"Liberals" Continue Great Silence
Harry Gunnison Brown
[Reprinted from The Freeman, June, 1939]
A recent editorial in the St. Louis Post-Dispatch entitled "Tax
Reform and Recovery" exemplifies again the fact that land-value
taxation is -- apparently as much in "liberal" circles as
anywhere else -- the subject of The Great Silence. Even when it seems
that a particular train of argument cannot possibly fail to lead to
some comment on or evaluation of the land-value-tax program, "liberal"
writers nevertheless manage to avoid any mention of it.
The Post-Dispatch editorial in question contains approving references
to a Brook ings Institution study and to a New Republic article, the
authors of both of which, it appears, are equally loath to mention at
all the community-produced rent of land in connection with the tax
problem. Citing as authority the Brookings study by Dr. James D.
Magee. the editorial contends that "if taxes are so high as to
limit too sharply the prospect of profit from an investment, people
who have money will simply let it remain idle. In that case, business
stagnates and laboring men are forced into the ranks of the
The article goes on to say: "If we place taxes so high as to dry
up the stream of new investment, as Germany has done, we make it
difficult for democratic capitalism to endure. This is a point which
John T. Flynn has argued with a good deal of conviction in the New
Republic. The argument is developed at length also in a report,
'Taxation Under Capitalism,' issued by the New Fabian Research Bureau,
representing the gradual Socialists of England."
I do not intend, in this connection, to comment on the various
changes In our tax system suggested in the Brookings report and in the
editorial, such as the proposal to levy taxes on income from
government securities, and the one to allow a deduction of corporation
losses over a period of several years instead of only one, before
calculating net taxable income.
Nor do I intend to take any position here on the question whether the
true explanation for continued business stagnation is -- as the
editorial contends -- the taxing away of the gains of capital.
But I do intend to emphasize the fact that a tax on land value, or on
the income from land and sites as such, can take practically all such
income (in strict theory, absolutely all) for public purposes without
discouraging in the slightest any capital construction or any
employment of labor. At the same time it acts to discourage
speculative withholding of good land from use at the expense of the
community. And I would point out that the more revenue is thus
secured, the less is necessarily appropriated from the earnings of
true capital. And hence, the net return on capital investment could be
appreciably increased. Therefore, whatever may be the evil
consequences of taxing capital and the income from capital heavily,
these consequences can be avoided by distinguishing between capital
and land, and by distinguishing between the interest on capital on one
hand, and the rent and royalties of sites and natural resources on the
other. No other possible tax reform offers such relief to industry,
enterprise and thrift, or such hope for the common man. Yet our "liberal"
newspapers and magazines won't give it even passing mention.
The St. Louis Post Dispatch is reputedly a very "liberal"
newspaper. It has recently expressed itself as highly critical of the
retail sales tax. It can hardly be in favor, therefore, of
substituting sales taxes for the taxes it is here criticizing. Aside
from the suggestion -- almost certain to be carried out in the very
near future -- that more tax be collected from the income on
government bonds, national, state and local, where is the revenue to
be secured to relieve capital? Is it to be had by reducing income tax
exemptions ("broadening the income tax base") so as to
collect a larger amount directly from the labor income of the lower
middle classes? If not, how?
Of course, being so "liberal," this paper and others like
it must not -- and evidently will not -- suggest anything to interfere
with a system under which private individuals enjoy each year billions
of dollars worth of community-produced site rent. Of course they will
not attempt to interfere with a system under which a majority must pay
a minority for permission to work on and to live on the earth.
It is essential to "relieve" capital. Yes, indeed. And
sales taxes must not be extended. Of course not. But, above all and
most important of all -- if we are "liberals" -- we must not
so much as whisper the suggestion that community-produced site rent
might be made to pay a higher tax than the earnings of labor,
productive enterprise and thrift. And so this proposal of some
idealists continues to be, among our "liberals," The Subject
of the Great Silence.