–> PB No 1
Let’s have real tax reform
Congratulations to Jessica Irvine (The Age, 28/11) for her article outlining the major issues around tax reform. Australians understand the need for efficient taxes and are not necessarily going to be put off by vested interests screaming loudly. As the Victorian election showed, most people are not convinced by spurious fear campaigns. They appreciate governments making good use of revenue and are open to fairer methods of taxation, as demonstrated by the transition to land tax in the ACT.
It is time our politicians were bold and implemented taxation that is, as recommended by the Henry review, “efficient, simple and fair”. Why not start with the excellent climate dividend plan put forth by professors Richard Holden and Rosalind Dixon, as outlined by Ross Gittins (Business, 24/11)?
Allan Dowsett, Preston
Recent Letter to the Editor AFR
The BHP buyback, with its streaming of franked dividends and the creation of capital losses for a fortunate few, exemplify how absurd the tax governance and therefore the management of Australia’s fiscal policy has become.
Further, the decision by the BHP board to construct a convoluted and discriminatory capital return strategy as opposed to a simple cash dividend to all shareholders needs an explanation.
The costs of the BHP structure will be high – probably millions – and shareholders are left to work out what to do and ponder whether they will benefit from the possible outcomes between participate or not participate.
BHP shareholders will recall the 2011 version of the BHP buyback at $38 per share. How poor that decision has been for shareholders ever since!
In my opinion, schemes like this should not be legal and in any case, directors need to decide if these schemes are really in the best interests of all shareholders. More so BHP which is a large resource company subjected to multiple cycles including commodity prices, currency, China growth, equity market risk and the current uncertainty as President Trump implodes the US budget.
Whilst BHP should be ready to buy back shares and they should only do so when they are clearly undervalued based on some assessment by them as to what is fair value. I suspect they have no idea of fair value as evidenced by their decision to buyback at a discount to a VWAP price rather than a set price. They did the same thing in 2011.
Meanwhile, Canberra is asleep at the wheel as our budget gets eaten alive by these contrived schemes. But they don’t worry because the average worker will still go to work, pay his tax for the rest of his working life and remain blindly ignorant.
Clime Investment Management Limited
Stiglitz worthy recipient of Peace Prize
In “Joe Stiglitz isn’t the economist he used to be” (November 18), Aaron Patrick suggests Stiglitz is better known for what he opposes than what he stands for. In fact, Stiglitz has very clear recommendations on achieving a more equitable economy and society with shared and sustainable prosperity, namely:
1. Strong social institutions – such as the rule of law, markets restrained by publicly set rules and regulations, and a functioning democracy with checks and balances;
2. Strong truth-telling institutions, namely an independent and free press, strong judiciary, and universities;
3. Adequate investment in education, public research and public services; and
4. Strong labour market institutions that give workers bargaining power on their wages and working conditions.
For this reason, the Sydney Peace Foundation is proud to have Professor Stiglitz as our 2018 Sydney Peace Prize recipient.
Marianna Brungs, director
Sydney Peace Foundation
Individualism and collectivism reconciled
Aaron Patrick appears to rue the fact that Professor Joseph Stiglitz has moved beyond standard neo-classical economic theory in pointing out the flaws of monopoly-capitalism, and especially the now entrenched failure of this system to deliver a fair rate of wages to workers.
Stiglitz is clearly very concerned about the disempowerment of working people and the rise of large-scale private monopoly interests. But it would be a mistake for readers to draw the conclusion that Stiglitz promotes a negative or divisive perspective on economics.
On the contrary, a close analysis of Stiglitz’s writing reveals his brilliance in reconciling the best aspects of individualism and collectivism.
One of the strongest examples of this is his work on the Henry George Theorem. Thereby, he demonstrated the multitudinous economic advantages of lifting taxes from labour and its products and funding community services through a ‘single tax’ on unimproved land values.
You don’t need to be a Nobel Prize winner to realise the good sense in drawing public revenue from the windfall gains of land speculators rather than from the hard yakka of working people. More strength to your arm, Professor Stiglitz!
Ronald E. Johnson
Championing the cause of inequality
You suggest Professor Stiglitz is “one of the world’s most-cited critics of capitalism” as if that is a bad thing.
The article tries to suggest the professor’s positions have changed over the years. His Sydney Peace Prize was “for leading a global conversation about the crisis caused by economic inequality”. That was the subject of Stiglitz’s doctoral dissertation in the 1960s – some consistency there.
A serious analysis on Stiglitz might instead point to how his thinking has developed over the years. Very early on the part of his work that earned the Nobel Prize included the economics of asymmetric information – the type of asymmetry we have seen uncovered in the banking royal commission. He showed that small asymmetries can have profound implications for the workings of the economy. That also has implications for our democracy.
But the determination to find inconsistency in his work leads the article to two propositions from Stiglitz separated by 35 years.
1. The textbook in which ‘paying unskilled workers too much prices them out of jobs’ versus
2. ‘He criticised reductions in Sunday penalty rates, and said employees’ bargaining power had been “eviscerated”.
Following his argument properly shows that proposition 1. is the outcome in a competitive economy at equilibrium. Proposition 2 obtains in the Australian real-world; a monopolist/oligopolistic economy where concepts such as equilibrium are rather meaningless and where heavy regulation of workers’ rights have dramatically reduced their relative bargaining strength.
Senior Research Fellow
The Australia Institute
(1828 – 1910) Christian anarchist, pacifist, author “War and Peace” “Resurrection” “Anna Karenina” widely regarded as one of the greatest novelists of all time:
“The only indubitable means of improving the position of the workers, which is at the same time in conformity with the will of God, consists in the liberation of the land from its usurpation by the landlords. …The most just and practicable scheme, in my opinion, is that of Henry George, known as the single-tax system.”
Leo Tolstoy: “This sin (of land ownership) can be undone, not by political reform, nor Socialist schemes for the future, not by revolution in the present, and still less by philanthropic assistance or government organisation for the purchase and distribution of land amongst the peasants ….The method of solving the land problem has been elaborated by Henry George to a degree of perfection that under the existing state organisation and compulsory taxation, it is impossible to invent any better, more just, practical and peaceful solution.”
Leo Tolstoy: “People do not argue with the teachings of George, they simply do not know it. And it is impossible to do otherwise with his teaching, for he who becomes acquainted with it cannot but agree.”
Leo Tolstoy: “The only thing that would pacify the people now is the introduction of the Land Value Taxation system of Henry George. The land is common to all; all have the same right to it.”
(1849-87) A famous poet in her day, authored the lines inscribed on the Statue of Liberty: “Give me your tired, your poor, your huddled masses yearning to breathe free.” Addressed to the “wretched refuse” of the earth in 1883, she tried to welcome them as equals in the American dream. She was a strong supporter of Henry George and his land rights and land tax policy proposals.
(1853-1895) Leader of the Cuban independence movement and noted poet and writer…one of the most cogent and audacious thinkers: “George’s book was a revelation not only for the workers, but also for the intellectuals. Only Darwin, in the natural sciences, left an impression comparable to that of George in the social sciences. …His devotion can be compared to the love of Nazareen, expressed in the language of our times.”
Daniel C. Beard
(1850-1941) American naturalist who founded the Boy Scouts of America:
“I believe in Henry George… I have long been a worker for the Single Tax cause.”
(1850-1924), founded the American Federation of Labor and who campaigned for George: “I believe in the Single Tax. I count it a great privilege to have been a friend of Henry George and to have been one of those who helped to make him understood in New York and elsewhere…”
Louis D. Brandeis
(1856-1941) United States Supreme Court Justice: “I find it very difficult to disagree with the principles of Henry George… I believe in the taxation of land values only.”
(1859-1938) Lawyer of Scopes Monkey Trial fame: “Henry George was one of the real prophets of the world; one of the seers of the world… His was a wonderful mind; he saw a question from every side… When we learn that the value of land belongs to all of us, then we will be free men – no need to legislate to keep men and women from working themselves to death; no need to legislate against the white slave traffic.”
(1862-1930) German reformer, earned fame for the successful application of his monetary reform in Austria between the world wars. In his main work, The Natural Economic Order through Free Land and Free Money, Gesell rejected the association of “blood” with “land”. “The whole earth is an integral organ; everyone should be free to travel and settle anywhere.” Gesell advocated an open world market without monopolies, customs frontiers, and colonial conquest. Inspired by Henry George, whose Single Tax on land value had become known in Germany, Gesell called upon government to buy land and lease it to the highest bidder and to forgo taxation. Since the amount of Rent depends on population density, Gesell would distribute Rent to mothers, freeing them from working fathers, letting the sexes relate for love.
Nicholas Murray Butler
(1862-1947) President of Columbia University, Nobel Peace Prize: “Consider Georgist economics with a just sense of their permanent importance and with regard to the soundness of their underlying principles. Sound economists in every land accept and support economic opportunity as fundamental.”
(1866-1925), father of modern China: “The teachings of Henry George will be the basis of our program of reform… The (land tax) as the only means of supporting the government is an infinitely just, reasonable, and equitably distributed tax… The centuries of heavy and irregular taxation for the benefit of the Manchus have shown China the injustice of any other system of taxation.”
(1877-1968) Businessman and author: “Abolish special privileges and Government interference in industry. Give to all equal natural opportunities – equal rights to the inexhaustible storehouse of Nature – and wealth will distribute itself in exact accordance with justice. This, the ideal of Henry George, is what I would place before our people.”
Princess Alice of Greece
(1885-1967), Mother of Prince Philip, the consort to the Queen of England:
“I have studied Henry George. The idea of a Single Tax could contribute to the economic restoration of our country.”
(1859-1952) Philosopher and educator: “Henry George is one of the great names among the world’s social philosophers. It would require less than the fingers of the two hands to enumerate those who, from Plato down, rank with him… No man, no graduate of a higher educational institution, has a right to regard himself as educated in social thought unless he has some firsthand acquaintance with the theoretical contribution of this great American thinker.”
Charles A. Beard
(1874-1948) Historian and author of An Economic Interpretation of the Constitution:
“Of all the American economists since the early days of the republic, none treated as comprehensively the interfiliation of economy and civilization as George did.”
(1879-1955): “Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice.”
Rev. John Haynes Holmes
(1879-1964), co-founder of the National Association for the Advancement of Colored People: “Progress and Poverty was the most closely knit, fascinating and convincing specimen of argumentation that, I believe, ever sprang from the mind of man.”
(1880-1968) American author, activist and lecturer, the first deafblind person to graduate from college: “Who reads shall find in Henry George’s philosophy a rare beauty and power of inspiration, and a splendid faith in the essential nobility of human nature.”
(1892-1981) American writer, amateur naturalist and radio and television personality: “No one should be allowed to speak above a whisper or write more than ten words on the general subject (of economics) unless he has read and digested Progress and Poverty.”
E. F. Goldman
Princeton historian: “For some years prior to 1952 I was working on a history of American reform and over and over again my research ran into this fact: an enormous number of men and women, strikingly different people, men and women who were to lead 20th century America in a dozen fields of humane activity, wrote or told someone that their whole thinking had been redirected by reading Progress and Poverty in their formative years. In this respect no other book came anywhere near comparable influence, and I would like to add this word of tribute to a volume which magically catalyzed the best yearnings of our fathers and grandfathers.”
Rutherford B. Hayes
(1822-1893), 19th U.S. President, from his personal diary:
“In church it occurred to me that it is time for the public to hear that the giant evil and danger in this country, the danger which transcends all others, is the vast wealth owned or controlled by a few persons. Money is power. In Congress, in state legislatures, in city councils, in the courts, in the political conventions, in the press, in the pulpit, in the circles of the educated and the talented, its influence is growing greater and greater. Excessive wealth in the hands of the few means extreme poverty, ignorance, vice, and wretchedness as the lot of the many… Henry George is strong when he portrays the rottenness of the present system. We are, to say the least, not yet ready for his remedy. We may reach and remove the difficulty by changes in the laws regulating corporations, descents of property, wills, trusts, taxation, and a host of other important interests, not omitting lands and other property.”
(1837-1908), 22nd and 24th president of the US, whom George worked with on trade:
“I have always regarded Henry George as a man of honest and sincere convictions and ever held a high opinion of him.”
(1856-1924), 28th president of the US and founder of the League of Nations, said, “This country needs a new and sincere thought in politics, coherently, distinctly and boldly uttered by men who are sure of their ground. The power of men like Henry George seems to me to mean that.” Wilson put Louis F. Post, a Georgist, into the post of labor secretary who founded Labor Day on the Monday closest to George’s birthday.
Franklin D. Roosevelt
(1882-1945), 32nd president of the US said, “I believe that Henry George was one of the really great thinkers produced by our country.” About financing transportation, he wrote, 1939: “The man who, by good fortune, sells a narrow right-of-way for a new highway makes a handsome profit through the increase in value of all of the rest of his land. That represents an unearned increment of profit – a profit which comes to a mere handful of lucky citizens and which is denied to the vast majority.”
(1886-1975) One of the three economists of U.S. President Franklin D. Roosevelt’s Brain Trust (which was so important that reputedly even FDR had to have an appointment to meet with them), a leading “New Dealer” who became its bitter opponent: “The basic assumptions of Henry George are sound. Nothing could be more useful than to bring these fundamentals to the attention of perplexed Americans.”
(1863-1947) Founder of the Ford Motor Company and father of modern assembly lines used in mass production: “We ought to tax all idle land the way Henry George said – tax it heavily, so that its owners would have to make it productive.”
First Viscount Philip Snowden
(1864-1937) British economist and politician, British Chancellor of the Exchequer: “There never was a time when the need was greater than it is today for the application of the philosophy and principles of Henry George to the economic and political conditions which are scourging the whole world. The root cause of the world’s economic distress is surely obvious to every man who has eyes to see and a brain to understand. So long as land is a monopoly, and men are denied free access to it to apply their labor to its uses, poverty and unemployment will exist. Permanent peace can only be established when men and nations have realized that natural resource should be a common heritage, and used for the good of all mankind… I am of the opinion that rent belongs to society and that no single person has the right to appropriate and enjoy what belongs to society.”
1st Viscount Phillip Snowden:
“There never was a time when the need was greater than it is today for the application of the philosophy and principles of Henry George to the economic and political conditions which are scourging the world … Permanent peace can only be established when men and nations have realised that natural resources should be a common heritage.”
Frank Lloyd Wright
(1869-1959), architect who’d design structures to avoid removing trees, wrote in The Living City: “Henry George showed us the only organic solution of the land problem.”
Franklin D. Roosevelt
(1882 – 1945) President of the United States:
“I believe that Henry George was one of those really great thinkers produced by our country.” –
New York Greens founder and a NATION columnist, in his Human Scale (1980):
“The Georgist principles provide a way for a community to secure its financial interest in a rational economy of usufruct.”
Author of Ecotopia, wrote in 1988: “If I’d heard of Georgism before publishing (his classic), I would have incorporated Georgist tax policies into its economic system.”
with Mayer Hillman and Robert Hutchinson in The Gaia Atlas of Green Economics (1992): “Taxes need to be shifted away from labor and on to the use of resources and the environment. One such tax, first proposed by the American reformer Henry George more than a hundred years ago, is land value taxation.”
Co-founder of the British Green Party in his Seeing Green (1984): “The Liberals have given up trying to get across the ideas of Henry George. And that’s a pity … the only way to break the monopoly of landownership (is) some form of land tax.”
Author and operator of Canada’s Sustainability Project which with members of parliament promoted the “Well-Being Measurement Act”: “Writing another book will have to wait. The Georgian perspective will be included without doubt.”
in Shoveling Fuel (2000) cited both the tax shift and the social salary and later added:
“If I had read Dr. Mason Gaffney’s Corruption of Economics prior to writing Shoveling Fuel, I also would have had a lot more to say about Henry George. After reading Corruption and a paper by Bill Batt from New York, I can see the connection of Georgist to ecological economics.”
Founder of creation spirituality, in A Spirituality Named Compassion (1979):
“Henry George sees his movement as an alternative… By taxing land more than we do and in a special way, we will be able to tax work and income derived from it considerably less…”
Theologian John B. Cobb, Jr.
with Herman Daly in their For The Common Good (1989):
“(George’s) specific proposal about taxation can be supported on the basis of a shared rejection of the idea of land as only a commodity… Since this tax would rise as the value of the land rose, or would fall as it fell, there would be no basis for speculation in land… farmers would have no reason to oppose zoning that kept taxes on agricultural lands appropriate to the profits that can be realized from farming… Whereas a higher tax on buildings encourages holding land unused or allowing buildings to deteriorate, a higher tax on land encourages efficient use of the property.”
San Francisco CHRONICLE environmental columnist (Aug 20, 1989):
“Another way out of the (land) cost dilemma might be to look for some variation on the proposals of that 19th century San Francisco economist and prophet-ahead-of-his-time, Henry George, author of the classic Progress and Poverty… Why not a land tax–paid when the land changes hands–to capture some portion of the increase in value resulting from population growth? And why not channel that revenue into incentives for affordable housing?”
(1944-2007) American newspaper columnist, political commentator, and best-selling author: “Henry George must be in his grave spinnin’ like a cyclotron. We, the people at large, make the land more desirable; and then the landowners want us to pay them because we won’t allow them to poison the air or to pollute the rivers.”
James Howard Kunstler
former Rolling Stone editor and contributor to New York Times Magazine, in his Home From Nowhere (1996): “Reform of our property tax system along the lines advocated by Henry George is a straightforward means for restoring the economic health of our ailing towns and cities – no smoke, no mirrors, no voodoo.”
The Utne Reader
in listing Pittsburgh among its “Ten Most Underrated Towns in America”, noted that the city’s “unique tax system, inspired by 19th-century economic theorist Henry George, assesses land at a higher rate than buildings, thus encouraging historic preservation, discouraging downtown parking lots, and reducing sprawl.
Institute for Local Self-Reliance:
“Can a land tax reduce sprawl and strengthen urban economies? The evidence is persuasive though not conclusive. Political economist Henry George first proposed a land value tax over 100 years ago, as a way to eliminate land speculation and make more land available for production.”
Herman E. Daly
Ex-World Bank Economist in Steady-State Economics (1977): “The windfall Rent from higher resource prices would be captured by the government and become public income – a partial realization of Henry George’s ideal of a single tax on Rent. Using Rent to finance a minimum income could substitute for a considerable number of bureaucratic welfare programs.”
Ex-British cabinet economist. Co-Founder of The Other Economic Summit in his Future Wealth (1989): “…tax the site-value of all land in its unimproved state. This tax was first proposed by the 19th century American economist Henry George. We should envisage the eventual removal of all taxes on incomes and value added, savings and financial capital. Taxes will take the form of Rents and charges reasonably paid in exchange either for the use of resources that would otherwise be available for other people, or for damage caused to other people.”
(1894-1963) in the preface to his Brave New World Revisited:
“If I were now to rewrite the book, I would offer a third alternative … the possibility of sanity. Economics would be decentralist and Henry Georgian.”
in his book Ownership: Early Christian Teachings:
“On first reading Henry George (Progress and Poverty) almost twenty years ago when doing research for this volume, I was particularly struck by the similarity of his arguments, and even analogies, to those of the fourth century Christian philosophers on the topic of land ownership.”
Avila continues: “Henry George, the great American political economist and land rights philosopher (1839-1897), eloquently confronted the enigma of the wealth gap in his masterwork Progress and Poverty and set forth both an ethical and practical method for holding and sharing the land as a sacred trust for all. He made a clear distinction between property in land and property in wealth produced by labor on land. He said that private property in human made wealth belonged to the producer and that the state should not tax wealth produced by human labor.”
Agnes de Mille
(1905-1993) Famous choreographer and grand-daughter of Henry George:
“We have reached the deplorable circumstance where in large measure a very powerful few are in possession of the earth’s resources, the land and all its riches, and all the franchises and other privileges that yield a return. These monopolistic positions are kept by a handful of men who are maintained virtually with- out taxation . . . we are yielding up sovereignty.”
published a list of “ten books that shaped the American character” (1985 April/May) compiled by Jonathan Yardley. With George’s classic Progress and Poverty were titles by writers who endorsed his idea, such as The Jungle by Upton Sinclair (1878-1968) and The Shame of Cities by Lincoln Steffens (1866-1936).