How to Create Jobs! How to Raise Wages!
By: Mike Curtis
Jobs are created by shifting taxes (buildings, income, sales) to the rental value of land. The more of this income potential that must be paid in taxes, the greater the incentive to put each parcel of land to its full economic use, or transfer it to someone who will. It requires labor to put land to use, and that is how jobs are created, and ultimately, wages increased. Just imagine how many more jobs would be created in rebuilding our cities: construction, manufacturing, high-tech, and retail.
The wages of each new worker will be spent on the products and services of other workers. And the rent of land, which is collected by the government, will be exchanged for labor and labor products to provide for infrastructure, social services, and social programs like healthcare and education.
By collecting the rental value of land for a public purpose, the community (society) would be sharing that portion of wealth. The wealth that results from superior opportunities and the synergistic results of the conscious and sub-conscious cooperation of people in a community are enabled and expedited by the infrastructure and public service.
The rental value of land measures precisely the amount of the benefits received from the community (society).
Wages and interest have fallen so much that most of taxes come out of what would otherwise go to the owners of the land. The owners of buildings get whatever reward is necessary to bring about the maintenance of their assets. If they didn't, no maintenance would be done, and no new buildings would be built. Workers who build and maintain buildings get whatever reward is necessary to do the work, or no construction or maintenance would be done. Therefore, the tax added to the buildings' cost is paid out from money, which would go to the owners of the land.
The best example of this can be seen in our slums today. Maintenance is not getting accomplished, and buildings are being replaced because there are not enough rental properties to be taxed.
However, if there is no building, there is no building tax. Cities have a significant number of vacant lots, empty, uninhabitable worthless houses, and other structures. An even greater number of under-used parcels like surface parking or buildings would be much taller if the land were put to its most economical (profitable) use—employing or housing many more people.
The tax on incomes from investments in business and the stock market are no different than real-estate. The owners of buildings, machinery, and products in being made and exchanged get the necessities to induce their production, maintenance, and replacement. Landowners and other monopolists take more significant results. Therefore, taxes on the incomes of business and their stockholders come out what would otherwise go to the owners of land and other monopolies.
Whatever Minimum Wage workers pay in Income and Payroll taxes lowers all wages to an equal extent. However, taxes paid only by higher-wage workers diminish the incentive to learn their unique skills and knowledge. Therefore, those taxes are compensated with even higher wages, lowering employers' incomes and, ultimately, landowners.
The sales tax, which has become an increasingly larger source of state and local revenue over many decades, is wealth confiscation. It reduces the legal Minimum Wage by increasing the cost of things that Minimum Wage workers buy, in the same way as a wage tax, and reduces everyone's wages. The sales tax on items only purchased by higher-wage workers lowers their incentive to acquire the unique skill and knowledge and is compensated with higher wages. And, to the extent that the higher prices diminish sales, some of it is paid out of what would otherwise go to commercial landowners in rental income.
So, not only the tax on buildings, but investments, most of the income tax, and the sales tax on real-estate and luxuries are paid from the socially created incomes that would otherwise go to landowners. If there is no building value, income, or sales, there is no tax.
None use and underuse of land is the root cause of unemployment—and its primary motivation is land speculation. That is: holding the land idle or underused while its selling value increases. Any time the selling price of land, minus the taxes that must be paid, grows faster than the returns from the stock market or other investments, people are inclined to hold land idle or under-used condition while its selling value increases.
It depends on how much land there is to be had, the quality of the land, and whether there are any deterrents to holding it idle, how long it takes before the unemployment begins. In the 19th century, the march of the invention and the extension of railroads continued to give previously uninhabitable land the potential for homesteading. This counteracted the extension of the free-land opportunity, and it is even believed to have helped end periods of depression.
As the 19th century came to an end (1890), the American frontier was officially ended. Slowly and surely, wages began to fall, and unemployment began to rise. In the absence of a free-land opportunity, wages of the least productive workers (those with the least skill and knowledge) tend to a bare subsistence in the free market—no matter how much they produce. Those superior workers, who produce more with greater skill and knowledge, get only enough of their larger production to generate the supply of each type and level of skill and knowledge needed to meet the market demands. Their wages do not account for the more valuable wealth they produce. The same thing goes for the owners of capital: buildings, tools, machines, and products being made and not yet in the hands of the ultimate consumer. In the absence of a free-land opportunity, the return to capital will be enough to induce its production and maintenance. Without a free opportunity, there is no way for its owners to employ it themselves.
Wages have been raised by the legal Minimum Wage and the employer's contribution to Social Security and Medicare. Some of that greater amount has been taxed back in wage and sales taxes on the things that Minimum Wage workers buy. None-the-less, wages are still measurably higher than they would have been in the absence of the Min. Wage. The Minimum Wage does not make land available for employment, so it cannot create jobs.
Removing taxes from income and sales increases the income from the land by the same amount. Increasing the tax on the rental value of land increases the incentive to put it to use. It removes the incentive to speculate (hold it idle or underused), creating jobs. Collecting the full rental value of land from every privately-held parcel will create job opportunities for all who want them.
Urban areas take up a tiny percentage of America's land area, even its arable land, but most people live in and around our cities. Because of the enormous investment in infrastructure (roads, wires, pipes, subways, etc.) and public service, urban and suburban land makes possible too dense populations with amazingly efficient cooperation: minute divisions of labor and enormous scale economies. Were we to eliminate all taxes (buildings, income, sales, etc.) and collect for the public purpose the full rental value of land, our cities would be rebuilt with a far larger number of people. All privately held land would be developed to its full potential within the legal limits set for the residents' safety and well-being. As taxes would be removed from buildings, many buildings' most profitable height would be much higher. Cities would draw people toward them, diminishing the demand for and the value of the least potentially productive land previously in use.
As a result, the best quality land that presented itself as a free-land opportunity for homesteading would set wages everywhere. No one would work for another unless they were offered a higher standard of living than they could make for themselves where the opportunity to do so was free. The free-land opportunity would not be overwhelmed, because the potential rent in the cities and all valuable areas would have to be paid whether the land was used. The land would have to be used to its full potential to maximize the income, and to do so; labor would have to be hired—continually competing with the free-land opportunity.
As inventions and new discoveries continue to advance, and the infrastructure and public service are extended, the potential of the free-land increases and wages and the return to capital increase everywhere. As wages rise, so does the return to buildings, machinery, and products not yet in the consumer's hands. Much of what the landowners would lose in their unearned income from the land, they would make up for in the increased return on their capital assets: buildings, machinery, inventories.
In most cases, inventions, innovations, and discoveries increase productivity on the least productive land use; it increases wages and interest everywhere. However, they increase productivity more on prime land, and therefore, increase its rental value. Farm machinery increases production in proportion to fertility; mining machinery in proportion to the veins; elevators with the density of population; great machines yield far more with a large workforce and significant market. This greater productivity that results in naturally superior land and that where the population is more concentrated adds to land's rental value. It is a socially created value and therefore belongs to the community or society.
For a more in-depth understanding of the thesis, go to lessons.
The wages of each new worker will be spent on the products and services of other workers. And the rent of land, which is collected by the government, will be exchanged for labor and labor products to provide for infrastructure, social services, and social programs like healthcare and education.
By collecting the rental value of land for a public purpose, the community (society) would be sharing that portion of wealth. The wealth that results from superior opportunities and the synergistic results of the conscious and sub-conscious cooperation of people in a community are enabled and expedited by the infrastructure and public service.
The rental value of land measures precisely the amount of the benefits received from the community (society).
Wages and interest have fallen so much that most of taxes come out of what would otherwise go to the owners of the land. The owners of buildings get whatever reward is necessary to bring about the maintenance of their assets. If they didn't, no maintenance would be done, and no new buildings would be built. Workers who build and maintain buildings get whatever reward is necessary to do the work, or no construction or maintenance would be done. Therefore, the tax added to the buildings' cost is paid out from money, which would go to the owners of the land.
The best example of this can be seen in our slums today. Maintenance is not getting accomplished, and buildings are being replaced because there are not enough rental properties to be taxed.
However, if there is no building, there is no building tax. Cities have a significant number of vacant lots, empty, uninhabitable worthless houses, and other structures. An even greater number of under-used parcels like surface parking or buildings would be much taller if the land were put to its most economical (profitable) use—employing or housing many more people.
The tax on incomes from investments in business and the stock market are no different than real-estate. The owners of buildings, machinery, and products in being made and exchanged get the necessities to induce their production, maintenance, and replacement. Landowners and other monopolists take more significant results. Therefore, taxes on the incomes of business and their stockholders come out what would otherwise go to the owners of land and other monopolies.
Whatever Minimum Wage workers pay in Income and Payroll taxes lowers all wages to an equal extent. However, taxes paid only by higher-wage workers diminish the incentive to learn their unique skills and knowledge. Therefore, those taxes are compensated with even higher wages, lowering employers' incomes and, ultimately, landowners.
The sales tax, which has become an increasingly larger source of state and local revenue over many decades, is wealth confiscation. It reduces the legal Minimum Wage by increasing the cost of things that Minimum Wage workers buy, in the same way as a wage tax, and reduces everyone's wages. The sales tax on items only purchased by higher-wage workers lowers their incentive to acquire the unique skill and knowledge and is compensated with higher wages. And, to the extent that the higher prices diminish sales, some of it is paid out of what would otherwise go to commercial landowners in rental income.
So, not only the tax on buildings, but investments, most of the income tax, and the sales tax on real-estate and luxuries are paid from the socially created incomes that would otherwise go to landowners. If there is no building value, income, or sales, there is no tax.
None use and underuse of land is the root cause of unemployment—and its primary motivation is land speculation. That is: holding the land idle or underused while its selling value increases. Any time the selling price of land, minus the taxes that must be paid, grows faster than the returns from the stock market or other investments, people are inclined to hold land idle or under-used condition while its selling value increases.
It depends on how much land there is to be had, the quality of the land, and whether there are any deterrents to holding it idle, how long it takes before the unemployment begins. In the 19th century, the march of the invention and the extension of railroads continued to give previously uninhabitable land the potential for homesteading. This counteracted the extension of the free-land opportunity, and it is even believed to have helped end periods of depression.
As the 19th century came to an end (1890), the American frontier was officially ended. Slowly and surely, wages began to fall, and unemployment began to rise. In the absence of a free-land opportunity, wages of the least productive workers (those with the least skill and knowledge) tend to a bare subsistence in the free market—no matter how much they produce. Those superior workers, who produce more with greater skill and knowledge, get only enough of their larger production to generate the supply of each type and level of skill and knowledge needed to meet the market demands. Their wages do not account for the more valuable wealth they produce. The same thing goes for the owners of capital: buildings, tools, machines, and products being made and not yet in the hands of the ultimate consumer. In the absence of a free-land opportunity, the return to capital will be enough to induce its production and maintenance. Without a free opportunity, there is no way for its owners to employ it themselves.
Wages have been raised by the legal Minimum Wage and the employer's contribution to Social Security and Medicare. Some of that greater amount has been taxed back in wage and sales taxes on the things that Minimum Wage workers buy. None-the-less, wages are still measurably higher than they would have been in the absence of the Min. Wage. The Minimum Wage does not make land available for employment, so it cannot create jobs.
Removing taxes from income and sales increases the income from the land by the same amount. Increasing the tax on the rental value of land increases the incentive to put it to use. It removes the incentive to speculate (hold it idle or underused), creating jobs. Collecting the full rental value of land from every privately-held parcel will create job opportunities for all who want them.
Urban areas take up a tiny percentage of America's land area, even its arable land, but most people live in and around our cities. Because of the enormous investment in infrastructure (roads, wires, pipes, subways, etc.) and public service, urban and suburban land makes possible too dense populations with amazingly efficient cooperation: minute divisions of labor and enormous scale economies. Were we to eliminate all taxes (buildings, income, sales, etc.) and collect for the public purpose the full rental value of land, our cities would be rebuilt with a far larger number of people. All privately held land would be developed to its full potential within the legal limits set for the residents' safety and well-being. As taxes would be removed from buildings, many buildings' most profitable height would be much higher. Cities would draw people toward them, diminishing the demand for and the value of the least potentially productive land previously in use.
As a result, the best quality land that presented itself as a free-land opportunity for homesteading would set wages everywhere. No one would work for another unless they were offered a higher standard of living than they could make for themselves where the opportunity to do so was free. The free-land opportunity would not be overwhelmed, because the potential rent in the cities and all valuable areas would have to be paid whether the land was used. The land would have to be used to its full potential to maximize the income, and to do so; labor would have to be hired—continually competing with the free-land opportunity.
As inventions and new discoveries continue to advance, and the infrastructure and public service are extended, the potential of the free-land increases and wages and the return to capital increase everywhere. As wages rise, so does the return to buildings, machinery, and products not yet in the consumer's hands. Much of what the landowners would lose in their unearned income from the land, they would make up for in the increased return on their capital assets: buildings, machinery, inventories.
In most cases, inventions, innovations, and discoveries increase productivity on the least productive land use; it increases wages and interest everywhere. However, they increase productivity more on prime land, and therefore, increase its rental value. Farm machinery increases production in proportion to fertility; mining machinery in proportion to the veins; elevators with the density of population; great machines yield far more with a large workforce and significant market. This greater productivity that results in naturally superior land and that where the population is more concentrated adds to land's rental value. It is a socially created value and therefore belongs to the community or society.
For a more in-depth understanding of the thesis, go to lessons.