Land value taxation - 1 - Chapter 6

American Journal of Economics and Sociology, The,  Dec, 2002  

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Introduction

IN 1916, THE YEAR BROWN JOINED THE FACULTY of the University of Missouri, the first major study of the single tax movement in the United States was published. Its author, Arthur Nichols Young, in a concluding survey, indicated that:

The American single tax movement has not had large accomplishments either in the way of legislation secured or number of adherents gained for its essential principles. (2)

In his study, Young did not identify any academic economist who defended these "essential principles." In the succeeding years, Harry Gunnison Brown would move purposefully to fill this void.

That the economics profession was opposed to George's proposed reform is not an unfair exaggeration. A simple listing of prominent American political economists who adamantly opposed the single tax idea is indicative of the position of the profession. Beginning with William Graham Sumner and Francis A. Walker, a brief list would include John Bates Clark, Richard Ely, Simon Patten, Frank Fetter, E. R. A. Seligman and Frank Knight. (3) Outside of this country a few of the notable opponents were Edwin Cannan, F. Y. Edgeworth and Gustav Cassel. (4) This is not to imply that these diverse and prestigious scholars were uniformly hostile to Henry George and his ideas. According to Joseph Dorfman, Frank Fetter was influenced to pursue the study of political economy by George's Progress and Poverty. (5) Seligman found support in George's writing for his own denunciation of the existing property tax system. (6) Ely was careful to praise George for "bringing forth the land problem as one of paramount importance." (7)

The view of Brown as a solitary crusader is somewhat misleading. Many economists of his time favored modified versions of the single tax, in particular where it would be applied only to future increments in the value of land. In 1904, Charles Fillebrown circulated a questionnaire to members of the American Economics Association, which stated: "it would be sound public policy to make the future increase in ground rent a subject of special taxation." Seventy-seven of the eighty-seven who replied agreed with the statement. (8) Thomas Nixon Carver, Frank Taussig, John Commons and Herbert J. Davenport (9) were some of the economists of the time with whom Brown could find varying degrees of affinity. (10) Irving Fisher (according to Brown) (11) maintained a long silence on this question. (12) Somewhat later, Brown quoted favorable expressions made by Fisher, Commons, Carver and Davenport along with Frank Graham, Raymond Bye, Glenn Hoover, William H. Dinkins and T. J. Anderson, Jr. and noted other economists who had expressed favorable opinions as well. (13) Outside of this country P. H. Wicksteed, Leon Walras and Knut Wicksell can be considered proponents of land value taxation. (14)

Brown's advocacy of land value15 taxation does stand in marked distinction to that of his colleagues of note, with the possible exception of John Commons. Brown's position was between that of the orthodox "single-taxers" and the "single-taxers of a looser observance" as Davenport declared himself to be. Brown's advocacy, introduced in 1917 by "The Ethics of Land Value Taxation" in the JPE, would entail multiple considerations. First, theoretical questions in economics, such as the place of land in economic theory as well as the meaning given to the concept of rent, were treated in part in Chapters 2 and 3 of this study. He also was concerned with examining the economic effects of increased land value taxation in order to defend what he perceived as beneficial outcomes and to refute erroneous criticisms. As ethical or philosophical concerns were endemic to the proposed tax reform, he addressed them as well. Also, strategies on how to best promote land value taxation to enhance not only its intellectual but als o its political acceptance could not be ignored. (16) Finally, Brown was forced to react to changing social and economic conditions as well as to varying intellectual currents of thought.

Brown incorporated the aforementioned article into a book published in 1918, The Theory of Earned and Unearned Incomes. (17) In 1921 he produced a smaller work, The Taxation of Unearned Incomes, which was revised and expanded in a 1925 edition. This book in turn was expanded into The Economic Basis of Tax Reform (18) in 1932. He published many articles on land value taxation in a wide variety of journals, and when the American Journal of Economics and Sociology was founded in 1941, he became one of its major contributors as well as a member of its editorial board.

Brown's Position

BROWN'S INTERPRETATION OF THE SINGLE TAX IDEA was that income derived from the site value of land (which he considered to be unearned) should constitute the first source for governmental taxation. A program for tax reform would entail the eventual substitution--to the extent possible--of land value taxation for all other types of taxation, which he considered to be economically harmful and philosophically unsound. He never maintained that the revenues from the taxation of land values would suffice. His son, Phillips H. Brown, related to me that his father privately referred to himself as a "triple-taxer" (19) and was willing to accept inheritance taxation, income taxation and perhaps, use taxation (such as a gasoline tax) to obtain the needed revenues that the taxation of land value could not generate. In addition, Brown was willing to entertain considerations that would allow landowners to claim some portion of their rent corresponding to site value. In contrast to Davenport, Carver and others, Brown rejecte d the view that only future increments in land value be taxed.