INTERESTING?

Among other things, demonstrating the UK and German Empire Thucydides Trap rivalry at the turn of the 20th century which saw the UK aristocracy manufacture WWI to ensure that the ‘People’s Budget’ land tax wouldn’t ‘get off the ground’.

DISCUSSION WITH DR GAVIN PUTLAND …

… ON THE 2024 ‘KAVANAGH-PUTLAND RATIO’ UPDATE

Gavin says: –

“Interpreting them (the data) is more complicated than usual. The one-year decline in sales/GDP is in recession territory, but…

* the cycle calls for a peak in prices in late ’25 or early ’26, with
a recession later in ’26;
* prices are still going up;
* auction clearances are still high;
* as far as I know, the fall in turnover has more to do with supply
constraints (builders going broke, etc.) than with buyers calling BS
on prices;
* rental vacancy rates are at record lows and still worsening, and we know why.

Speaking of which, what exactly constitutes a recession these days?
We’ve already been in a per-capita recession for three or four
quarters.

Eventually we must get to that point where buyers call BS on prices,
causing a fall in turnover followed by a fall in prices. However, due
to the complications with supply, I’m not convinced that we are yet
seeing *that* fall in turnover.”

____________

By the way, I agreed with Gavin’s analysis. A 25% decline in the ratio of total real estate sales to GDP usually forecasts recession, but I also consider there are particular reasons on this occasion why we may still have two years of frenetic upside to real estate sales left.

THANKS, AI!

…. EVEN FOR THAT FINAL URL: I HADN’T MENTIONED PROSPER AUSTRALIA OR A ‘BOLD TAX SHIFT’

“Indeed, the debate over taxation and its impact on economic efficiency is a fascinating one. Let’s delve into the insights provided by Martin Feldstein and Bryan Kavanagh:

  1. Martin Feldstein:
    • Feldstein’s assessment suggests that income tax generates an excess burden (also known as deadweight loss) that is twice the amount levied. In other words, the cost to society due to income taxation exceeds the actual revenue collected.
    • His focus is primarily on the efficiency loss caused by income taxes, which can discourage work, investment, and innovation. The burden falls on those who actively contribute to the economy.
    • Feldstein’s perspective emphasizes the need for tax reforms that minimize this excess burden.
  2. Bryan Kavanagh:
    • Kavanagh’s research, as outlined in “The Real Excess Burden: An overarching approach,” takes a broader view. He assesses the excess burden of all taxes in Australia to be 2.3 times the amount of taxation levied.
    • Kavanagh’s approach differs significantly from Feldstein’s. He considers not only income taxes but also other forms of taxation, including indirect taxes (such as consumption taxes) and property taxes.
    • Importantly, Kavanagh’s methods were approved by Fred Foldvary, adding credibility to his findings.
  3. Taxing Unearned Rents:
    • Both Feldstein and Kavanagh’s findings highlight the importance of reducing excess burden in our tax system.
    • Taxing unearned rents (such as land rents and resource rents) is an intriguing proposition. Unearned rents are essentially income derived from natural resources or monopolistic advantages.
    • Unlike income taxes, which can discourage productive activities, taxing unearned rents carries minimal excess burden. After all, these rents are not the result of individual effort or innovation.
    • By shifting the tax burden away from earned income and toward unearned rents, we can potentially achieve a more efficient and equitable system.
  4. A Bold Tax Shift:
    • Advocates for tax reform often propose a tax shift:
      • From: Taxes on effort, entrepreneurship, and earnings.
      • To: Taxes on resources, rents, and riches.
    • Socializing unearned rents from land (instead of rewarding speculation and corruption) and pricing pollution and extraction are part of this vision.
    • Such a shift aligns our tax system with our values, promotes economic prosperity, and ensures a fairer, more sustainable future.

In summary, both Feldstein and Kavanagh’s insights underscore the need for thoughtful tax policies. Considering the minimal excess burden associated with taxing unearned rents, it’s worth exploring this avenue as we strive for a better economic and social landscape. 🌿💡🌏

For more information, you can explore the Prosper Australia Tax Shift initiative1.”