In 1879 Henry George published Progress and Poverty in which he laid out the social and economic arguments for what he called the single tax. The term single tax comes from the theory held by George that if land were taxed at an amount equal to 100% of its rental value, that all other taxes could be eliminated, leaving the country with just one single tax: the tax on land.
Henry George's book, Progress and Poverty, was the second greatest seller in the 1880's; only The Bible sold more copies. When he ran for mayor of New York City he defeated Theodore Roosevelt, but came in second. Few if any economists have achieved as much attention from the average citizen as did Henry George.
While Henry George is remembered as an economist, he was first and foremost a social reformer, deeply concerned with the terrible living and working conditions of the poor during the industrial revolution in the mid and late 1800's. The name of his book, Progress and Poverty, alludes to the contradiction of such poverty in the midst of so much industrial progress. He was appalled by the vast discrepancy in wealth between the workers and the elite. His search for the cause of these conditions led him to the single tax theory. The theory was not an end in itself, but a means toward the end of bringing greater equality of opportunity, and a smaller wealth gap between rich and poor.
Henry George felt that taxing land at 100% of its rental value would be both justified and beneficial. It would be justified because land is a gift of God, not a creation of man. The enhancement to land value comes from public improvements such as railroads, canals, highways, and various public works. The owner of land did not create the external factors that increased the rental value of the site, so why should he benefit from the increase in value brought about by those factors?
He felt that the single tax would be beneficial because it would take away all speculation in land, and it would encourage land owners to use their land in the most efficient manner possible. Another benefit, he felt, was that by having the tax on land the only tax, we would not burden labor and capital with taxation. This would allow people to keep the full fruits of their labor, and allow capital and the returns gained therefrom to be allocated to promoting more economic growth.
Henry George felt that the single tax should be applied throughout the country. His approach to achieving this was to encourage the establishment of single tax clubs whose members would lobby their U.S. Senators and Representatives to pass the legislation imposing a tax on 100% of the rental value of land throughout the country, thereby creating the situation where all other taxes could, according to his theory, be repealed. Such single tax clubs were established in New York, Chicago, Des Moines, and dozens of other cities.
There was fierce opposition to the idea of taxing 100% of the rental value of land on the part of railroads, mining companies, land developers, and others, and the single tax was never implemented. In the 1880's when the single theory was being promoted, the responsibilities of government were such that the revenues from a single tax on land could probably have paid all government obligations of the time. As years went by, however, the role of government has changed to the point where a single tax on land could not generate the revenues required to fund the expanded government activities.
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