The two greatest challenges facing the world in 2021 — climate change and growing inequality — could be addressed by the application of a fundamental remedy: Henry George’s misnamed, misunderstood, and much-maligned single tax.
Taxes are burdens, charges levied on activities and commerce that very often discourage the very kinds of productivity that the taxing body would be better off encouraging. George understood this and proposed the elimination of every tariff and tax save for the one on land. In a nutshell, that’s it.
Henry George’s infamous Single Tax was also known as a land value tax. And here is where George, a rational philosopher who argued for a strict and consistent definition of terms, failed to anticipate how those two words, “tax” and “land” allowed monopolists—those who would have to relinquish their unearned advantage should his policy be adopted—to distort, deride, and discredit his proposal.
What is land? For most people the answer would be the ground under our feet. Despite the fact that agricultural land was the most obvious factor of production in George’s day, he was careful in his definition of terms to point out that he used the word “land” in its broadest sense. For Henry George, land meant all naturally occurring resources: pure air, clean water, virgin forests, oceans, wild flora and fauna, mineral reserves, and, yes, the ground itself. As he clearly stated, the term “land” encompassed all gifts of nature, the things no human can claim to have created but which every one of us must be able to access in order to survive. In today’s economy, the atmosphere, outer space, its planets, and the electro-magnetic spectrum should be added to the list.
How about the word tax? Is that the best term to apply to the collection of fees that George proposed? No. Unfortunately, a more accurate term, “rent”, is another of those words with multiple meanings. In its everyday use, people think of it as the monthly fee they pay to lease a car or an apartment. “Economic rent” is an altogether different beast and one that the introduction of a Georgist solution is designed to tame.
Henry George wanted to eliminate what today’s economists call rent-seeking behavior. Rentiers claim income from nothing more complicated than the ownership/monopoly of a common resource that others need. The entity holding paper title captures unearned fiscal rewards based on little other than the fact of the holding.
The point is not to outlaw private ownership, but to put a stop to such rent-seeking behavior. Who would be willing to devote time, ingenuity, and money to utilizing a resource if their claim to the improvements erected on a piece of land, for example, were not secure? No one should be denied a legitimate profit when they have worked to productively employ the resources they hold. The trick is to separate out gains that flow to title-holders as a result of their unique skill and effort from the amount of return that is based solely on economic rent, the unearned privilege derived from the exclusion of others.
Anyone who claims ownership of a piece of the commons in nature should be expected to remit to the public coffers the economic rent associated with that holding. Whether the charges be on activities or externalities that pollute, consume, or monopolize, the resulting wealth flowing from them rightly belongs to us all and should be used to fully replace more onerous taxes, such as the income tax.
- You pollute the air, you pay.
- You dump mercury into the water, you pay.
- You ravage virgin forests, or overfish the rivers, streams, and oceans, you pay.
- You occupy a plot of land that someone else might also want to use, you pay.
- You control electromagnetic frequencies in ways that make them unavailable to others, you pay.
- You leave space junk orbiting Earth, you pay.
Isn’t it astonishing? The remedy that a 19th-century political economist, Henry George (Progress and Poverty, 1879), developed to break the counterintuitive link between growing inequality and technological advance also provides an efficient and effective way to address climate change. Those whose unearned privileges have enabled them to control a disproportionate share of money and power will do everything they can to block the path to a just and sustainable world. They don’t seem to realize that when our planet becomes incompatible with human life, they will go down with the rest of us.
Is our willful blindness to a catastrophe of our own making the only thing that unites us? While the world around us is consumed by fires, floods, droughts, record-breaking heat, tornadoes, and rising oceans, we bicker over petty political divides. It’s time to join forces and get to work, right now, before it’s too late to turn things around.