Tithes, Not Taxes, Promote Economic Growth

By Harry Ball-Wilson

During the United States' war of independence, the Native Americans sided with the British, since they believed, based on experience elsewhere, that continued colonial rule would give them a better chance of retaining their lands. Indeed, the winners of the revolutionary war not only took native peoples' lands; they also engaged in an attempted genocide.

Hawaiians haven't been murdered en masse, but they have certainly been dispossessed. Today, steps are at last being taken toward compensating the islands' native inhabitants. The payments are projected to come, however, from yet another tax levy, even though Hawaii's tax rate is, on average, 25 percent higher than that of other states.

The price of Hawaii's land has increased enormously, in part because many owners keep land unused until its value increases. Landlords have also benefited immensely for generations from agricultural subsidies.

That far-seeing American, Henry George, pointed out that it was planning permissions granted by local government that actually accounted for increases in the value of land. The owner of the land played no constructive part. George, therefore, suggested that the community should exact an annual fee, a sort of tithe, as warranted acknowledgment of the community's role in enhancing the value of privately held land. This action would also ensure that land would not be left unused for long periods.

As communities grow, George further postulated, the annual charge should be increased due to the addition of facilities that incrementally increase the land's value.

Since 1970, Taiwan has seen its gross national product rise from $389 per person per year to $12,000. Some of this economic expansion was due to the assessment of an annual fee on landlords, based on the value of land as stated by its owners. The vital factor was that the local authority had the right to buy the land at that value, without argument.

This policy minimizes dependence on employment - and goods - oriented taxes and encourages investment in wealth-creating industry rather than burying money in land.

This year marks the 100th anniversary of the U.S. Supreme Court's ruling that the income tax was unconstitutional in peacetime. Yet the Internal Revenue Service has obviously managed to survive, due to ratification in 1913 of the Sixteenth Amendment, which legalized this dreadful imposition.

It is time to exit the vicious cycle of ever-increasing taxes-which only make the poor poorer-and instead promote investment in wealth creation-for the benefit of all.

Harry Ball-Wilson is coordinator of the World Economics Commission.

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