Protection or free trade: is the tariff a tax on the people, and does true free trade mean abolishing every tax on production for the single tax on land values?

Henry George, answered from the texts and cited to the page.

Henry George answers

Ask yourself what protection is, and the matter is half settled. It is a system of taxes laid on imports to raise the price of certain commodities at home, so that the home producers of them can get more from their own fellow-countrymen.1 That is all there is to it. No duty is protective unless it so raises prices as to enable someone to get more from his fellow-citizens than he could without it; and protection cannot lift by a penny what an American sells to foreigners.

How it may benefit the manufacturer or the owner of timber and mineral land is plain enough. How it can benefit the man who sells labor and buys commodities, no one has ever shown me.1 So it is a tax on the people, and a tax with two collectors: the Government takes its share at the custom-house, and the favored producer takes another from the same pocket.

That is why a protective tax cannot be abolished without Washington filling with lobbyists. A tax that did not let private parties levy a second tax for their own benefit would not be a protective tax at all.2 But I do not stop where the revenue-tariff men stop. The partial reform miscalled free trade, the bare substitution of a revenue tariff for a protective tariff, cannot help the laboring classes, for it never touches the cause of that unequal distribution which makes labor a drug and population a nuisance in the midst of a plethora of wealth.3

Free trade means free production. To free production fully you must remove not only every tax upon it but every restriction as well; and the greatest restriction of all is that Labor, the active factor, is denied free access to Land, the passive factor.3 Then where is the revenue to come from, once the taxes on production are gone? From the one tax that is no check upon production.

A tax on land values falls on the owner and cannot be shifted to the user, any more than a seller can compel his buyer to pay a mortgage.4 Land cannot be hidden or carried off, so the tax is assessed with more certainty and collected with less expense than any other. It is a tax only in form; in nature it is rent, a taking for the community of a value that arises from the growth of the community and not from any man's exertion.

What the individual makes, the value of his improvements, is his own and ought not to be taxed. What attaches to the land itself belongs to the community and can be taken to the last penny without lessening any man's incentive to produce.4 Mark the distinction, for my critics stumble on it. A tax on land by quantity, a specific tax on all land, would be a condition upon its use and would fall on the farmer and become a tax on labor.

The single tax is no such tax. It falls only on valuable land, on the premium which the user must pay the owner for permission to use land of superior excellence. It therefore cannot restrict production, and since it discourages speculation and makes land easier to get, it would increase production and the earnings of labor and capital.5 And it is no strange machine to be built from nothing: we already collect it, in part, in the tax on real estate.

All that is new is the single. We have only to abolish the other taxes.5 So the two reforms are one. To carry the free-trade principle to the abolition of every tax that hampers production would of itself bring very nearly the measures needed to assert the common right to land, and it needs only that the taxation of land values be carried far enough to take, as near as may be, the whole income arising from the value the community gives to land.4 True free trade, thus completed, yields not only the largest production of wealth but the fairest distribution of it.3

The position in brief

A tariff is a tax, paid by the people who buy, to enrich the few who sell; it protects no laborer, because what protects the laborer is access to land, and no tariff gives him that.6 The arguments of the protectionists, the balance of trade, the home market, the pauper labor of Europe, are fallacies. But the free traders stop half-way: abolish the tariff alone and the gain goes to rent.

True free trade means freedom of production as well as of exchange, which means abolishing every tax on what men make and raising the revenue from the value of land.78910

Sources

  1. Now what is "protection"? It is a system of taxes levied on imports for the purpose of increasing the price of certain commodities in our own country so that the home producers of such commodities can get higher prices for what they sell to their own fellow-countrymen.
    Our Land and Land Policy, Speeches, Lectures and Miscellaneous Writings
  2. A tax that will not enable private parties to levy a tax for their own benefit, in addition to the tax collected by the Government, is not a protective tax.
    A Single Tax on Land Values, Reply to Edward Atkinson
  3. The partial reform miscalled free trade, which consists in the mere abolition of protection— the mere substitution of a revenue tariff for a protective tariff— cannot help the laboring-classes, because it does not touch the fundamental cause of that unjust and unequal distribution
    Protection or Free Trade
  4. A tax on land values is of all taxes that which best fulfils every requirement of a perfect tax. As land cannot be hidden or carried off, a tax on land values can be assessed with more certainty and can be collected with greater ease and less expense than any other tax, while it does not in the slightest degree check production or lessen its incentive.
    Protection or Free Trade
  5. The single tax, therefore, could not fall on all land. It could fall only on valuable land, or land of superior excellence. Hence it could not restrict production, or lessen the use of land, or diminish the earnings of labor or capital.
    A Single Tax on Land Values, Reply to Edward Atkinson
  6. That I have already done, in anticipation of the coming before the people of this question, in a little book entitled "Protection or Free Trade?" in which I have shown the full relations of the tariff question to the labour question.
    Our Land and Land Policy, Speeches, Lectures and Miscellaneous Writings
  7. Labor, free to the natural elements of production, would no longer be incapable of emplojdng itself, and competition, acting as fully and freely between employers as between employed, would carry wages up to what is truly their natural rate— the full value of the produce of labor— and keep them there. Let us turn again to the tariff question.
    Protection or Free Trade
  8. But what I now wish to point out is the inadequacy of the arguments which free traders usually rely on to convince working-men that the abolition of protection is for their interest. In our examination we have gone as far, and in certain respects somewhat further than free traders usually go. But what have we proved as to the main issue?
    Protection or Free Trade
  9. True free trade, on the contrary, leads not only to the largest production of wealth, but to the fairest distribution. It is the easy and obvious way of bringing about that change by which alone justice in distribution can be secured, and the great inventions and discoveries which the human mind is now grasping can be converted into agencies for the elevation of society from its very foundations.
    Protection or Free Trade
  10. And what is really involved in the decision that will be asked of you as to whether protection or free trade is best for the interests of labour, is whether the emancipation of labour is to be sought by imposing restrictions or by securing freedom. Until the men who would raise wages and emancipate labour settle that for themselves, they cannot unite to carry out any large measure.
    Our Land and Land Policy, Speeches, Lectures and Miscellaneous Writings

Where the argument is made

  • Protection or Free Trade (1886) in full, on protection as a tax that robs the many for the few and on the fallacies of the balance of trade, the home market and the pauper labor of Europe
  • chs. XXII-XXVI, "The Real Weakness of Free Trade," "The Robber that Takes All that Is Left" and "True Free Trade," on the gains of a merely fiscal free trade swallowed by rent
  • ch. XXVIII, "Free Trade and Socialism"
  • Progress and Poverty (1879) VIII.3, "The Proposition Tried by the Canons of Taxation," and IX on the effects of the remedy
  • Social Problems (1883) ch. XVI on public debts and indirect taxation
  • "Justice the Object, Taxation the Means" (1890)
  • "Causes of the Business Depression" (1894)

How the argument was received

His most popular book after Progress and Poverty and the bridge by which the single tax entered national politics; it set him against the protectionist Republicans and, at the end, against the free traders who would go no further.