to workers, employers, and the general
public -- apart from the annoying drudgery involved in paying a
multiplicity of taxes. It is of primary importance to the landowner.
Many workers favor high taxes; while land is private property, they
may well expect some advantage from them, possibly in the form of
government relief or benefit payments.
These considerations make it abundantly clear that the state of
popular well-being cannot be different in such a city as Sydney (which
meets its local expenses with a 2 per cent tax on land values) as
compared with Melbourne, which collects the usual multiple taxes.
The aim of the Georgist movement is to make the rent of land public
property. But for this it is indispensable that the land itself become
public property, as I have demonstrated in my essay "Que la
tierra debe ser confiscada y otros conceptos genuinos y actualcs del
georgismo," and also that the public lands must be rented to
private tenants at public auction. The rent of land ought to pay,
directly, the public expenses1 and if there is a surplus, it ought to
be distributed periodically to the true owners, the people.
Georgists should be partisans, not of a "single tax" but of
the complete abolition of taxation. The rent of land is not a tax. And
if we will bear in mind that the burden of all taxation falls
eventually upon the landlord, we shall escape the error of expecting
economic miracles from a change in the tax laws, avoid fallacies, and
find our further study enormously simplified.
- Progress and Poverty,
Book VII, Chapter 2.
- The Condition of Labor,
III, page 66 (Doubleday Doran, 1930).
- Revista Argentina de Ciencias
Politicas, Buenos Aires, 1920