It is vain in a country whose great fund is land to hope to lay the publick charge on anything else; there at last it will terminate.
John Locke (1632-1704), “Some Considerations of the Lowering of Interest”
To have made the abovementioned statement–akin to Mason Gaffney’s modern ATCOR and EBCOR (‘all taxes come out of rent’, and ‘excess burden comes out of rent’)–Locke was clearly aware that if we fail to capture ground rent directly, other sources of public revenue must introduce needless cost burdens into the community.
So-called ‘tax reform’ has always managed to skirt around this basic fact. The claim has been that “there’s not enough rent”, even though it can indeed be shown that all taxes do come out of rent anyway.
So, what’s the point of retaining income tax or taxes on goods, services and exchange?
Well, it suits certain people, especially the politically powerful 0.1%. Landowners are then able to pass these costs on, you see? This way, they’re able to avoid paying their fair share into the public purse. And, of course, land can’t be hidden in the Caymans!
Martin Feldstein has assessed income tax injects a deadweight loss of $2 for every $1 of tax levied. I’ve said that all taxes cost Australians $2.35 for every dollar levied between 1972 and 2006, and that had we done as John Locke suggested, Australian GDP would have actually doubled during this period. [This shows we needn’t replace all current taxation to achieve the same effect: we’d only have to take half the amount in economic rent in a thusly-stimulated economy.]
Taxation, instead of capturing ground rents, explains the inadequacy of our politicians: terribly failing economies; increasing private debt and social distress. It’s just that people don’t understand the economic underpinnings of these failures. Education is required on the point.
Maybe this old cartoon bears more than a little truth?