ATCOR (All Taxes Come Out of Rent) and EBCOR (Excess Burden Comes Out of Rent) are cornerstone concepts of Lockean and Georgist economics. They are generally regarded as non-mainstream, or ‘heterodox’.

While mainstream economists respect the efficiency of land-value taxation, they fail to subscribe to the conclusion that all tax burdens ultimately shift onto land. [1, 2]

Understanding the Theories (The Georgist Perspective)

Both terms were formalized and expanded upon by the economist Mason Gaffney: [1, 2]

1. ATCOR (All Taxes Come Out of Rent): This theory argues that because the supply of land is fixed (perfectly inelastic) while labor and capital are mobile (elastic), any tax levied on labor or capital ultimately lowers production and demand. This, in turn, depresses the amount of surplus value that can be captured as land rent. Conversely, if you abolish income or sales taxes, the savings are eventually bid into land prices, causing land values to rise. [1, 2, 3, 4]
2. EBCOR (Excess Burden Comes Out of Rent): This builds on ATCOR by focusing on the “excess burden” (or deadweight loss) of traditional taxes. Because distorting taxes stifle economic activity, they shrink the economic pie. EBCOR asserts that this lost potential wealth also directly reduces total aggregate land rents. Therefore, replacing bad taxes with a land tax would recover this deadweight loss back into the rental value of land. [1, 2, 3]

Why the Mainstream Differs

In standard neoclassical economics, the idea that a tax burden can be shifted completely onto one factor (land) relies upon assumptions not considered to hold perfectly in the real world: [1]

• Tax Incidence is Shared: Mainstream public finance uses the principle of tax incidence. It dictates that a tax burden is shared between buyers and sellers (or labor, capital, and land) depending on their relative price elasticities of supply and demand. While land bears a massive chunk of immobile taxes, it doesn’t bear 100%.
• Labor and Capital Aren’t Perfectly Elastic: ATCOR assumes labor and capital can perfectly “flee” a tax jurisdiction. In reality, workers face high friction when moving (due to family, language, borders, and culture), meaning workers often absorb a significant portion of income and corporate taxes through lower real wages. [1, 2, 3, 4]
• Agglomeration Economies: Modern urban economics shows that land values are heavily driven by network effects and matching markets (agglomeration). Land taxes can disrupt these networks, rather than cleanly subtracted them from a static rental pool.

Where Mainstream and Georgists Agree

Though mainstream economists reject the absolute mathematical claim of ATCOR/EBCOR, they strongly agree with the underlying sentiment regarding efficiency. [1]

Major institutions like the Australian Treasury and top-tier economic consensus acknowledge that broad-based land taxes are uniquely efficient because land cannot move or disappear. Mainstream models routinely find that taxes on capital and property transfers (like stamp duty) carry a massive “marginal excess burden” (deadweight loss), confirming Gaffney’s premise that bad taxes severely punish the wider economy. [1, 2, 3]

From a political economy standpoint, many reformers and heterodox economists argue that dropping ATCOR and EBCOR from mainstream textbooks wasn’t an innocent scientific evolution, but a deliberate move to shield landed interests and justify rent-seeking behavior.

However, mainstream economists view their rejection of these principles not as a cover-up, but as a matter of empirical precision.

To look at this more objectively, let’s separate the political motive (why these ideas were sidelined) from the analytical critique (where mainstream economic models differ).

1. The Political Argument: A Shield for Rent-Seekers?

There is strong historical evidence supporting the point that neoclassical economics was shaped as a push back against Henry George and John Locke.

Mason Gaffney co-authored a famous book, The Corruption of Economics, on the topic. He argued that early neoclassical pioneers (like John Bates Clark)—heavily funded by wealthy landowners and robber baron universities—deliberately conflated “land” with “capital” into a single factor of production.

By hiding land as a distinct entity, they achieved two things that benefit rent-seekers:

• Moral Equivalence: They made making money from owning land (rent-seeking) look exactly the same as making money from building a factory (capital investment).
• Tax Obfuscation: By arguing that all factors of production are essentially the same, they made broad-based income and sales taxes seem “fairer” than targeting land, allowing land speculators to quietly pocket unearned community-generated wealth.

From this viewpoint, denying ATCOR and EBCOR serves as a highly effective intellectual smoke screen for the rentier class.

2. The Analytical Counterargument: Where Mainstream Models Clash

While the political history reveals clear biases, mainstream public finance economists argue their objection to ATCOR/EBCOR is rooted in how actual markets function under pressure. They point to several real-world frictions where the maths of ATCOR doesn’t hold perfectly:

• The “Sticky” Labor Problem: For ATCOR to be 100% true, labor must be perfectly mobile—if a city raises income tax, workers must instantly leave until landlords drop rents to compensate. In reality, human beings are not perfectly fluid capital. Because of family ties, immigration laws, and moving costs, a tax increase often genuinely lowers a worker’s standard of living rather than being perfectly passed downward into lower land rents.
• Global vs. Local Capital: While financial capital is highly mobile globally, land markets are local. If a country imposes a highly distorting corporate tax, capital might flee, which does lower land values locally (supporting ATCOR). But if the tax distorts the entire global economy, the overall loss in wealth doesn’t just lower rent; it reduces the absolute global capacity to innovate and produce.
• Deadweight Loss is Distributive Destruction: Mainstream economists agree that “bad taxes” create massive excess burdens (EBCOR). However, they view this deadweight loss as wealth that is permanently destroyed or failed to be created in the first place, rather than a neat pile of money that was specifically subtracted from a landlord’s potential ledger.

Summary: Two Different Lens on the Same Problem

Ultimately, whether we the rejection of ATCOR/EBCOR as an obfuscation depends on one’s view of economic history. If we look through a political economy lens, it looks like a highly successful campaign to legitimize land speculation. If we look through a mathematical modeling lens, it may look otherwise.