The hOle in ecOnOmics

We need to work, but we tax those who do. A tax that checks production and acts as a penalty for working. Is this the best we can do?

Taxes on land differ from all other taxes insofar as they are actually rents and cannot be passed on in prices.

Most economists say that the times have changed since Henry George and there is no longer enough rent to replace all other taxes. The times have changed, but there is more rent than ever before!

In fact, people from John Locke to Mason Gaffney and Joseph Stiglitz say that as all taxes come out of rent (ATCOR), there’s always sufficient rent. And, of course, the excess burden of taxation passed on into the prices of our goods and services also comes out of rent (EBCOR).

Australia’s total economic rent is now in the order of 50% of the economy, so the net incomes derived from work have declined to 50% of GDP.

If we taxed land rent away, this would not only reduce the inflation-generating burdens of land prices and taxation, but also provide scope for a decent universal income.

Seems we’re stuck here because too many people believe this is about as good as it gets. However, they’re wrong.

OK, I’m getting repetitive.

But good news bears repeating.