Economists, from John Locke, Adam Smith, David Ricardo, JS Mill, Tom Paine and Henry George, to Mason Gaffney, Joseph Stiglitz and Michael Hudson, were/are onto something. They thought/think, it’s crazy taxing productivity and workers, and grossly under-taxing unearned ‘ground rents’.
Adam Smith said not taxing ground rent generates monopolies. He was right.
Locke said all taxes come out of land rent anyway, so ground rents ought to be taxed directly. Gaffney says the excess burden of this taxation also comes out of rent. I’ve carefully assessed the burden on productivity for Australia over a period at $2.35. This effectively acts to halve our GDP. [!]
So, why do we continue to carry this ridiculous burden of taxation around our necks? Were/are these famous economists wrong? No, they weren’t/aren’t. So, what the ……?
It’s like this. We do it for the 0.1% and their hangers-on who work for the 0.1%, and for others who ape the 0.1% in the forlorn hope of getting wealthy in property speculation like the 0.1%. Simple.
Unrealistically escalating taxes, land prices and share markets, based on rent-seeking instead of production, cause economies to founder, into repetitive recessions and eventually into economic depression. When things get bad enough for the 0.1%, reserve banks will bail them out so they may pump the share market up to unrealistic levels.
It wasn’t always this bad. In fact, Australia did even better than the USA in capturing unearned incomes – at all three levels of government.
There were some terrible decisions taken to reverse this situation in the last depression and following WWII. In this great confusion, it’s difficult to believe the 0.1% were not behind these swift changes ‘for the good of the people’. We was dudded! Ayn Rand and the Reagan-Thatcher era compounded these ills that have delivered us to this point in history.
So why won’t economists act to fix this incredibly stupid situation?
Because they believe what the 0.1% has told them: “There’s not enough rent!” (Though all taxation comes out of rent.) What they really mean is: “There’s not enough rent for you! It’s all ours! You just keep paying taxes on your wages whilst we ship our banking and rent-seeking profits out to the Caymans!”
The Henry Tax Review tried to enlighten us to start making the switch back to a better tax regime (Australia’s Future Tax System), recommending we abolish more than 100 taxes and introduce a land tax. The 0.1% saw to it that it got nowhere.
And so, we keep having these ridiculous annual budgets based on a false ‘scarcity’ instead of the actual abundance; and we keep aiming for the ludicrously false security of a ‘balanced budget’. [Sigh!]
So, let’s capture the economy’s ‘externalities’–economic rents–folks!