Henry George: The Relevance of his Philosophy Today
[A presentation to the Fairhope Unitarian Fellowship, 22 October,
GroundSwell, January-February 2007]
We all know that Fairhope Alabama is a unique and wonderful
community, and those of us who have been here for any length of time
know that one of the reasons for this is because Fairhope was
founded in 1894 as a utopian community by a group from Des Moines,
Iowa. This group wanted to establish a community or colony that
would implement, as best they could, the concept of the single tax
that had been proposed by Henry George.
The effort has been successful, and today the Fairhope Single Tax
Corporation owns about 4,500 acres of land in and around Fairhope.
When you buy a house on this colony land you own the building but
have a 99 year renewable lease on the land.
The story of how Fairhope was founded is an interesting one and
perhaps should be the topic of a Fellowship program some Sunday.
What I want to talk about today, however, is the philosophy of Henry
George, and whether it still has relevance today. As you will see,
there was much more to Henry George than just the single tax.
Although the name of Henry George is not well known today, after
the publication of his book Progress and Poverty in 1879, he became
one of the three most well known Americans; only Mark Twain and
Thomas Edison had greater name recognition.
Progress and Poverty is the most widely sold popular book on
economics, and the only book of any kind to sell more copies than
Progress and Poverty in the 1880s was The Bible. When Henry
George ran for mayor of New York City he received more votes than
Theodore Roosevelt, but just barely lost to the machine candidate.
The reason I asked Ruth Geraci to use this particular picture of
Henry George on the Sunday Bulletin is that it is from a cigar box
from the 1890s. How many people were popular enough in their
own time to be honored with their picture on commercial cigar boxes?
Today there are 30 or 40 organizations around the country that are
dedicated to studying the philosophy of Henry George and promoting
his ideas. People in these groups call themselves Georgists,
and every year there is a conference of an umbrella organization
called the Council of Georgist Organizations where representatives
of these groups gather to discuss his philosophy and influence.
Henry George was a journalist, economist, and social reformer who
lived 1839 to 1897. He is best known for his 1879 book Progress and
Poverty in which he raised the question: Why is there so much
poverty in the midst of so much economic progress? Georges
over-whelming concern was the vast and growing disparity in wealth
between rich and poor. His goal in writing Progress and Poverty was
to seek an explanation for this enigma, and to propose a remedy that
he felt would bring greater equality and fairness.
Writing just a few years ahead of Henry George was Karl Marx.
George and Marx both looked at the three same factors of production:
land, labor, and capital. And they both looked at the same problem
of poverty and the vast disparity in wealth between rich and poor.
But they came to a different conclusion as to the cause of the
problem of poverty, and to a different solution on how to remedy the
Marx determined that the problem was that the capitalist was
taking too large a share, leaving too little for the worker. His
solution was to have government own the means of production,
reducing the power of the capitalist.
Henry George, on the other hand, felt that the problem was the
private ownership of land. The landowner did not create the land,
and he contributed nothing to production, but yet he could force
others to pay him for the privilege of working on or living on the
land, causing an increase in the disparity in wealth between those
with land and those without.
Most of the increases in productivity will go not to the laborer
or even to the capitalist, but to the landlords.
One possible solution to this situation would be for government to
confiscate land and lease it to those who would use it, with the
rents going to the government to be used for the benefit of all
citizens, instead of to the individual who claimed ownership
of the land. But Henry George rejected this approach as being too
harsh and traumatic.
Instead he proposed keeping the land in private ownership, but
having the government tax 100% of the rental value each year. (Henry
George later endorsed taxing just 90% of the rental value each year,
leaving the property owner a 10% bonus or commission.)
Taxing all or most of the rental value of the land would be
justified, he said, because land is a gift of nature (or God), not a
creation of man. The enhancement to land value comes from population
growth and public improvements such as railroads, canals, highways,
and various public works. The owner of the 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
Remember: we are talking only of land here, not the improvements
on the land. Factories, stores, and houses are the creation of man,
and George believed the owners should receive the economic rent for
such improvements upon the land.
Henry George felt that the land 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. But
his main concern was that such a tax would, in his opinion,
eliminate unwarranted privilege, bring about greater economic
Henry George believed that such a land tax would raise enough
revenue so that all other taxes could be eliminated, and 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 from that capital to be allocated to promoting more
economic growth. It should be noted that Henry George wanted to see
the single tax implemented nation-wide, and opposed efforts to
implement it within individual communities. He was invited to visit
Fairhope to see the colony his philosophy inspired, but declined the
opportunity to visit, and never did endorse the Fairhope experiment.
In Progress and Poverty Henry George did not call his proposal the
Single Tax, but he does use the word single
as an adjective in talking about having a single tax on land rather
than many taxes for people to deal with.
It was one of his followers, lawyer Thomas Shearman, who first
called the land tax movement Single Tax. Shearman was
more concerned with tax reform and tax reduction than he was with
land reform or the disparity in wealth, but the name single tax
stuck, and even Henry George accepted it and used it in speeches and
later writings, apparently with some reluctance.
Henry Georges philosophy influenced the Progressive
Move-ment in the early 20th Century, and contributed to the
restriction of monopoly, more democratic political machinery,
municipal reform, the regulation of public utilities, and the
improvement of labor laws and working conditions.
World War I broke the momentum of the Progressive Movement, and
gave Georgist enemies an opportunity to regroup and work to
discredit the Georgist philosophy. They attempted this by attacking
Georgism as socialist or communist, and by
redefining economic theory to eliminate land as a significant
category, treating it instead as just one element of capital.
In recent years the land tax concept has gone through a major
transformation. Georgists, following the introduction of the income
tax and an increase in the role of government, began to embrace the
concept of land value taxation when it became apparent
to some Georgists that relying on a land tax as the sole source of
revenue for all levels of government might be unfeasible.
Land value taxation is merely a variation of the property tax
under which land is assessed at a higher percentage of its market
value, and buildings and other improvements are taxed at a lower
percentage of their market value.
Today one of the major efforts of the various Georgist
organizations is to encourage states to authorize the use of land
value taxation, and to encourage cities, counties, and school
districts to implement land value taxation in their local property
tax procedures. The major success has been in Pennsylvania where 18
units of local government have implemented land value taxation.
At the 2006 annual conference of the Council of Georgist
Organizations in Chicago there was a panel on Georgist
Perspectives on City Planning. I gave a presentation on What
Makes Downtown Special. After listing nine factors that
contribute to making the downtown areas of our cities such
interesting, exciting, and vibrant places I explained how land value
taxation, if it were applied, would contribute to enhancing these
values. It would do this by dis-couraging surface parking lots and
the holding of vacant land (because of high taxes on land), and by
encourag-ing renovation and construction (because of a lower tax on
The other person on the panel was Paul Justus, a city planner from
Eureka Springs, Arkansas, who talked about how smart taxes
(i.e. land value taxation) contributes to smart growth.
He pointed out that the use of land value taxation would encourage
more dense development, reducing suburban sprawl.
In London and elsewhere land value taxation has been used to
finance the construction of rapid transit lines. Construction of a
transit line increases the value of property near a transit stop,
and a portion of this increased value is taxed each year to fund the
construction of the transit line.
In my opinion, even if there were nothing else to the Georgist
philosophy, land value taxation would make Georgism a worthy and
relevant philosophy today. But there is more to the Georgist
philosophy than land value taxation.
To understand how much more, we need to understand how Henry
George defined land. Land includes not only the surface
of the solid earth, but the water and minerals below the surface,
the air space above the earth, and the lakes, rivers, and oceans.
This opens the Georgist remedy to not only having government tax
the rental value of land, but securing royalties on gas, oil, and
all minerals extracted from the earth. It also suggests that
government should be charging for the use of radio frequencies and
satellite orbits. The proceeds from these royalties and fees belong
to the entire community, according to Georgist philosophy, not
merely to the individual or corporation claiming ownership of the
land under which the minerals are found.
The implications of this would be enormous, if only this concept
could be implemented. It means that part of the profits now going to
the oil companies would be going to the people. The oil companies
would receive a fair return on the capital invested in searching for
and drilling the oil, but the proceeds of the crude oil beyond the
cost of extraction and a reasonable profit would go to the entire
community, i.e. the government. The same with coal, copper, water,
hydro-electric dam opportunities and all other gifts of nature.
Perhaps even more important than the royalty fees from oil and
mineral companies would be the fees that would be charged to those
wanting to dispose of carbon dioxide and other pollutants by dumping
them into the atmosphere or into the water .
The air and water belongs to us all it is part of the
public commons. Those who want to use it as a dumping ground should
pay us, the citizens, for the right to do this. One example is the
proposed carbon tax, a tax on the burning of fossil
Charging corporations and individuals for the right to add
pollutants to our environ-ment would raise funds for community
benefit, and it would also have the impact of encouraging companies
to change their production methods so as to reduce the amount of
pollution being generated. Furthermore, because of consumer demand
from those motorists who want to reduce their carbon tax, auto
companies might increase the production of hybrid cars, and start
producing electric cars once again.
Taxing the right to pollute is referred to as green taxes
or environmental taxes. When these taxes are increased
to the point that revenues permit other taxes, such as the tax on
earned income to be reduced, this is referred to as the green
tax shift. Such a tax shift would bring us closer to what
Henry George had in mind when he said the tax on land (broadly
defined) could eventually replace other taxes, thus becoming the
single tax. Environmentalists who have never heard of Henry George
are advocating this, but it is a Georgist concept.
Within the Georgist movement, as well as within the environmental
movement, there is discussion on how the proceeds from the green
taxes and mineral extraction fees should be distributed. Some say
those revenues should go to federal and state governments to be used
for governmental services or for reducing other taxes. Others
advocate a citizens bonus, whereby every citizen
in the country (or in the world) would receive an equal share of the
There are several examples where these Georgist principles are
actually being implemented. The State of Alaska has the Alaska
Permanent Fund, under which all citizens in the state receive a
share of the royalties received from the extraction of oil within
The windfall profits tax on oil company revenues in the 1970s
was an indirect way to achieve the Georgist concept of collecting
for the public a portion of the bounty of nature that ought to
belong to all.
When we look at both land value taxation and the green tax shift
we see that the Georgist philosophy is, or could be, very relevant
today. But there is still more.
In his second book, Social Problems published in 1883, Henry
George repeated his concern about the unfair distribution of wealth.
But in this book he went further and identified other examples of
privilege that he labeled as unfair. He opposed corporate welfare
and the granting of special privileges not available to all. Henry
George felt that monopolies such as railroads, telegraph systems,
electric companies, and other public utilities should not just be
regulated by the government, but should in fact be owned by the
government. As early as 1871 he was advocating that subsidies for
railroad construction be eliminated, and that the railroads be
brought under control of the federal government.
Henry George was opposed to patents, which he felt limited free
trade, and he opposed the tariff and other impediments to
international trade. He also had ideas on monetary policy worth
considering today, was strongly opposed to maintaining a large army
and navy, and he was a firm supporter of fiscal responsibility and
opposed to a large national debt.
In my opinion there are two areas where Henry George fell short of
presenting a strong case for this philosophy. The first is that he
assumed that a tax on land would be able to pay all the costs of
govern-ment. He never gave any evidence to prove this; it was just
given as an article of faith.
A second problem with the Henry George philosophy was his
obsession with viewing all the problems of the world, not just
poverty, as the result of the private ownership of land. He was so
focused on seeing his single tax implemented that he did not support
other progressive ideas of his time, such as limiting the number of
hours that women and children could be required to work. He felt
that if the single tax were established that these and other
problems would take care of themselves.
It is important to keep in mind that the primary concern of Henry
George was the vast disparity in wealth between rich and poor. The
single tax was not an end in and of itself, but rather a means to
the end of securing greater fairness and equity, and allowing people
to benefit from the fruits of their own labor.
If Henry George were here today he would see the same great
disparity in wealth as he saw in 1879, but his analysis of what
causes it and how to address it would undoubtedly be different.
Today I believe he would look at stocks and bonds as well as at
land, and would have to take into account the expanded
responsibilities of government.
I believe he would support taxing a portion of corporate stock
dividends, and that he would also favor a tax on capital gains,
especially on gains received by buying land, holding it for ten
years as population growth and highway construction increased its
value, then selling it at a huge profit.
This attitude may make me what the late Professor Robert Andelson
from Auburn University called a Neo-Georgist, rather
than a Georgist.
Is the 19th Century philosophy of Henry George relevant today? A
lthough few people outside of Fairhope Alabama or Arden Delaware
(the other single tax colony) have ever heard of Henry George the
answer is yes, his ideas are still relevant.
Land value taxation can contribute to better, more attractive, and
more efficient cities and suburbs, and perhaps to a better
Environmental taxes can lead to a cleaner and safer environment
and perhaps help us prepare for peak oil and the threat of global
Reducing taxes on the earned income of labor is a worthy goal,
when other revenue sources such as a green tax shift permit it.
And his ideas on monetary reform, fair trade, fiscal
responsibility, and the proper role of government and the military
are still worth studying.
We should promote the ideas of Henry George, even if we do it
without giving him the credit he deserves for introducing them.