david spainCurrent Forms of Revenue-Raising

 by David William Spain BA, LLB, LLM

(an extract taken from SITE REVENUE: KEY TO ECONOMIC SANITY)

The average Australian pays some 125 different taxes each year, there being about 160 different state taxes and 259 taxes nationally, not counting local government rates. Australian taxation law is so complicated that even the 7 judges of the full High Court, professionally conscripted to interpret acres of writing, can be completely fragmented in what they rule and the reasons given. The Australian Taxation Office issues over 10,000 rulings a year, many of them with extensive consequences. At one blow under an SR system, this complexity would all be ditched, simplified to 0.6%.

All taxation distorts the economy by suppressing & warping the object taxed.  In the 18th century, European authorities raised revenue by taxing chimneys & windows: as a result, folk built houses with few, or bricked them up.

When Muhammad Ali, the Ottoman ruler of Egypt 1805-48, imposed a tax on date palms, the peasant farmers cut them down; (incidentally, replacing this impost with a tax on land of twice the amount produced no such result – indeed, the farmers had incentive to grow more palms so as to raise the revenue to pay the tax).  In the USA, capital gains are only taxed at 15% but income from labour can be taxed at 35%: this encourages speculation not production.

If labour is taxed, it diminishes its effort or emigrates.  If capital is taxed, it can flee the jurisdiction (perhaps to operate as an offshore company in a tax haven).  If transactions (such as land sales) are taxed via stamp duties, people may hesitate to buy and efficiencies are curtailed. Similarly, income taxes constrain effort & initiative, payroll taxes constrain employment and tariffs exclude cheaper goods and coddle inefficient workers.  Stamp duties impede mobility and relocation of residences to more efficient sites.

Deadweight taxes flourish throughout Australia so as to oppress effort & production and maximize profit for the manipulative puppeteers behind the scenes, the rentier class who pocket capital gains in land and skim off hidden values attending possession of sites.

In 2010-11 all levels of government in Australia collected 57% of total taxes as income tax (fining effort & initiative!), 13% as GST (complicating transactions!), 7% as excise on goods (increasing their price!), 5% as payroll tax (punishing employers!), and only 6% on land.

Possibly there is no salvation from the dead hand of the rentier class.  They own the train and drive it, filled with bewildered voters and blinkered academics, straight to the cliff of oblivion.  The time is late.

Various forms of stupid subsidies also distort the market.  Thus, first home owner grants [“FHOG”] foster a general increase in house prices (benefiting no-one except vendors), and negative-gearing (which allows income-rich investors to tax-deduct interest paid on borrowings) strips $54bn p.a. from revenue, promotes increased land prices and assists the rentier class to outbid battling home buyers, locking these latter into tenancy. The hidden intent of both these subsidies is to coddle the rentier classes and to prop up the banks (whose securities are fixed upon assets) by keeping high the prices of assets (land, buildings, shares).

Such irrational taxes, and the rates of levy imposed under them, are relatively arbitrary and are necessarily complicated in order to reduce avoidance.  This leads to evasion and complex litigation in which even the highest courts are severely divided.  To make things worse, modern governments often (effectively) conscript or enslave citizens by forcing them to collect & remit GST and self-assess tax liability.  This process is tremendously wasteful & inefficient, involving personal downtime & red tape and giving manipulative power to short-term politicians.  Instead of continually tinkering with piecemeal adjustments, one should roundly condemn all taxes.

The term “rentier” arose when the lands of church & nobles, seized during the French Revolution 1789-93, were auctioned off by the embattled, cash-strapped new republic to the “rent-seeking” wealthy bourgeoisie, who then exploited the workers as their tenants.  Much the same exploitation of the peasantry had been occurring in England ever since Henry VIII, in his breach with Rome, confiscated the Church lands, and subsequent statutes confiscated the traditional commons.  Such enclosures were even more oppressive in Scotland, forcing emigration.

The rentier class (with their control of media, dumb unionists, tame academic twits & bipartisan politicians grasping for donations) love having a messy, complicated tax system where rip-off “tax minimization” dodges can be hidden, unproductive zombie mates can hold high-paid jobs suckling on the public teat, all whilst manipulated taxes on labourers & grants from afar improve their own property values and their rip-off of community-created capital gain & locational benefit escapes notice.  A nice rip-off system if you have the stomach for it.

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narendra modiOn the ABC’s “Insiders” this morning Australian Treasurer Joe Hockey has just noted Indian Prime Minister Narendra Modi’s plan for $1 trillion in new infrastructure.

That’s a big spend, and Australia excels at PPPs, says Mr Hockey, so we should seek to employ our expertise as India rolls out this program of capital works.

“PPPs”?  Yes, that’s where–instead of issuing bonds or capturing part of the uplift that new infrastructure provides to land values–you get the government to grant leases for 30 years or more over the infrastructure and charge a toll on it in the constructor’s favour, effectively privatising the works for that period.

PPPs are another rotten idea promoted by the 1%, and, as some of these partnerships against the Australian people have begun to fall over, it now seems the Australian government is starting to look elsewhere for bunnies to go along with this pathological nonsense.

Is that the best you can come up with for India, Joe Hockey? By all means, let Australian companies tender for the construction of Indian infrastructure …. but you’d better beware of PPPs, Mr Modi, because they will undoubtedly work against the interests of all Indians – as they have against Australians!

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World Economics Association –> Hudson69  “Piketty vs. the classical economic reformers”


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Take a peep here at how Germany has chopped off its own foot.

Then, this video will provide a further thirty years of background to the Eurozone:-

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World Economic Review article by Richard Pereira –> http://werdiscussion.worldeconomicsassociation.org/?post=universal-basic-income-and-the-cost-objection-what-are-we-waiting-for 

Noting, especially, the comments on the piece by Dr Gavin Putland.

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THE ABC’s Q & A, on the topic of mental health/illness, was pretty good last night.  There seemed to be some recognition that depression may have something to do with mortgage debt and/or a lack of “community”, especially in the country.

On this site, I’ve often put the case that we lose a sense of community when land rent becomes privatised instead of captured for necessary revenue. It’s public community property, of course, yet increasingly we allow it to be privatised.

Last night’s Q & A reminded me of this piece from anthroposophist, Carl Flygt:-

“My eyes were opened when I first read Henry George. Suddenly I had an economic explanation for why modern man has lost his soul, his sense of ease, wholeness, mystery and profundity. I could understand in concrete terms why the people I met and knew were full of conceit and vanity, of angular superficiality, of debasement and shame, without emotional subtlety in their expression, incapable of objectivity in their thinking, loudly cynical and humourlessly fearful. I could see also why I shared these qualities. From George I could understand that we had all accepted something radically wrong in our social contract, that in giving up many of our personal liberties in exchange for the greater liberties afforded by society, we had also given up an immensely great freedom, a spiritual freedom. Furthermore, and most amazing to me, we had no idea that we had done it.

What is this spiritual freedom we have lost through economic error? It is the freedom possessed in rudimentary form by the indigenous peoples of the world before their way of life was lost to economic development. It is the freedom of man in harmony with nature and the world soul, the free cultural life of the natural man in rational and reverent exchange with forces he understands or at least knows intimately and respects. As Henry George put it, it is the freedom of a man in full possession of the rights to his labour and to the fruits of that labour.”

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Behind every radical movement you will find Single Taxers. Woodrow Wilson is surrounded by them.

– Walter Burley Griffin, Henry George Commemoration Dinner Address, Melbourne, 18 September 1915


An unparalleled amount of social reform was achieved during the US Progressive Era, when both Republican (Teddy Roosevelt and William Taft) and Democrat presidents (Woodrow Wilson) featured. From 1909 to 1921 they addressed the corruption, excesses and wrongs of the day.  Of course, they were influenced by longer-standing movements and their leaders from about 1890 to 1930 in addressing these issues which included poverty, corruption, monopoly, fair competition and women’s suffrage measures.

But the world has retrogressed again into corruption and inequality, the surest indicator of which is the well-documented phenomenon of a vastly-widening gap between what the Occupy movement calls the “1%” and the rest of us. Political parties have no real answers and have become a complete shemozzle as they continue to accept funds from self-interested corporate donors at our expense.

Although the Ayn Randian “trickle down” economics supported by the US and UK leadership of Ronald Reagan and Margaret Thatcher has proven itself to be a fraud perpetrated on all but the super wealthy (real incomes having started to decline in 1972 a little before their time), attempted reform movements such as Occupy Wall Street have been confronted by a citadel-like defence from the status quo.

This is mainly because reform today lacks the economic focus that characterised and underpinned the reforms of the Progressive Era. If you don’t get your economics right, then all other reforms are destined to fail.  Yes, the wealthy are certainly getting wealthier at the expense of the poor and middle class, but does Tomas Piketty’s call for higher taxes on capital constitute a valid response, for example? No, definitely not. Piketty’s conclusion is not as compelling as his extensive data.

The Progressive Era was informed by Henry George’s reformative economics [see Mason Gaffney's evidence] which explained that private incomes from publicly-generated land rents–in the broader sense of rents from all natural resources–are unearned and must be distinguished from the earned incomes of wages and capital. Therefore, Piketty’s solution is a scatter-gun approach that leaves much to be desired and is likely to damage the productive economy. Other major reforms, such as the movement for action on climate change, which tends to disregard our concupiscence to destructive rent-seeking, are also diminished by their lack of focus on fundamental taxation and economic reform.

If we want to experience a new progressive era of reform, it needs to concentrate upon those unearned incomes from land and natural resources which the wealthy have proven to be so proficient at keeping away from the public purse – as witnessed by the Australian mining industry’s successful $22 million scare campaign against the resource super profit tax.

Ironically, it may be our aspiration and proclivity to become like the 1% that holds us back from progressive reform.  Australia’s current obsession with residential “investment”, which is worrying the Governor of the Reserve Bank of Australia at the moment and is likely to end badly, tends to support this proposition.

The outlook is bleak but improving. As property-bubble-weakened world economies continue to wrestle for answers, there has emerged a significant re-awakening to the transformative ideas of Henry George: even Australia’s Henry Tax Review is alert to them.

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