I'm a real estate valuer who worked in the Australian Taxation Office (ATO) and Commonwealth Bank of Australia (CBA) before co-founding Westlink Consulting, a real estate valuation practice. I discovered, by leaving publicly-generated land rents to be privately capitalised by banks and individuals into escalating land price bubbles, this generates repetitive recessions and financial depressions. We need a tax-switch: from wages, profits and commodities onto economic rents/unearned incomes, if we are to create prosperity and minimise excessive private debt.
For five minutes last night I had the pleasure of sharing a glass of red with guest of honour John Freebairn before Grattan Institute’s Danielle Wood delivered “Tax reform in Australia: an impossible dream?”for the 2023 Freebairn Public Lecture at the University of Melbourne.
A colleague in our group mentioned to John that at that this year’s 131st Henry George Address he’d assisted Ross Garnaut up the stairs of the venue because Ross had just that day broken his leg! That was some commitment, Ross!
Danielle Wood’s address on the need for tax reform proved to be brilliant and thoroughgoing. It laid out clearly what Australia requires so urgently. If the media gives her a chance, Danielle Wood is going to make an excellent Head of the Productivity Commission.
Australia has a rotten tax regime. That’s the way banking, mining, real estate and super profit-seeking monopolies want it. We may shift the emphasis from incomes to purchases, or reverse that process from time to time, but that’s the only ‘tax reform’ permitted. A media beholden to well-funded rent-seeking interests will damn any proposal for a tax-shift from the status quo towards greater capture of our natural resource rents.
This flawed tax system encourages many Australians into spec where they’re better served than they are working to create real wealth. We’ve become wedded, if not welded.
I was first alerted to the tax system’s failings in the 1970s when part of the Australian Taxation Office in which I worked in the Prudential Building at the corner of Bourke and Queen Streets Melbourne was re-located into a new building at 270 King Street, where Mainline Corporation, Australia’s biggest office builder, had just gone broke.
I was completing my real estate valuation course at RMIT at the time, and the Mainline collapse heralded and came to characterise Australia’s property bubble-burst. I came to see the link between the tax regime, the property bubble and the 1974-75 recession.
The time of the 1975 Aspery Tax Review was a little premature for me to be involved, but when the Hawke government was about to hold its 1985 Tax Summit, I had the temerity to suggest to my professional body, the Australian Institute of Valuers, that it should have input to the Summit in favour of an all-in land tax. That went well!
As a member of Prosper Australia’s Land Values Research Group, I also took part in the 1996 ACOSS-ACCI Tax Summit with Phil Day, Town Planner Head, Department of Regional & Town Planning at the University of Queensland, to speak to our paper in favour of a land tax.
The purpose of the Summit was obviously to provide an imprimatur for a federal charge upon purchases. This was indeed the outcome, although the communique did allude to strong support at the Summit for an all-in land tax.
As a member of the executive committee of Prosper Australia, my odyssey for public recapture of Australia’s net product, our economic rent, from rent-seekers continues.
Danielle Wood’s contribution last night was most impressive. It merits a thoughtful hearing from a too-often blinded mainstream media. How to get over that particular stumbling block if we’re to have genuine tax reform?
Last night on Q&A, Michael Biercuk threw the grenade into the program by suggesting that in and of itself AI had nothing to offer in reducing poverty and providing equality of access.
Yes, we seem to be able to skirt around the greatest fundamental human rights of all.
We may well ask where the following people went wrong in suggesting that poverty and access may only be had when the economic rent–the nation’s net income–is shared equally by everyone.
100 people, living in 100 houses. 70 of them own or are buying their own home. 8 of these people are landlords who own 30 homes between them, rented to tenants. 30 are renting.
Governments change something. A landlord decides as a result to sell one of their rental properties: – There are 2 potential types of buyers: 1. If it is affordable enough, a current renter may be able to buy it as their own home. What happens to the numbers, 71 people living in their own home, 29 renters. No shortage of rental properties! ….. 2. An existing homeowner buys it. Two things can happen: (a) having bought it as an investment property, they continue to rent it out. No shortage of rental properties! What happens to the numbers? 70 people living in their own home, 30 renters. (b) they move into it themselves. Meaning their home is then rented out. No shortage of rental properties! What happened to the numbers? Still 70 people living in their own home, 30 renters. If they subsequently sell their original home, there are 2 potential types of buyers; which simply starts the circle again!!
Maybe the self-absorbed property industry is trying to tell you a black cat is white, and hoping if they say it often enough you will believe it? h/t – Grant Tenni
What if economists were proactive instead of reactive?
What if they saw that keeping land prices and taxes at a minimum generates prosperity; remembering that public capture of publicly-generated land and resource rents aren’t really taxes?
Seems they’d rather debate the latter point than acknowledge the simple formula: wealth production minus rent leaves wages and the return to capital untaxed, viz, P – R = W + I.
Healthcare is faring badly, with hospitals, doctors, nurses and the ambulance system all under pressure from inadequate funding. The money is there but the neoliberal economic regime into which we have morphed under the label of ‘free enterprise’ denies it.
The public education system is also struggling. For that matter, many parents in the private education system are finding it difficult to meet their children’s school fees. Education, too, could be remedied.
Then there’s climate change. “But how can we manage it, and where’s the money to come from?” Uh, taxing pollution would be a great start.
With the exception of banking and monopoly businesses making super-profits, many businesses are struggling. They see the level of wages to be the issue. They believe they need cheaper labour.
Accepting the fair-seeming business case that wages come at the expense of profits, Australian governments of both persuasions have resorted to excessive migration to solve the “skills shortage” in order to keep wages as low as possible.
But if keeping wages low is a public good, would keeping them at zero also be a public good? The same question might be asked of zero business profits; therefore, how would business fare? Neither lower wages nor profits are proper responses to the situation in which we find ourselves.
We listen to radio shock jocks describe a litany of areas in which Australia is coming up short. It’s all of the above, plus inadequate infrastructure serving our current population and a vast immigration program.
It must be admitted that shock jocks excel at the daily listing of our social problems. However, their questions and solutions are less compelling: “What’s the government doing to fix this issue?” “They need to be sacked!” But if a change of government is seen as a solution, why have they not proven to be solutions? Something’s terribly amiss. Maybe we’re wedded to a misguided distributional system?
Adding fuel to the fire, ‘housing’ has become impossibly expensive. It’s inviting for supply and demand afficionados to blame ‘undersupply’ and a complex immigration program for the increasing financial stress that Australians are feeling. Mortgage stress is not the least of these. It dwarfs the power charges of which we’re often heard to complain.
The Georgist case that privatised land and natural resource rents enforce a regime of low wages and low earned profits doesn’t get coverage in a mainstream media not wishing to offend its advertisers; this includes banking and monopoly super-profit-making business interests. (Remember what happened to the attempt to get a fair return for Australians on our minerals resources via the Resource Super Profits Tax?)
The overarching cause of the litany of problems we face is inadequate capture of our publicly generated resource rents. We seem to prefer to tax ourselves and our purchases – into penury and social collapse.
Were we to ‘tax’ land values instead of wages and purchases, we’d not only have higher wages and higher profits, but lower prices, lower rents and lower monopoly super-profits. We’d also be able to deliver a living wage universal income to abolish poverty.
Many economists quietly concede the point on taxing resource rents (about which Joseph Stiglitz has said we should tax as near to 100% as possible). They accept the solution but argue that it’s far too politically difficult to challenge the fundamental status quo to which we’ve become accustomed. As professionals, their reluctance on this score is more than a pity.
Of course, the solution also has implications for banking, mortgage-holders and investors were land prices to be reduced by an all-in land tax (along the lines as recommended by the Henry Tax Review for a trade-off of abolishing some one hundred other damaging taxes). So, it’s just “too darn hard”.
Government could manage the tax-shift gradually and effectively, but it’s unlikely to be supported by rent-seeking monopolies or those people fearful of substantial change to the existing tax mix.
So, onward we labour, under a terminally-ill social contract; one in which from 2024 to 2026 we’ll likely experience the final three-year land price mania in the current 18-year property cycle before collapsing into a devastating financial depression from 2027. Incredibly, we call this “the natural business cycle”.
Georgists and very few others are able write the economy’s script, but the world has become entangled in the alternative rent-seeking monsters of ‘capitalism’ and ‘communism’.
The dispossession and poverty inflicted upon first nations peoples is increasingly becoming a general feature of Australia’s poor and middle class.
While faux ‘national debt’ is at the forefront of political concern, many people have shackled themselves to impossible levels of mortgage debt, a form of dispossession and servility to banks which receives scant attention.
Escalating land prices and income tax has worked to undermine us.
In her 1974 warning to America, Taylor Caldwell might well have been speaking of where the world today finds itself: –
THE MIDDLE CLASS MUST NOT FAIL OR ALL IS LOST
[THE MIDDLE CLASS]
With the rise of the Industrial Civilization in the world about two hundred years ago, there also arose a social body which we know as the middle class. Before that, most of the world suffered under a feudal system in which the people were truly slaves of their governments in all things. There was no strong buffer between them and their despotic rulers, no assurance of freedom to pursue commerce and to live decently, to keep the fruits of their labor and hold the paying of tribute at a minimum. The middle class made the dream of liberty a possibility, set limits on the government, fought for its constitutions, removed much of governmental privilege and tyranny, demanded that rulers obey the just laws as closely as the people, and enforced a general civic morality.
Sound leaders looked to the experience of Rome, the first to encourage a middle class, noting that Rome had been a strong and prosperous Republic, with much public virtue, a large degree of freedom for every citizen, and a constitution (the Twelve Tables of Law) on which our own is based. After the fall of Rome, governments had everywhere destroyed the middle class, returned to despotism, and entered the Dark Ages. It had been centuries since a rising middle class, looking to the experience of Rome, resolved to keep government at a minimum and to force respect for the people and eschew tribute except for such absolute necessities as armed forces, street protection, and the guarantee of the authority of contracts in commerce.
[OUR RULERS]
Those who for centuries had ruled their nations, from father to son, in total despotism, realized that they were threatened. Were they not by birth and money entitled to rule a nation of docile slaves? Did the people not understand that they were truly inferior dogs who needed a strong hand to rule them, and should they not be meek before their government? Were not the people too stupid to understand that the elite needed to extort tribute for their own use?
Little wonder that the elite hated the middle class which challenged them in the name of God-given liberty, and little wonder that this hatred grew deeper as the middle class became stronger and imposed restrictions through which all the people including the most humble had the right to rule their own lives and keep the greater part of what they earned for themselves.
Clearly, if the elite were to rule again, the middle class had to be destroyed. It had to be destroyed so despotism and the system of tribute could be returned, and the grandeur and honor and immense riches for the elite …. assuring their monopoly rule of all the world. For you see the elite of all nations, then as now, were not divided. They were one international class, and worked together and protected each other. But the middle class laughed and said “we will bind you with the chains of our Constitution, which you must obey also, lest we depose you, for we are now powerful and we are human beings and we wish to be free from your old despotism.”
The elite did not give up. While it profited from the Industrial Revolution which under liberty of enterprise freed the people from the feudal and despotic systems, and which gave new birth to the middle class, it also hated the threat to its own authority. It did not wish to destroy the Industrial Revolution; it wished to use it for its exclusive purposes. In the early Nineteenth Century, this elite looked for a way. once and for all, to regain its power and extort tribute from the people and to destroy the burgeoning middle class which stood in its way and to subdue the populaces again to their proper role as slaves of government by the elite.
[ENTER MARX]
Through the “League of Just Men,” elitist conspirators sought a fanatic to cloak the point of their purpose in slogans and cant. The man they hired was Karl Marx. Certainly Marx was no worker; he had never soiled his hands with labor. He hated the middle class, which he contemptuously called the bourgeoise, for he considered himself superior in mentality and breeding to what he called “the gross merchants of commerce and exploitation.” He did not attack the waiting despots; no indeed. They were of one mind with him. Rather he proposed in his books and pamphlets the return to government of the total power to exact tribute from the people in order that the government might better direct every phase of the people’s lives, as he asserted, “for their own welfare.” The elite in turn, would control the governments.
Marx began to accuse the middle class of heinous crimes and aroused the workers against their benefactors. He labored to create envy and malice among the workers – all aimed at the entrepreneurial middle class which had raised them from serfdom, restored their human dignity, and given them liberty for the first time in nearly two thousand years.
Karl Marx was made to order by the self-styled elite. They financed the propagation of his sedition all over Europe and in America. They bled France and Germany with it. They financed sedition in Russia. And the plan began to succeed. By 1910 the Scandinavian countries had already fallen to the Socialism of Karl Marx. Only three nations stood between the elite and their ambitions, the British Empire, Czarist Russia and the United States of America. To a lesser extent, Germany also stood in their way, though Bismarck had greatly succeeded in introducing Socialism there, too. The saving hope was that Germany had a great middle class which the Kaiser honored and supported.
Much is now made of supposed Czarist tyranny. But the fact is that the Czar of Russia had already granted his people a greater measure of freedom. A Constitution had been established and a Parliamentary system. Russia, too, was well on her way to nourishing and encouraging a middle class.
The elitists were anxious to promote the Marxist notion of demanding tribute from the people, for only through forced tribute could freedom be destroyed and the people reduced again to forced labor for the benefit of the elite. Only this could the middle class be eliminated. So, we have Karl Marx’s infamous notion: “To each according to his needs, from each according to his ability.” That is the foundation for slavery and tribute. Marx and the elite had a juicy bait for the workers, who were deluded to envy and hate the middle class which had freed them. If the riches were taken away from the middle class, then the workers would become equals. He called this redistribution of wealth. Not wealth from the elite, with their vast fortunes in every country of the world-inherited fortunes which would not be taxed as income – but wealth from the strong middle class, which would be robbed in the name of the people. Only earned income would be vulnerable to seizure.
[INCOME TAX – DIVIDE AND RULE]
But in the way of all this happiness for the conspiring international elite and the slavery of the people, stood the United States, the British Empire, and Czarist Russia. They would have to be destroyed. Britain had only a small income tax, used for the armed forces, for roads, for the maintenance of law and order, and for the payment of a tiny body of bureaucrats who did the paperwork. The nonsense of Karl Marx had made little popular headway in Britain in Russia or in America. The United States, for instance had no income tax at all.
Over and over in America, the elite tried to establish their federal income tax, but they did not succeed. The people were too vigilant, too jealous of their freedom, too proud, too respectful of themselves. They embraced the ancient proverb, “To work is to pray,” and they guarded the fruits of their labors. No, America had no graduated income tax to drain the capital of the hard-working middle class, and so she became strong and rich and powerful, the envy of nations which exacted tribute and forced labor from their people. Attempts were made to exact such tribute from Americans during the Civil War and the war with Spain, but each time the Supreme Court declared that our Constitution prohibited it. As late as 1902 the graduated income tax was again declared unconstitutional, and the Chief Justice observed: “It is a method to enslave our people, and deprive them of their liberty and right to the fruit of their labors.”
[WAR]
The conspiratorial elite fumed. How best, now, to institute their system of tribute and slavery? The solution was war. During wartime governments were better able to tax the people, harnessing their patriotism to maintain enlarged armed services.
And so the elite began to prepare America for war, and conspirators of the French and German and Russian and English elite worked with them – for the destruction of their own nationals, and the elimination, once and for all of the defiant middle class. Again the American elite, under the advice of their brother conspirators in. other nations, proposed an Amendment to the American Constitution, the Sixteenth Amendment – a graduated income tax, just as Karl Marx had proposed. To support this the elite were very busy, through their henchmen, the Socialists and the Populists, and through their secret Communists, in arousing the envy of the workers against the middle class. They told the workers that they would never be taxed, “only the rich” and even then the highest rate would be only two or three percent. And the taxes would go to “our exploited workers” through all sorts of governmental benefits. The unthinking, the envious and the stupid and the malicious, thought this was wonderful. They supported the Sixteenth Amendment, the federal income tax, and it was passed into law in 1913.
Now the stage was set for war, the attack on the British empire, Czarist Russia and the German empire. The major thrust of the effort to destroy freedom of the whole world, and reduce it to total control by the elite, had begun.
[ECONOMIC SLAVERY]
The rest is sad contemporary history. Few in America heeded what Thomas Jefferson had said long ago, that when we are taxed on our earned incomes, in our food and our drink, in our coming and going in our property, we would face the return of slavery and the reestablishment an all-powerful and despotic elite. So it is that we of the middle class are being destroyed in an ever-increasing power and despotism of a central government controlled by a conspiratorial elite, and everlasting wars to subdue us and drive us to our knees.
Do not believe for an instant that the world’s conspiring elite in every nation have so much as a serious quarrel among them. They have just one object: control through tribute. Your slavery through tribute, and mine. And they use wars for their purposes just as they use the inequities, harassments, bullying, capriciousness and extortion of their graduated income tax. The system of taxation with which they have yoked us is really forced tribute from the hardworking and especially from the middle class who are slowly being eliminated. The conspirators know that the spiralling payment of tribute will lead to our serfdom and the black night of slavery.
Behind this attack are the self-styled elite, secure in their own power and riches. Most of them have huge fortunes which are tax-exempt. But every man and woman of us – we of the middle class – are taxed in our food and drink, in our property, in our incomes, in our comings and goings. The harder we work the more tribute we have to pay, for the elite are determined that never again will the middle class challenge them and never again will we be able to save money and so rise to power, and never again will we protest the slavery they have planned for us.
But many of us still dare to protest and will continue to do so while God gives us breath. To be effective we know we must direct our attacks on the real criminals, the wealthy and powerful and secret elite of all the world – the conspirators laboring night and day to enslave us. Even our own government is now their victim. For it is the conspiratorial elite who choose our rulers, nominate them and remove them by assassination or smear. I have fought these enemies of liberty in every book I have written. But too few have listened to me, as too few have listened to others who have warned of these conspirators. The hour is late. Americans must soon listen and act …. or endure the black night of slavery that is worse than death.
