Economists manage to assess the “excess burden” of all the different forms of taxation in a very reductionist way, whilst largely ignoring the only non-tax that injects no excess burden at all into the economy.

Why don’t they assess the total excess burden or deadweight loss generated by all taxes? It could be most informative and might explain a lot about the west’s failing economies.

I conducted an assessment of Australian total excess burden (on data from 1972 and 2006) which showed that for every dollar of tax levied on wages, profits and goods and services, we achieve $2.34 in deadweight losses being injected into the economy. This would seem to be a significant finding.

The figure may appear to be crazily high, but you will note that my methodology was approved by the late Professor Fred Foldvary who was able to forecast the 2008 global financial crisis.

I was happy that the following chart based on that of Dr Gavin Putland’s in Trickle-Up Economics virtually bears out my assessment.

I suggest this devastating wastage explains why western economies are failing. It is not a matter of wages being too high but of deadweight losses being too high, because the deadweight losses generated by taxes are simply passed on in the price of all goods and services.

To ignore this fact is also to explain why Australia and other western nations are increasingly being forced to rely on cheap labour (wage slavery).

By the way, as land rent (dark blue) can do all that taxation (red) does, (and more), under a land rent system, governments would be able deliver a universal income of $30,000 p.a. out of the lost 34% (based on 2017 data). Of course, a universal income would assist to lower business wage costs too.

May I suggest we need to replace taxes with ‘ground rent’, as advocated by the classical economists?


A very good episode of the Keiser Report

But you’re still using terms like “housing costs”, the “cost of a home” much beloved of rent-seekers in this rentier economy, Max. The cost of a house is OK: it’s the land beneath the house that’s rapidly escalating, thanks to government and central bank support for high land prices .


We’re stuck

The political left requires higher taxation to provide essential social welfare to combat rising poverty, while the right demands taxation be reduced to stimulate the economy, short however of taxing away the privatised site rent that has seen land prices increase at incredible rates.

Neither camp proposes workable solutions.

In this watershed, the gurgler awaits us.