The Time Has Come to Reconsider
the Tax Theories of Henry George
[Reprinted from the Los Angeles Times, 27
While the doctrines of Henry George and other tax reformers seem
to have faded into the past and are largely forgotten in the
calculations and teachings of economics, the new policies of urban
renewal bring those ideas into sharp focus again.
Henry George lived in a predominantly rural civilization, but his
ideas have a permanent value, and their reconsideration was never
more necessary than today.
Embodied in that philosophy was the concept that since land on 5th
Ave. is physically no better than land 50 miles away in the wooded
Hudson valley, its greater sales worth must be due to the fact that
many people are living in the city.
Therefore, there attaches to prices a "social" value
created by the community. And that value should be taxed to help
support the public needs of the city.
Those who hold city real estate with little interest in its
improvement are thus speculators who contribute little to the
interests of the community.
And if, as is necessary, there is to be urban renewal or
redevelopment, the unearned increase in values should be squeezed
from speculative profits. Thus it would be less necessary to tax not
only those who have built improvements but the generality of
In a study just completed in New York City by a special committee
on tax policies, organized by the Citizens' Housing and Planning
Council, some very interesting facts are developed.
The committee started with the self-evident fact that New York,
just like all modern American cities, needs more and better housing
for its people and that such housing should supplant slum
properties. There should be action to create that housing.
But the committee found that since the assessments and, hence, the
tax burden on unimproved slum property are far lower than on
improved property, the speculative values of such unimproved
property have risen.
It is a curious fact, then, that those who make improvements are
punished. Government thus puts pressure on landowners not to do what
the government wants done.
But to provide better housing and to improve the face of the city,
state and federal governments break through the situation by pouring
out vast sums of money, largely federal, to induce or to create
improvements. So the government buys the land and sells it to a
The committee study found that the government paid $103,475,000
for 12 projects but then sold the property to the developer for
$22,721,303. The government pays 70% above the values at which the
same government has assessed the property.
This low assessment on unimproved land means that to support the
city, more must be raised on improved property. There is neither
common sense nor justice in this. For example, there are two pieces
of real estate w ith a frontage of a block each on 5th Ave. They
face each other and are of equal attractiveness. When, until
recently, both had buildings dating back to the 19th century, the
land under them was appraised at $5 million each. But a private
builder bought up one and built a tremendous office building.
Nothing happened to the other.
In the present appraisal, the man who built the office building
has had his land assessed at $15 million, while the other side still
pays on $5 million. Thus the man who built the big office building
is penalized for doing something to improve the city, while the
do-nothing owner pays the same as before.
A major remedy recommended by the committee is an overhauling of
assessment policies. Also, to induce owners of undeveloped property
to make improvements, it is suggested that such improvements be
exempt from taxation for a specified number of years.
A rational move of this kind would certainly lighten the immense
burden on the federal budget as well as promote the rebuilding of