The Manufacturer versus
the College Professor

Noah D. Alper

[A pamphlet published by the Public Revenue Education Council, St. Louis, Missouri -- 1951. The original version of this document included four illustrations that did not reproduce clear enough to include below. ]

The Controversy

A leading California Manufacturer, Mr. Joseph S. Thompson, President, Federal Pacific Electric Company of San Francisco, in an address before the Tax Committee of the National Association of Manufacturers of which he is a member, proposed that government derive its income from a "single source." Dr. H. L. Lutz, adviser to the Tax Committee, issued a memorandum[1] in opposition to this proposal in which he said:

"The product of the economy results from the joint contribution of land, labor, capital and management. Granted that government costs too much, it is still true that the proper way to cover this is by spreading the tax burden across the board instead of seeking to concentrate it at any one point." (Emphasis ours.)

A Natural Scientific Tax-Structure Exists

The fact that the "product of the economy results from the joint contribution of land, labor, capital and management" in no way warrants the conclusion that the idea of "taxing across the board" is either best or desirable. In truth, this idea is most arbitrary and unscientific, and is dangerous to the Free Enterprise economy. On the other hand, the very statement made by Dr. Lutz that "the product results from the joint contribution of land, labor, capital and management" suggests that a simple, helpful and natural tax structure is revealed by these factors.

Tax-Structure to Be Compared

We propose to compare the natural tax-structure revealed by the truths of the Science of Economics with -

• 1. The tax-structure based on the doctrine of Dr. Lutz of "taxing across the board," which is now well established in the United States. In fact, this has served for years as a background of tax-education in the great majority of our colleges and universities.
• 2. The tax-structure of the Communist Manifesto which was designed in 1847 by Karl Marx and Frederich Engels as one that would destroy Free Enterprise (Capitalism) and advance the Communist State.
• 3. A particular "single source" of revenue for government proposed by Mr. Thompson in his address to the Tax Committee of the National Association of Manufacturers.

This comparison and the direct and logical deductions based on it will show which tax-structure, or proposal - that of the Manufacturer or of the College Professor - will best serve the interests of the Free Enterprise system and the producers of wealth and services. Furthermore, this comparison will show which tax-structure will be more apt to increase this nation's chances of winning the economic war being waged against it by the Communists.

The Meaning of Taxing Across the Board

What does "spreading the tax burden across the board" mean? Dr. Lutz suggests its meaning when he says that the "product is the joint contribution of land, labor, capital and management." This statement is back of his notion that taxation should be made to fall, in one way or another, on all the factors of production. Dr. Albert I. Meyers, in his book "Modern Economics - Elements and Problems," says that in this doctrine, which he calls the "Diffusion Theory," "it is postulated that the burden should be spread over as many people as possible."

The doctrine of "taxing across the board," so far as it can be explained by the facts and principles of the Science of Economics, means this: Land and Labor are the two primary factors of production, and Capital, a man-made or derived factor - derived, that is, from the first two - is the secondary factor. Economic Science then logically shows that the product - wealth and services (or monetary claims on them) - divides into a three-way flow, that is, into three Avenues of Distribution. These are: RENT-of-land, Wages and Interest.[2] Therefore, "taxing across the board" means the taking by government of Wages. Interest and RENT-of-land without scientific discrimination or consideration of the origin and nature of these shares, or of the, effect of such taxation on men and women, the Free Enterprise economy, and the national well-being.

Sources of Public Revenue Revealed

An important fact is that when we have thus identified the Avenues of Distribution of wealth and services we have also identified the basic sources of Public Revenue (and of private revenue as well). This positive and most useful economic science fact, if known to today's economists, is, unfortunately, generally ignored. Dr. Lutz stopped short of the inevitable conclusion that the Avenues of Distribution are, in fact, also the SOURCES OF PUBLIC REVENUE.

As we have pointed out, the only meaning the doctrine of "spreading the tax burden across the board" can have is that all three of these sources of Public Revenue are to be used by government. It would appear that the doctrine of Dr. Lutz of taxing all these sources in some fashion is to be followed in the face of this fact - that by using the source that is most naturally and most properly Public Revenue, and by refraining from using the other sources, we can greatly increase the efficiency of and respect for the Free Enterprise System.

Scandalous Tax Confusion Can Be Ended

We can end the scandalous amount of tax confusion that has been imposed on the American people by correcting the inept and distorted teaching of economics of taxation in our colleges and universities and through other mediums. Many intelligent people, who are otherwise well educated, have been led to believe that our public revenue problem is one of taxes rather than one of sources. Never has a more harmful economic error been made. This error is the cause of much of the tax hocus-pocus by which many men of Labor and many Capital-owners, as well as other people, are kept fooled. This error is the source of endless squabbling and squawking about taxes - whether to increase or lower rates of this or that tax - whether to use manufacturers' sales rather than retail sales or gross transactions taxes - whether to lower the income tax (or abolish it and use as a substitute, in whole or in part, manufacturers' excise taxes) - whether to increase the tax on cigarettes, liquors, baby food, cosmetics - whether to make utilities collect more taxes, etc., etc. In this way people are kept in a continuing state of excitement by schemes that stir up the tax mess but never end it. We can end most of this tax nonsense -

1. By recognizing the difference between a tax and a source - an extremely simple economic science truth. A tax is no more a source of Public Revenue than a pump is the source from which it pumps, such as a lake, watershed, spring, etc. A tax is like a pump. This truth alone, when recognized, will go far in causing a reorganization of economic instruction in our institutions of higher learning.

2. By recognizing the fact that we have a choice of one or the other of the two basic sources of Public Revenue, and by recognizing the further fact that the one and only basic administrative decision we must make, as citizens, is not which tax to use but which source to use, or to use first - RENT-of-land or the Rewards of human effort.

Three Sources Are Really Two

There is a natural affinity between Labor and Capital-owners. (Capital is created by laborers who consume less than they produce, save and invest. Capital-owners create more capital by this same process.) A demand for Labor is a demand for Capital, and vice versa. And, except when obstructed by government or by individuals or groups of individuals, operating immorally or illegally, Interest rises as Wages rise and fall as they fall, although a time lag is usually involved.[3] For these reasons we here treat Wages, including wages of Management, and Interest as one basic source. We consider, therefore, that only two basic sources of Public Revenue exist, viz. -

1. Rewards of human effort.
2. RENT-of-land.

What Is RENT-of-land?

Before proceeding it is necessary for us to discuss one of the basic terms of economic science - RENT-of-land - what it is, how it arises, who really earns it and who should use it. Actual RENT-of-land, and speculative RENT-of-land, is the measure of the value of land for use in production, for home use, or for other uses, as compared with land so poor in desirability that while it may be used no one can afford to pay for its use. It is a value which attaches to land - the factor of production that is not made by. man. Land is publicly serviced by all the people, through their agent, government, and by their privately provided services, including public utilities which are privately financed and owned. Land is in no way serviced in these ways by title-holders as such.[4]

RENT-of-land is the sum of money a title-holder can collect from a tenant for the use of a land site or its natural resource contents. People who want the use of land voluntarily offer to pay title-holders a market determined rental for the use of the site and, when involved, its natural resource advantages. None of these community produced or natural resource advantages are provided by the title-holder as such. In truth, the title could be held by a native of Timbuktu, a fifth generation descendant of the first title-holder who, himself may never eyen seen his property, or by a cat and dog estate, and the same economic and social phenomenon of RENT-of-land would occur.

It happens that this same amount of RENT-of-land which the free market allows a title-holder to collect from a tenant, is also the amount the people, through government - as an agent, not as a land owner - can collect from the title-holder. This is his payment of obligation - his "ground debt." It is his obligation to pay for community services as certainly as it is the obligation of a tenant to pay this sum to a title-holder.

Title-Holders' Rights Not Changed

It must be pointed out that when this balancing obligation - this payment of RENT-of-land in exchange for title privileges - is demanded of the title-holder his legal right as a property owner remains unchanged. He retains possession of the land and disposition of his legal rights can be made as he wishes during his lifetime or at death. Ownership of all value in improvements and tangible personal property, added to or placed in or on the land, is assured. The right to enjoy the income that arises from such privately provided improvements, personal property and services untaxed, should also be assured.

Two Vital Economic Science Facts

Two scientific facts, familiar to practically all economists, are vital to our presentation. These are -

1. RENT-of-land can be separated from the total national product by principles of economic science as surely as cream can be separated from milk, or minerals from rock and other matter in which they are found by principles of the science of physics. This process leaves Wages and Interest intact. The separation of RENT-of-land from Wages and Interest is achieved each day through the mechanism of the free market as title deeds to land are sold or as land is leased, with or without improvements. It is due to this fact that we have a choice between the two basic sources of Public Revenue, and between the kind of results we can secure by using one and not the other. We should, of course, tax the Source that provides the greatest benefits to all and not the one that gives unearned gain to a few in special and privileged positions of socially created advantage.

2. The second vital fact is that a tax placed on the value of land, or on its RENT, cannot be shifted. This tax can only be applied on land good enough to yield a rent; it does not fall on the "no-rent," yet competitive, marginal or sub-marginal land. The RENT-of-land payment is paid by the title-holder out of the current RENT-of-land he collects. He cannot shift it to others either in a higher price for land or for products. Many readers who have not studied this fact may doubt its truth. However, if this were not true, there would be no opposition to the use of RENT-of-land to support government from those who gain unfairly by the present tax-structure. Any textbook on economic principles that includes a discussion of land and its RENT will usually give an explanation of why title-holders must pay a tax on this RENT, or land value, and why they cannot then collect more RENT to recover the amount of the tax paid.

The Tax Structure of the Communist Manifesto

The Communist Manifesto offers three tax proposals:

1. A heavy progressive, or graduated, income tax.

2. The abolition of all inheritances.

3. The application of all rents of land to public purposes.

These three proposals, if used, would certainly spread the burden of government costs on Land, Labor, Capital and Management. By calling for the abolition of all inheritances, past accumulations of Capital and practically all consumer wealth, would be confiscated. This Communist tax scheme, in principle, conforms to the Dr. Lutz doctrine of "taxing across the board." It is the stated intent of the Communists (and Socialists) to destroy Free Enterprise (Capitalism). This is not, of course, the intent of Dr. Lutz, nor of the many college professors and those who offer tax-education through foundations and industrial economics courses who, knowingly or unknowingly, support the "taxing across the board" doctrine. The difference is one of degree, not of principle. The greater the intensity of application of this doctrine, the greater the danger to Free Enterprise. Wrong principles are not made correct by a mere modification in degree of application.[5]

Dr. Lutz Proposes a "Single Source" of Revenue

It should be noted here that the effect of using taxes of various kinds, without discrimination as to basic economic sources, is really "to concentrate the tax burden at one point." This is what Dr. Lutz says we should not do. His plan, however, does concentrate it largely on the source we have identified as the Rewards of human effort. It is in this way that tax relief is given to the collectors of the publicly created rental value of land which attaches, not to wealth - man-made objects - but to land, an object of vastly different origin - a natural object. Since this is the generally known effect of "taxing across the board," it must be assumed that it is known to Dr. Lutz and further, that his proposal is made to achieve and perpetuate this type of tax concentration.

It is a fact that the great majority of people live entirely, or primarily, from this "single source" of Public Revenue - the "Rewards of human effort." This source is now being taxed by multiple taxes often with compounding effect. It is due to the confusion created by this multiplicity of taxes that people do not understand taxation and the great harm that is being done them, who is doing it to them or why. These many taxes, however, can in no way alter the basic economic science analysis that reveals which source is really being taxed most heavily.[6]

The Vital Issue

Mr. Thompson elected to emphasize the necessity for drawing support of government from the RENT-of-land; Dr. Lutz chose to draw this support from the Rewards of human effort, that is, from incomes personally earned. Dr. Lutz would allow title-holders to retain the publicly earned RENT-of-land for personal use. Of course, if such an arrangement were allowed to persist many title-holders of land of great value, and their descendents, could live forever off the productions of others, not making one iota of productive contribution themselves. This is an immoral arrangement, unblessed by human experience. This is privilege at its worst! This is the original "something for nothing" economic deal.

The "Cause and Effect" Pattern Involved

The following are well established facts, both of economic science and of market experience, and can and should be used by people, as citizens, in determining how best to secure revenue for government. Which source they will choose, or choose first, will be determined by their knowledge of economic science, their social and moral concepts, and the results they wish to secure for themselves and their country.

The market price of land goes down as more RENT-of-land is diverted by taxes to government use and less is left for personal use by the title-holder. On the other hand, the market price of land goes up as less RENT-of-land is collected by government, and more is left in the hands of the title-holder.

We further know that, in principle, imposing taxes on products and services causes products and services to be less plentiful and, therefore, tends to raise prices. However, if these taxes are abolished, prices of products and services tend to be lowered, not only by the amount of taxes removed and their cost of collection, but still more by the increased production that will result.

We also know that direct taxes, such as taxes on the net income of individuals, taxes on retail or consumer sales, as well as gasoline, cigarette and other excise taxes at the retail level, take money (purchasing power) directly from people. This has the same effect as hidden taxes which inflate prices and which cause people to buy less. On the other hand, if we abolish these direct taxes, this purchasing power remains in the hands of people and the effect is the same as if prices of products and services were lowered, enabling them to buy more.[7] This "cause and effect" pattern enables us to decide which source of Public Revenue we will use, or use first - RENT-of-land or the Reward of human effort. As we make this decision we are also deciding whether to make land and products and services higher or lower priced. It follows as certainly as night the day that we are deciding whether to make it easier or harder for people:

1. To produce, save and invest, and keep their savings for personal use and security.

2. To secure products and services.

3. To secure access to land.

Possible Results of Our Choice of Source of Public Revenue

We can be sure that if we follow the Dr. Lutz doctrine of "taxing across the board," using more of the Rewards of human effort and less RENT-of-land, we will make it harder for people to secure access to land and to obtain products and services, and also harder for people to provide for their own security and old age. As a result of such a policy the following will occur: There will be -

• Less demand for labor, and, therefore, fewer jobs.
• Lower wages (basic depression conditions).
• More slums.
• More blocking of the unique process of control of Free Enterprise which will tend to increase the abnormal swings of inflation and deflation and their attendant evils.
• An increase in number and a worsening of the nature of conflicts between Labor, and Management and Capital-owners; and

There will be - A decided trend toward -

• A Welfare State
• Socialism
• Communism
• War

(This is the experience of the United States today!)

If, on the other hand, we use more of RENT-of-land and less of the Rewards of human effort, it will be easier for people to secure access to land, to obtain products and services, and to save and provide for their own security and old age. As a result of such a policy the following will occur:

There will be --

• More demand for labor - more jobs.
• Higher wages (basic prosperity conditions).
• Fewer slums and, possibly, none.
• Less blocking of the unique process of control of Free Enterprise which will greatly modify the abnormal swings of inflation and deflation and their attendant evils.
• A decrease in the number of and a betterment in the character of conflicts between labor, and management and capital-owners; and

There will be - A decided trend toward -

• A State of Welfare- not a Welfare State
• A Free Economy - not Socialism
• A Free Society - not Communism
• Peace-not War.

Politics and Propaganda, Not Land Titles, Fix Assessments and Tax Rates

Title to land, the only property right involved when land is bought or sold, does not guarantee that the rate of taxation in effect at the time of purchase will never be increased or decreased. There is not now and never has been a safe presumption that the legislators, or the people, will not demand an increased use of the RENT-of-land source to support government. The very success of those whose primary income, or a substantial part of it, is in RENT-of-land, in having the tax burden shifted from this source to the Rewards of Human effort source, is no reason why it cannot at any time be shifted back. And Dr. Lutz are aware of this.[8]

Treat Causes, Not Symptoms

All this is suggestive of the potential benefits of the Science of Economics which need to be better understood, and to be taught with the same objectivity found in the teaching of other sciences. How amazingly different it would be if this science were really free - free from the ruthless and dangerous influences of those who would warp its teachings so as to preserve great wrongs in which they now have, unfortunately, an established financial interest; and free of the influence of those who would pervert the teaching of economics so as to accelerate the increasing trend toward Socialism. How different it would be if the direction of economic teaching had been toward ridding the Free Enterprise system of its wrongs rather than toward perfecting a system of "built-in" economic stabilizers and devices designed to help us coexist with them.

What Is a Good Deal?

It is important for more people to realize that we cannot correct wrongs in our system without, eventually, curtailing and eliminating the profits based on these wrongs. Surely it is understood that changes will be made, and in the economics and social field, generally wrong changes - simply because the people are confused and do not have the true facts. It is indeed unfortunate that some people in possession of monopoly and special privilege have ethical standards which lead them to oppose needed changes even though the changes could be made gradually without much hardship to anyone. The trouble is they will not permit any change which they assume will reduce their income to any degree. If they understood the facts many would see that their real income would actually increase. Because of their resistance to any slow evolutionary adjustment of these wrongs, pressures build up and change takes the form of violent revolution or serious ideological changes of socialistic nature by use of democratic processes. Experience has amply shown the truth of the statement in the Bible that: "Where there is no vision the people perish.

Practical and conservative people, if they are thoughtful at all, will realize that a good deal is not always one which makes a profit; it is sometimes one which will prevent or reduce a loss. Consider what happened in Russia and in China, and in numerous European, Mid-Eastern and Far Eastern countries. (Of course some people insist on living under the delusion that "it can't happen here.") Title-holders of land, because of their ownership of land and their collection of RENT-of-land and their shifting of the tax burden, owned most of the Capital in these countries. Who can deny that had they made a fair and timely adjustment in their land tenure system they would have avoided the loss of their land title privileges, their Capital, and, in many cases, their lives as well.

Tolstoy in Russia and Dr. Sun Yat Sen in China sought land reform before the Communists took over all Land, all Capital, and all Labor (the people). The platform of the Kuomintang party of Dr. Sun called for the public collection of RENT-of-land and a reconciliation with private ownership. However, such absolutely necessary reforms were blocked by the privileged landed interests in these countries, and many honest and sincere men, although true agrarian reformers, became Communists, either voluntarily or under the most severe compulsion.

The Ism That Fathered Communism

Many who fight Communism know little of and ignore the 'Ism that fathered Communism. It is common thought in many parts of the world that it was Colonialism, or Landlordism, or Capitalism. Yet, while these contain the basic elements that cause the trouble, they also contain powers, which, when properly used, could lift the standards of living of the so-called downtrodden or backward people all over the world.

"Earthlordism" best describes the specific and common evil contained in Colonialism, Landlordism and Capitalism, Earthlordism refers exclusively to a feature in these systems which relate directly to the economic factor, Land. Earthlords are people who are in the business of charging other people for living and working on earth. They collect such a large share of production as RENT-of-land that they also make it their business to control the peoples' tax system so as to bring about conditions which will yield the most net RENT even though it is at the expense of Labor and capital-owners. They seek to promote public projects and services paid for by general taxes, and public services produced by private industry and paid for in the prices of products and privately rendered public services, and to attract new industry and greater population to the community; at the same time they seek to reduce the rate of taxation on their land value or rental income by resorting to other taxes. Such Earthlords resist all efforts to restore to people their rightful and natural heritage in God-given land, even under a method which would preserve for them and their heirs the exclusive and private use of land, and all they place in or on the land - untaxed (so far as is possible).

Earthlords, like most American economists and all Socialists and Communists, have little or no concern with truths of Economic Science as they apply to the problem of Public Revenue, and the welfare of the people and of the Nation. They either do not know or they do not care about the scientific difference between Land, and Labor and Capital, and between RENT-of-land, and Wages and Interest and which should and which should not be taxed. We may be sure that as many as 95 per cent of the people who either hold land of little actual or potential income value, or who hold no titles to land at all, would be directly and quickly benefited by a proper change in our tax system. We may also be sure that if men to whom actual or potential RENT-of-land income is of some importance win consider the increased value of their other forms of income and the increased stability and attractiveness of the Free Enterprise system which is possible, they will see that they too will benefit by such changes in the source of Public Revenue as are so clearly dictated by the Science of Economics.

A system of taxation which benefits only continue in a country where people are told the truth about taxation. People are too intelligent to willfully allow a system to continue which injures them and the future of their children, and endangers their freedom as well. That changes will be made are certain; that correct changes will not be made is just as certain unless people get the true facts as to the cause of their economic and social troubles and of the economic and moral cause of the growth of Communism.

An Unfortunate Hoax

With civic pride, and progress as a theme, organized land dealers and land speculators, boost for new and larger public improvements, for new industries and increased population. They are amazingly successful in having men and women of outstanding civic spirit, of professional, church and patriotic groups, and who will not profit - in a monetary way - one cent personally, take the leadership of such movements. Success in such public efforts, of course, makes the community a better place in which to live and work, and to rear a family. For a while people, at least some people, will get more as Wages and in Interest but, as all know who are aware of economic forces, this will be temporary. However, RENT-of-land will rise permanently. All people will pay out more of their incomes, however secured, in taxes; and the landless will pay in addition more RENT-of-land to people like themselves, for what today seems to be for the privilege of living on earth and in communities.

Only unawareness of this fact could possibly cause homeowners, farm operators, and that great body of our people who hold no title to land whatever - and who rent working and living facilities - to believe that their interest in land and taxes are the same as those who own valuable tracts of land, whether large or small, and who collect substantial - often fabulous - amounts of RENT-of-land, or expect to do so in the future. Continuous propaganda and lack of proper education are responsible for this unawareness - an unawareness which results in their support of "good" projects to be paid for by taxes which unjustly burden, the people and favor title-holders of land of income value. With proper understanding surely these same people would demand that the projects of the type mentioned be paid for out of the values they create - RENT-of-land, and not out of their personally earned incomes of Wages and Interest.

Capital-Owners and Labor Have Common Basic Interests in Taxation

Men and women, as Capital-owners and as Labor, should consider, together, today's tax mess - their greatest common problem, as citizens. They should consider how they get their income, whether, basically, from RENT-of-land - charging other people for the use of the God-given, or Natural, Factor Land - or from their personal earnings, Rewards of human effort. Will they, as individuals, gain or lose money if government is required by the people to use RENT-of-land rather than the Rewards of human effort to meet its expenses? Can they afford to risk either the nationalization of Land, Labor and Capital as the Communists would do it, or the draining away of personally earned income as the Fascist would do it?

Can citizens afford to ignore the fact that in solving our tax problems economic SOURCES, as opposed to politically enacted taxes (pumps), are the vital truths to be considered? Will they continue to permit the multitude of taxes which conform to the "taxing across the board" doctrine, and whose real purpose seems to be to confuse the people, and to prevent them from seeing the cost and corruption involved in today's tax mess?

It is now later than we think so far as correcting our tax system is concerned, but it is not too late if people will begin to apply right ideas to the problems. Right action always follows right thinking and can follow nothing else.

Whose Proposal Is Best?

Today, as ever, our policy of land tenure and taxation is the determining element in the success or failure of Free Enterprise and in its competition with Socialism and Communism. That is why the basic and determining issue in this struggle is whether government is to be supported by the source of Public Revenue called RENT-of-land, or by the source identified here as the Rewards of human effort; in short, whether the San Francisco manufacturer, Mr. Joseph S. Thompson, or the college professor, Dr. H. L. Lutz, offers the best tax system for Free Enterprise, for national strength and defense, and the good of our people and the people of the world.

NOTES

[1] 8-7-51

[2] Management is included under the factor Labor and its share of the rewards of production is included under Wages. Management is a most important job classification, but is not a factor of production. Furthermore, attempts to separate management-labor from other labor, as Dr. Lutz and most American economists do, plays directly and unnecessarily into the hands of the Socialists and Communists. Socialists and Communists believe in the doctrine of inevitable "class struggle" between Labor, and Capital owners and Management; and they seek to drive them apart. Whereas, the truth is that the basic economic interests of these groups are mutual Their rewards depend on the productive results achieved in a naturally free and cooperative system. This basic truth is not and cannot be disproved by the fact that bargaining for wages and working conditions, individually or through organizations - an essential principle in Free Enterprise - does take place. Bargaining is not and should not be made a symbol of the "class struggle"; it is only a method for determining what wages and working conditions can and should be.

[3] Wages and Interest tend to rise and fall together currently as indicated. Over a longer period of time, however, should the amount of Capital be increased in relation to demand, Interest would tend to fall, thereby taking less of the total product Increased Capital would add greatly to production with the bulk of this increase going as Wages to all producers, as it has tended to do in the past. However, a shortage of good land could seriously retard such a favorable trend. An artificial shortage of land is often created either by land speculators or by owners who are unable or unwilling to develop their land to its highest capacity.

[4] Title holders to land do not service the land area to which they hold title as, for instance, newspapers and magazines service the space they offer for sale with funnies, cartoons, sport and market news, or as offices and warehouses, hotels and apartment buildings provide heat, light, fire protection, elevators, sanitation, etc., or as trains, theaters, and other sellers of space provide theirs. For such service renters of space are entitled to income and people are willing to pay for what they get.

The RENT-of-land space charge is a universal application of the old and long established principle of paying for benefits received, as in special assessment districts formed for making streets, sidewalks, sewers and the like. RENT-of-land is a "pay-for-what-you-get" charge and is specific. It is not properly called a tax.

[5] Millions of intelligent and highly educated people, many of whom have studied economics in college, have studied the tax provisions of the Communist Manifesto. But it is highly doubtful if many readers were aware of the great contradiction in its tax proposals. It is this: the first two propositions, if rigidly applied, as the Communists advocate, would utterly destroy the Free Enterprise (Capitalist) system. Whereas, the use of the third proposition, alone, would so greatly increase the production and efficiency of the Free Enterprise System and bring about such a just distribution of wealth and services that Communism would be eliminated as a competitor.

[6] Dr. Lutz, in his memorandum to the Government Finance Section of the National Association of Manufacturers, has identified this "single source" of public revenue Mr. Thompson would have government use with what is known as the "Single Tax." The term "Single Tax" was used prior to the French Revolution by a group of Frenchmen known as the French Physiocrats. These men studied government and the effects of its tax policy on industry and on the people. They proposed the "impot unique" -- the "one tax" - on RENT-of-land for support of government, and that other taxes be abolished. (Among these men was Pierre Samuel Du Pont de Nemours, father of the founder of the E. I. Du Pont de Nemours & Company.)

Their basic idea was observed independently by Henry George, an American Economist, and was thoroughly developed, so far as economic science and its pattern of "cause and effect" are concerned, in his book "Progress and Poverty." Henry George stated his specific proposal as follows: "To abolish all taxes save those which fall on the value of land," that is, on RENT-of-land, one of the two basic sources of Public Revenue.

(NOTE: As long as available, copies of "An Analysis of The Single Tax (A memorandum by Dr. Harley Lutz)," by Mr. Jos. S. Thompson will be sent on request. Mr. Thompson quotes Dr. Lutz' entire memorandum, parenthetically, commenting on each quotation. The Public Revenue Education Council is primarily interested in exposing the fallacies in Dr. Lutz' doctrine of "spreading the tax burden across the board and not concentrating it at any one point")

[7] We speak in terms of price changes. Technically, monetary circumstances might prevent price changes. This will not alter the conclusion that people will get more or less products and services for their effort as we use proper or improper tax sources to support government.

[8] For detailed information concerning this successful shift of the tax burden see our pamphlet, "The Great American Tax Shift." Single copies free on request.