The Cambridge History of English and American Literature in 18 Volumes (1907–21).
VOLUME XVII. Later National Literature, Part II.
XXI. Political Writing Since 1850.
§ 32. Henry George; The Income Tax.
Criticism was started by Henry George 17 in his Progress and Poverty (1879):
| So long as all the increased wealth which modern progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent. The reaction must come. The tower leans from its foundations, and every new story but hastens the final catastrophe. To educate men who must be condemned to poverty, is but to make them restive; to base on a state of most glaring social inequality political institutions under which men are theoretically equal, is to stand a pyramid on its apex. |
The remedy was an application of the physiocratic doctrine of the eighteenth century. The land of each country belongs to all of its people but it is occupied or used by individuals. Therefore all land rents, or taxes on rents, should be used for the common good, thus removing all existing revenues. Thus abolishing taxes on labour and production would stimulate wages and profits. Land values would decline and land held for speculation would be thrown in the market. This argument won great popularity and George suddenly became the leader of a new movement—the single tax. It had much popularity and influence abroad; it contributed to the introduction of increment taxes in Germany and Australia; in England it was well received on account of the Irish situation. In the United States it has had less practical results, but one of the attendant theories—that wages are paid out of the value created by labour, not out of capital—has had a wide acceptance. Gradually, also, all types of economist emphasized questions of distribution and the ground of the older individualistic laissez faire school was abandoned. The great question of taxation was subjected to analysis and new sources of revenue were defended in Max West’s Inheritance Tax and E. R. A. Seligman’s Essays on the Income Tax. Thus within fifteen years after the publication of George’s work the revision of America’s tax systems was well under way. Reform was openly advocated by liberals and bitterly opposed by conservatives. Illustrative of the conservative view were the words of Justice Field in the decision by which the Federal income tax law of 1894 was declared unconstitutional: “The present assault upon capital is but the beginning. It will be but the stepping-stone to others larger and more sweeping till our political conditions will become a war of the poor against the rich; a war growing in intensity and bitterness.” In contrast was the more liberal spirit in Justice Harlan’s dissenting opinion:
| The practical effect of the decision today is to give certain kinds of property a position of favouritism and advantage inconsistent with the fundamental principles of our social organization, and to invest them with power and influence that may be perilous to that portion of the American people upon whom rests the larger part of the burdens of the Government and who ought not to be subjected to the dominion of aggregated wealth any more than the property of the country should be at the mercy of the lawless. |
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