OPEN LETTER TO POPE LEO XHI. 13
different person from the owner he must always pay the owner for it in rent or in purchase-money; while if the user be also the owner, it is as owner, not as user, that he receives it, and by selling or renting the land he can, as owner, continue to receive it after he ceases to be a user.
Thus, taxes on land irrespective of improvement can- not lessen the rewards of industry, nor add to prices,* nor in any way take from the individual what belongs to the individual. They can take only the value that attaches to land by the growth of the community, and which therefore belongs to the community as a whole.
To take land values for the state, abolishing all taxes on the products of labor, would therefore leave to the
- As to this point it may be well to add that all economists are
agreed that taxes on land values irrespective of improvement or nse or what in the terminology of political economy is styled rent, a term distinguished from the ordinary use of the word rent by being applied solely to payments for the use of land itself must be paid by the owner and cannot be shifted by him on the user. To explain in another way the reason given in the text : Price is not determined by the will of the seller or the will of the buyer, but by the equation of demand and supply, and therefore as to things constantly demanded and constantly produced rests at a point determined by the cost of production whatever tends to increase the cost of bringing fresh quantities of such articles to the consumer increasing price by check- ing supply, and whatever tends to reduce such cost decreasing price by increasing supply. Thus taxes on wheat or tobacco or cloth add to the price that the consumer must pay, and thus the cheapening in the cost of producing steel which improved processes have made in recent years has greatly reduced the price of steel. But land has no cost of production, since it is created by God, not produced by man. Its price therefore is fixed 1 (monopoly rent), where land is held in close monopoly, by what the owners can extract from the users under penalty of deprivation and consequently of starvation, and amounts to all that common labor can earn on it beyond what is necessary to life ; 2 (economic rent proper), where there is no special monopoly, by what the particular land will yield to common labor
�� �
