Tax Policy and the Modern City
Harry Gunnison Brown
[Reprinted from the American Journal of Economics
and Sociology,
Vol. 17, No. 3 (April, 1958), pp. 279-282]
THE ADVANTAGES of raising public revenues by taxing
community-produced land values, rather than by penalizing industry and
thrift, certainly are not confined to cities. Nevertheless, an
appreciation of these advantages will perhaps be etched most sharply
on the reader's mind if we pass in review, briefly, certain salient
characteristics and problems of the modern city and of modern city
life.
I
THE CITY is a much larger part of the economic life of the modern
world than it was of the economic world of the ancients or of the
middle ages. To begin with, it is a trade center. That, the city has
been always, but never before have the efficiency and cheapness of
transportation made this function so important. Great fleets of
passenger and freight trains rush daily into and out of magnificent
passenger stations and large freight depots, coming from places
hundreds and thousands of miles distant and from many directions.
Concrete roads, grey ribbons stretched across the fields and through
the woods of the countryside, converge on the city. From all parts of
the sea-faring world, if the city is a seaport, come giant ships to
cast anchor in its harbor. The products of distant mines, plantations
and factories pass through on their way to far markets and are, in
part, intercepted and used by the city's people. Many of these
products are raw materials which must be manufactured and sent out
again in finished form for sale to widely scattered consumers. Trade,
indeed, is ancient, but trade on the contemporary scale is wholly
modern.
The location of the city is partly a matter of position in relation
to the territory to be served. The city may be as the hub of a wheel
of which roads and railroads are the spokes. Its location may be
dictated in part by the results of physical forces which operated in
remote geological ages. Ships must dock and land their cargoes where
there is a harbor. Railroads must focus where ships come in. Men must
work where work is to be done. There must be men at the wharves, men
at the railroad stations, men to build and to repair stores and
factories and houses, men to operate trucks and taxis, men and women
to work in the factories, men and women to sell to all these workers
the food and clothing they need, the luxuries they desire and can
afford. There must be insurance agents, bankers, ship brokers and men
of numerous other occupations. In a single one of the towering
buildings which make for the eyes of the approaching visitor a
picturesquely jagged skyline there may be thousands of workers --
accountants, lawyers, investment bankers, brokers, and others.
In the city is now done much of the work which, a few generations
ago, was done in the country. Spinning and weaving are done in the
factories, not in the home. Clothing is purchased ready-made. Food is
canned, frozen or otherwise processed largely in factories. Farm work
which used to be done by hand or with simple tools inexpensive to make
and to buy is now done with the aid of expensive machinery made in the
city. Proportionally less labor, and so less of the population, is
needed on the farms. Competition tends to force down, relatively, the
remuneration of farming and to drive the excess farm labor supply to
the cities, where there is the lure of apparently much higher
wages-the evils of city life for the poor not being clearly
visualized.
For all these reasons the city draws its millions to do the work
which can be done adequately nowhere else. And here their work is
effective, aided by every device that inventors can plan and by the
workers' nearness to each other and their high degree of
specialization.
But because the work must be done here and because the workers who do
it must live here-or near here-those who are allowed to claim this
part of the surface of the earth as their own reap rich returns. Men
must pay them for permission to work in this area, must pay them for
permission to live on this part of the earth. And because, as the city
grows, this land becomes more and more valuable, there are persons who
buy land and hold it vacant hoping for it to rise in value that they
may sell it at a profit.
Thus is land made still more expensive. Thus are the poor compelled
to live in even smaller quarters. Thus is home ownership made, for
many, a yet more impossible ambition. Land becomes so expensive that
the people of the city, even in their corporate capacity, feel they
cannot afford to buy sufficient space for parks and playgrounds and
school athletic grounds, since the city must pay private owners for
the very values that the city itself creates. And so the children whom
high land values have crowded in their homes are, from the same cause,
denied relief outside.
Why must Americans of "liberal" tendencies continue to
think of the land problem as purely agrarian and as having to do
mostly with European and Asiatic peasants whom the United States must
somehow try to help?
In this situation, when privileged owners of land are pocketing the
rents which the growth of the city and its suburbs and its tributary
territory, and not any activities of their own, have produced, when
land rents, thus the result of general community development, are the
highest they have ever anywhere been in the previous history of the
world, we hear constant pleas that land should be relieved even of
part of the taxes it now pays, and the burden put elsewhere. Such
relief would but encourage speculation; it would leave yet more of
community-produced value in the hands of privileged private owners,
and it would make land still more expensive for the poor man's home.
At the same time we hear men talking about rising land values as if
such increase were to be desired! This seems to be the ordinary
popular view, perhaps because the tone of opinion is set by
speculators in land, while the masses of common folk, working for
salaries and wages and living, often, in hired apartments or
tenements, are not directly and acutely conscious that land is
something they have to pay for the privilege of using, both where they
work and where they live. The truth is that high sale values for land
are, could these common folk only realize it, an economic and a social
calamity. Who would boast of a high price, in his city, of bread or
meat or clothing, as if that were desirable for the people who. must
live there? Then why think of high land values, brought about by
allowing private individuals to enjoy, to capitalize into sale prices,
and to speculate in, community-produced advantages, as desirable?
For the highly civilized countries with their efficient technology
which transfers so much production to towns and cities, the old days
of life in the country are gone, so far as a large proportion of men
and women and children are concerned-gone, probably never to return.
The open fields and woods, horizons not shut from view by skyscrapers
and closely-set dwellings, the healthful work of the
out-of-doors-these are largely things of the past. Men must live close
to their fellows; they must work in towering buildings, twenty, forty,
sixty or more stories from the ground; they must rush in busses,
surface cars, elevated trains and subways to their work in the morning
and back to their homes at night, for the millions who work in a great
metropolis cannot all live within a few blocks of where their work is
to be done. Yet they must not live too far away. And so, land in the
great cities and their suburbs comes to have a tremendous value, and
speculators, holding part of it for higher prices, make it
artificially scarce and still further increase this value.
Gardens, green grass, trees and play spaces are too seldom seen. And
for too many children there are, in place of the woods and fields,
only the dingy and dirty and traffic-filled streets and the crowded
city sidewalks. Yet childhood demands, and will have, its play. The
instincts of the race cannot be entirely thwarted, however bad the
environment in which they have to be expressed.
Some day there may come into existence the ideal city, a city that,
from our present conservatively cruel point of view, may seem a dream
city, although there are, even now, some remote approximations to it.
In that city a tax will take all or nearly all the rental value of all
the land, to be used for the common benefit. Improvements, brought
into existence by the labor and thrift of individuals, will be tax
exempt or nearly so. Tax burdens on the necessities of the poor will
not be preferred to tax levies on community-produced land values.
No one will be able to afford to hold land out of use for
speculation. Except for the tax, land will be costless or nearly
costless, for there will be no large privately-received site rent to
capitalize into a gigantic sale price. And so the city government can
afford, without risking bankruptcy, to construct beautiful and
spacious public buildings and to provide sufficiently numerous
playgrounds and parks. Then we shall have for all, including the
city's children, the best substitutes available for life in the
country and the country village, enjoyed by a majority of children in
the generations which have passed. And these we shall have without
sacrificing but, rather, while extending, those opportunities for
education and culture which city life, whatever its evils, has tended
to promote.
FOOTNOTES AND REFERENCES
- This paper is adapted-with
additions and some rewording - from my book, Basic Principles
of Economics, 3rd ed., Columbia, Mo., Lucas Brothers, 1955,
pp. 478-82.
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