I'm a real estate valuer who worked in the Australian Taxation Office (ATO) and Commonwealth Bank of Australia (CBA) before co-founding a private valuation practice, Westlink Consulting. I discovered that we leave too much publicly-generated land rent to be privately capitalised by banks and individuals into land price bubbles. This generates repetitive recessions and depressions. These need to be avoided by capturing more revenue from land values to free up wages and household debt.
The current tax system continues to reward rent-seeking in the “game of mates” being played out at great cost to the Australian community.
It wasn’t always thus. Australia had an even better record than the USA (below), in capturing back some of the uplift in property values provided by services and public infrastructure – at all 3 levels of government. (The USA did it only at local and state levels.)
The recommendations of “Australia’s Future Tax System” (2010), namely, abolishing some 120 taxes and relying on 4 only, income tax, the goods and services tax, an all-in land tax and a mining tax, though moving in the right direction, have largely been ignored.
What then does it take to reform a tax regime that fosters speculative rent-seeking, the pumping up of asset values and the taxing of wages, instead of genuine productivity and wealth creation?
Where is the Productivity Commission on this? It appears to be failing in its duties, in no lesser fashion than the Banking Royal Commission found APRA and ASIC to have issues in this regard.
It’s arguable Karl Marx is the better-known figure today because he was the lesser threat to capitalism’s excesses.
Henry George, on the other hand: his ideas had to be buried and economics to be recast in order to make no distinction between the returns to land and capital: “They’re both the same. Both have been earned!“
What a pity an otherwise good article degenerates into “There’s not enough rent!“, an old canard people have seen through, from John Locke many years ago, to Mason Gaffney today.
Locke first noted that all taxation comes out of land rent anyway, so why not put it there in the first instance for the sake of efficiency.
Professor Gaffney notes similarly, having shown that all taxes come out of rent [ATCOR], and that the excess burden [of counter-productive taxes] comes out of rent [EBCOR].
Therefore, “there’s not enough rent!” is no rebuttal Henry George’s insight into what is proving to be today’s great economic calamity, namely, that wages and profits are what’s left after [privatised] rents have been extracted from the economy.