Opting out of the tax system — or the feasibility of financing government through the free market

ProsperAustralia

Working Paper No. 1
Version 2006.10.08

What if a business could opt out of the federal tax system by selling all its land to the federal government and leasing it back? What if individuals, including home owners, could do likewise? We argue that many individuals and firms would choose to accept such an offer, and that widespread acceptance would lead to faster economic growth, an improved balance of trade and lower unemployment, without inflation or fiscal deficits.

Addendum (August 6, 2006): This paper is considered to be superseded by Working Paper No. 2, but is published here for the record.

Contents

1.  Introduction: A censored debate

2.  Theory

2.1  All taxes fall on rent.
2.2  All deadweight costs fall on rent.
2.3  Less tax: more revenue

3.  Implementation

3.1  Leaseback deals
3.2  Meaning of "exempt"
3.3  Protecting revenue
3.4  Meaning of "land"
3.5  Meaning of "market rent"
3.6  Scope of "taxes"

4.  Economic benefits

4.1  Advantages for enterprises
4.2  Advantages for individuals
4.3  Lower unemployment without inflation
4.4  Trade surplus; falling foreign debt
4.5  Bonanza for realtors, conveyancers, accountants

5.  Enabling legislation

5.1  Political feasibility

6.  Q&A

7.  Conclusion

Notes

Revision history

Copyright

1.  Introduction: A censored debate

Property investors, when objecting to taxes on their rents and capital gains, argue along these lines:

(a) We are providing for our retirements through the property market in order to avoid burdening the taxpayers. Saving taxpayers' money is as good as paying tax. Where's the justice in making us pay tax too? And what's the point of taxing us if it only causes a drain on social security funded by other taxpayers?

The obvious but seldom-heard riposte is something like this:

(b) Your rents are paid by tenants and your capital gains by first-time buyers. Is there any good reason why a retiree funded by tenants and first-time buyers should be considered more respectable than one funded by taxpayers?

Actually there is a good reason:

(c) Retirees funded by tenants and first-time buyers do not damage the economy, but are merely the receivers of natural market prices, whereas taxes (as we know them) deter productive activity and consequently reduce the sum of income available for all purposes, including retirement.

But if that is the case:

(d) Why shouldn't the government imitate the property investors? That is: Why shouldn't the government fund its expenditure through the property market, so that the government does not burden the taxpayers? — and so that anyone who burdens the government does not thereby burden the taxpayers?

The above points are sequential. So, if the gatekeepers of public debate won't let you hear point (b), neither do you hear (c) or (d). That is unfortunate for the taxpayers.

2.  Theory

Suppose that every person or firm residing or operating entirely on federal land — that is, on land owned by the federal government — is exempt from federal taxes. For convenience, let us refer to this hypothetical arrangement as "the exemption".

2.1  All taxes fall on rent.

The exemption would make it more attractive to reside or do business on federal land than on other land, causing a net migration of taxable entities (individuals and firms) onto federal land. This would drive up the rents of federal land until the rent premium cancelled the tax advantage, at which point the net migration would cease. But because there is so little federal land (by comparison with private land and State land), the effect of the migration on the occupancy rates of non-federal land, and hence on the rental values of that land, would be negligible. Moreover, even if federal land were more plentiful, the overall supply of land is still fixed, so that any increase in effective demand for land cannot be offset by increased supply; therefore the increased spending power conferred by the exemption would tend to be competed away in the land market, so that the increased rent of federal land would not be balanced by decreased rent of other land.

It follows that the federal taxes presently paid by tenants of federal land are simply deductions from the rent that the federal government could otherwise get for that land.

2.2  All deadweight costs fall on rent.

In this age of "self-assessment", most taxes impose substantial compliance burdens on the entities that pay and/or collect the tax. Both the taxes themselves and their compliance burdens reduce the returns on various economic activities, causing some otherwise viable activities to become unviable. The net cost of these lost opportunities is the so-called deadweight cost of taxation.

Under the exemption, the "tax advantage" of being located entirely on federal land is not limited to the actual tax saved, but also includes the additional opportunities opened up by the lifting of the tax burden; that is, it includes the removal of the deadweight cost.

It follows that under the present system, not only the federal taxes paid by tenants of federal land, but also the deadweight costs of those taxes, are deductions from the rent that the federal government could otherwise get for that land.

(Note: Should compliance costs be included in deadweight costs? From the viewpoint of a single taxpaying entity, compliance costs are uncompensated losses. But from the viewpoint of society, compliance costs incurred in cash are part of the income of other entities and are therefore not a net loss (although they still cause a net loss), whereas compliance burdens incurred as unpaid work may be a net loss because the time might otherwise have been spent productively. So not all compliance burdens can be classified as deadweight. In this paper we treat "deadweight" as being net of compliance burdens, so that, from the viewpoint of a single entity, deadweight costs and compliance costs are additive.)

2.3  Less tax: more revenue

The exemption would raise the rents of federal land so as to cancel the tax advantage, comprising the avoided taxes plus their deadweight costs, so that the federal government would gain more revenue in the form of rent than it would lose in the form of tax, while the reduction in deadweight costs would be a net benefit to the economy. The additional revenue could be given back in the form of tax cuts and corresponding rent reductions, or spent on additional public services.

The implication is that the present failure to grant the exemption is, quite simply, fiscal and economic vandalism.

3.  Implementation

In view of the small stock of federal land, it may seem that the "fiscal and economic vandalism" is minor, and that the "exemption" is no way for the federal government to "fund its expenditure through the property market". However, there is nothing to stop the government from acquiring more land. Moreover, the exemption would encourage voluntary sales of land to the government.

3.1  Leaseback deals

The exemption, as we have worded it, implies that if you sell all your land to the federal government and lease it back, you are exempt from federal taxes. That is indeed our intended meaning.

The conditions under which you would accept such a deal are best explained by a little algebra. Let R be the rent to be paid, G the expected capital gain to be forgone, T your present federal tax bill, C your present compliance cost due to federal taxes, D your present deadweight cost due to federal taxes, and I the interest (to be earned or saved) on the sale price, all quantities being expressed in dollars per annum. Then a leaseback deal is attractive to you on the condition that

R + G  <  T + C + D + I .

The same deal is attractive to the government on the condition that

R + G  >  T + I ,

where the inequality sign is reversed because, from the government's viewpoint, the quantities are gains rather than losses.

The two conditions are compatible because C and D are missing from second inequality. That is, they are compatible because the deal gets rid of your compliance cost and deadweight cost, leaving a net benefit to be divided between you and the government.

To see the constraints on the rent and the sale price, we combine the above inequalities, obtaining

0  <  R + G − T − I  <  C + D ,

where R is the rent and I (interest) is proportional to the sale price. The rent will be determined by competition among tenants and renegotiated from time to time, whereas the sale price will be a one-off. So the rent should be understood as "given" and the combined inequality should be understood as constraining the sale price, not the rent. At the maximum price, the taxpayer gets the whole benefit of the removal of compliance costs and deadweight costs. At the minimum price, the government gets the whole benefit. The sale price will be negotiated to give a mutually acceptable division of the benefit.

The government's share of the benefit means that each leaseback deal will be revenue-positive. That guarantees that there will be no "black hole" in the federal budget. A separate macroeconomic calculation demonstrating that the budget figures "add up" is neither necessary nor possible, because all the "adding up" is done on the microeconomic scale, one transaction at a time.

Equally well, the taxpayer's share of the benefit means that the government's fiscal gain does not come at the expense of the taxpayer, but is a dividend from greater economic growth.

Because such leaseback deals, at the right prices, will be mutually beneficial, they will tend to go ahead.

3.2  Meaning of "exempt"

Entities qualifying for the exemption would not pay income tax or property taxes, and would not remit GST (VAT) or sales taxes. But they would still bear any indirect taxes hidden in prices that they pay (although those hidden taxes would be reduced as other entities gained exemptions from remitting indirect taxes), and would still remit personal income tax on behalf of any employees who are not themselves exempt [1].

As an example, consider GST. A business qualifying for the exemption would neither remit GST on its sales nor claim GST credits on its purchases, and would therefore avoid all GST-related compliance burdens. In other words, the business would be GST-exempt in the internationally accepted terminology, or input-taxed in the Australian terminology. Widespread acceptance of leaseback deals would simply cause a proliferation of input-taxed businesses, which would be dealt with according to the existing rules. If this in turn causes political pressure to simplify the rules, so be it [2].

The interaction between an exempt entity and a non-exempt entity raises a question in connection with GST simply because the existing GST rules raise the same question. But the same existing rules also answer the question. If there are any other taxes for which issues arise from the interaction between exempt and non-exempt entities, the same logic should apply.

3.3  Protecting revenue

In explaining why the rent from federal land would be sufficient to replace federal taxes, we have tacitly assumed that full market rents would be paid. An entity that presently occupies federal land for a peppercorn rent — that is, a ridiculously low rent — would not qualify for the exemption unless it started paying market rent. This could be arranged through a "leaseback" deal in which the government, instead of buying the land outright, would buy out the remainder of the peppercorn lease. Similar comments apply to entities in Canberra, where the federal government owns all the land [3], but no longer charges rent!

The exemption applies only to entities located entirely on federal land. If it applied to an entity that owns or rents other land in addition to federal land, that entity could make arbitrarily high profits on the other land while avoiding tax, and the tax avoided in this way would not be fully recovered through the rents of federal land; the increase in spending power caused by the avoided tax would be reflected in the rent of land in general, but the effect would not be confined to federal land. Neither is it practical to tax such an entity in respect of its operations on non-federal land only, because this would cause a proliferation of schemes for imputing otherwise taxable cash flows to non-taxable land. But if the entity were to split into two independent entities, one of which were entirely located on federal land, that one would qualify for the exemption.

For the same reasons, a multinational company that owns or rents land overseas would not qualify for the exemption. But if all or part of its operations within the Commonwealth were devolved to a separate company, that company could qualify.

Notice, however, that there is nothing in the wording of the exemption to exclude entities that own buildings, or lease buildings from parties other than the federal government, as long as those buildings are on federal land [4]. So, if you are a landlord, and if you sell all your land to the government and lease it back, but retain ownership of the associated building(s), you qualify for the exemption and enable your prospective tenants to qualify for or retain the exemption. This does not cause a leakage of federal revenue, because the tax advantage for your tenants feeds into the market rent of space in your building(s), and this in turn feeds into the market rent of your land, which you pay to the government.

3.4  Meaning of "land"

As every property speculator knows, the market value of a piece of "land" includes the value of any building rights conferred by the planning or zoning system, and of any other privileges attached to the "land" or building(s). To allow for this, we define a site as a piece of ground or airspace, including any attached rights to build on that ground or into that airspace or to use the ground or buildings for particular purposes, but excluding any actual buildings; and we declare that the category of land includes sites.

[Note: The rest of this section would affect only a minority of taxpayers.]

When we say that the exemption would raise the rents of federal land until the rent premium cancelled the tax advantage, it is critical that taxpayers cannot produce more land or bring more land into the country; if they could, the additional supply of land would restrain the increase in rent. More generally, taxpayers can neither create sites nor move them into (or out of) the taxing jurisdiction. This is the essential economic property of sites. But sites are not the only assets with this property. As an example, consider taxi licences, also known as plates. In Australia, taxi plates are issued by State governments and are usable only within their respective States (or specified parts thereof). They cannot be created by taxpayers or moved between States, let alone moved into or out of Australia.

So let us define a site-like asset as an asset that taxpayers can neither create nor move into (or out of) the taxing jurisdiction.

We have seen that if the exemption were available to entities that own land or lease land other than federal land, there would be a leakage of federal revenue. The same logic applies concerning entities that own site-like assets or lease site-like assets from parties other than the federal government. For example, if taxi plates were not treated as "land", a firm with a small office on federal land could buy up a huge number of taxi plates and let them to operators (or, for that matter, hoard them for speculative gain) while avoiding tax, and the tax avoided in this way would not be fully recovered through the rents of federal land; the increase in spending power caused by the avoided tax would be reflected in the rental values of site-like assets in general (and taxi plates in particular), but the effect would not be confined to federal land.

So, for the purposes of the exemption, land must include not only sites, but all site-like assets. Entities entering into leaseback deals in order to qualify for the exemption would need to sell not only their site(s), but also any other site-like assets that they own, and would need to vacate or release any site-like assets that they lease from parties other than the federal government.

Site-like assets include not only sites and taxi plates, but also gaming licenses, electromagnetic spectrum assignments, airport and seaport time slots and other rights of way, pollution rights, water rights, fishing rights, forestry rights, patents, and copyrights. However, because the overwhelming majority of patents and copyrights yield little or no return, one would not classify a patent or copyright as site-like for the purpose of the exemption until the royalties exceeded a reasonable threshold. In the case of a patent, obviously the assessable "royalties" should be net of the cost of obtaining and defending the patent.

A borderline case is that of corporate shares, which are site-like in that their supply is inelastic in the short term. This suggests a compromise: in order to qualify for the exemption, an entity would need to "sell" only a fraction of the value of its share portfolio to the government. In practice, this would mean that the "rent" payable to the government would be assessed on a fraction of the market value of the shares, which would remain tradeable; in other words, the "rent" would resemble a conventional recurrent property tax. If distributed profits are presently taxed in the hands of shareholders, the shareholders must be treated as owners of the shares for the purpose of the exemption. But if the present taxation of dividends is entirely at source, the companies must be treated as the share owners, and shareholders joining the new system would therefore not incur any compliance costs due to buying and selling of shares or fluctuating share values. If this causes political pressure from shareholders to reform the old income tax so that corporate profits are taxed at source, so be it.

Of course a corporation, in order to qualify for the exemption, would need to sell its tangible site-like assets (to the government, if the intention is to lease them back). In particular, if part of the corporation's business is by nature a monopoly, that part satisfies the definition of a site-like asset, and would have to be sold to the government before the share owner(s) could qualify for the exemption. The rent payable on a fraction of the share value would still be needed, not only because of the short-term inelasticity in the supply of shares, but also because not all corporate-owned site-like assets (including de-facto monopolies and near-monopolies) are necessarily tangible.

But most taxpayers, especially individuals and small businesses, would not be affected by site-like assets other than land.

3.5  Meaning of "market rent"

Consider the following three cases, each of which qualifies you for the exemption if you hold no other site-like assets:

(1) You rent your premises (a site and a building) from the government. The government gets the site rent as part of the total rent.

(2) You own your building but rent the site from the government. The government gets the site rent only.

(3) You rent your premises from a private "landlord" who owns the building but rents the site from the government. You pay the building rent and the site rent to your "landlord", who in turn pays the site rent to the government. Again the government gets the site rent only.

In cases (1) and (3), in which you rent both the building and the site, the determination of your combined rent bill is straightforward and familiar: you enter into a tenancy contract like any other, and the rent is decided by the usual market forces under the usual contract laws and tenancy laws. The fact that in case (1) your landlord happens to be the government is irrelevant — except that, whereas most landlords only want the rent, the government also wants your vote, and might therefore be slightly more benevolent than your average landlord.

But how is the site rent determined in cases (2) and (3)? It is not sufficient to say "by market forces" or even "by periodic auctions", because the higher the rent that is payable on the site, the lower the price that potential buyers will be willing to pay for the building. Who divides the spoils between the lessor of the site and the seller of the building? One solution is to set the site rent by a periodic scientific valuation of the site, and let the buyer and seller negotiate as usual over the price of the building. If the site valuation process is trusted, the negotiated price of the building will reflect its depreciated replacement value. To minimize the perceived risk of overvaluation of the site and consequent depression of the sale price of the building, the site valuation should be accompanied by a building valuation and should constitute an offer by the government to buy the building at the stated value. But perhaps the best safeguard against overvaluation of sites is politics: the government wants the votes of its site-tenants.

If you do a leaseback deal with the government in order to qualify for the exemption, the choice between cases (1) and (2) should of course be yours. Case (1) has the advantages of simplicity and familiarity. Case (2) has the advantage that you are free to modify the building, but the disadvantage that the building depreciates. Case (2) also requires that you have faith in the site valuation process. The choice would be much debated around bars and barbecues. But whatever the progress of that debate, the availability of both options could only enhance the popularity of the leaseback deals.

3.6  Scope of "taxes"

At face value, an exemption from federal taxes seems to imply an exemption from federal sumptuary taxes — also called "sin taxes" — which are intended (or so it is said) primarily to discourage undesirable behaviour, and only incidentally to raise revenue. Opinion on sin taxes is far from unanimous. Some say that governments should not profit from activities that they ostensibly want to discourage. To the contrary, some say it is better to fine people for undesirable behaviour than to tax them for desirable behaviour. (One might also point out that the revenue raised through sin taxes is at least not raised from illegal activity, which is more than can be said for the revenue raised through fines.) Between these extremes, some argue that the purpose of sin taxes is to compensate the community for the costs attributable to the "sin", in which case the taxes should be high enough to cover those costs, but no higher. It is clear, however, than any exemption from sumptuary taxes would be controversial and would be widely perceived as socially and environmentally irresponsible.

We therefore suggest that in this paper, "federal taxes" should be taken as pure revenue taxes — that is, taken to exclude sumptuary taxes such as excises on tobacco, liquor, and fossil fuels. Under this interpretation, businesses that presently remit sumptuary taxes would continue to do so even under our "exemption", while their customers, whether "exempt" or not, would continue to pay sumptuary taxes hidden in prices. We say this not by way of endorsement of the present sumptuary tax regime, but by way of declaration that, for better or worse, reform of sumptuary taxes is beyond the scope of this paper.

While the retention of sumptuary taxes would cause compliance burdens for the businesses that actually remit the taxes, the number of affected businesses would be small as long as the taxes are remitted at wholesale level or further upstream. Even those businesses, by accepting leaseback deals, would be able to rid themselves of the compliance costs and deadweight costs associated with other federal taxes. So the popularity of the leaseback deals would not be greatly affected.

4.  Economic benefits

4.1  Advantages for enterprises

If your enterprise qualifies for the exemption, you avoid substantial compliance costs and deadweight costs. Most taxes and some compliance costs are marginal costs (that is, they increase with turnover), and therefore must be recovered through prices if your business is to grow. This is obviously an impediment to growth — that is, a cause of deadweight. In contrast, rent is a fixed cost (that is, independent of turnover). So, if you qualify for the exemption by renting your business site from the government, thus replacing a marginal cost (tax) with a fixed cost (rent), you gain an advantage in the contest for market share.

Moreover, enterprises that rent their premises tend to grow faster than those that own their premises. The reason should be obvious: an enterprise that owns its premises has chosen to direct part of its capital away from its core business and into real estate, which is not advantageous unless the real or imputed return on the real estate is higher than that on the core business, in which case one would do better to sell out of the "core" activity and concentrate entirely on real estate! Owning the premises does not make sense even as a diversification strategy, because if the core business is adversely affected by any factor related to location, the value of the premises will be reduced by the same factor. If an enterprise wants to diversify by acquiring property, the property in which the enterprise is located is the worst possible choice as it gives the least diversity.

4.2  Advantages for individuals

If you qualify for the exemption as an individual, your employer need not deduct income tax on your behalf, and can more easily reward you for good performance because income tax will not eat into any raise in your wages or salary. Thus you minimize compliance costs for prospective employers, increase your opportunities to improve your lot by hard work, and send a signal to prospective employers that you are keen to maximize your performance.

4.3  Lower unemployment without inflation

Indirect taxes obviously feed into prices. Income tax, although usually called a direct tax, is a cost of production, and will prevent production unless it is recovered through prices. So all these taxes raise prices, thus increasing inflationary pressures and raising the so-called natural rate of unemployment, which is the minimum unemployment rate that causes enough wage restraint to give stable inflation. The central bank adjusts interest rates so as to maintain unemployment at this "natural rate".

But, as the leaseback deals spread through the economy, fewer and fewer entities would remain subject to inflationary taxes; so inflationary pressures, and therefore the "natural rate" of unemployment, would fall.

4.4  Trade surplus; falling foreign debt

When taxes feed into prices, they feed into prices of exports and import replacements and thereby damage international competitiveness. While GST purportedly does not apply to exports, the related compliance costs still affect export prices. Moreover, all indirect taxes, by raising the cost of living, affect wage outcomes and consequently export prices.

But the exemption, by removing a range of taxes that feed into prices, would improve the competitiveness of the nation's products, allowing the nation to trade its way out of debt.

4.5  Bonanza for realtors, conveyancers, accountants

Millions of entities wanting to sell land to the government and lease it back would obviously generate much business for the professionals who facilitate such transactions or give advice thereon. Remember also that entities leasing sites from private site owners (not to be confused with building owners) would need to lease alternative federal sites in order to qualify for the exemption. They would be able to do so because a procession of landlords, driven by the demand for federal sites, would choose to sell, lease back and sublet their sites; but tenants wishing to take advantage of this trend would normally need to relocate. Some tenants of private sites, in order to qualify sooner for the exemption and secure the most suitable premises, might even buy properties for the sole purpose of selling the sites to the government and leasing them back. This is all good business for the property transaction industry.

5.  Enabling legislation

As an educational association, Prosper Australia does not endorse any particular legislative plan. But this lack of endorsement does not imply lack of discussion, because Prosper Australia specializes in public finance, and no system of public finance is feasible unless it can be codified in legislation.

The legislative embodiment of our "exemption" would be extremely simple. The essence of it would be contained in a single sentence such as the following:

Every entity that neither owns land nor leases land not owned by the Commonwealth shall neither pay direct taxes to the Commonwealth nor remit indirect taxes (other than sumptuary taxes) to the Commonwealth, provided that the entity pays full market rents for all land that it leases.

Of course some definitions would also be needed. In particular, the types of assets classified as land, the taxes classified as direct, and the taxes classified as indirect but not sumptuary would need to be listed. To avoid doubts, there could also be notes listing the taxes classified as sumptuary and explaining that indirect taxes are intended to be shifted ("passed on") in prices of goods and services, while direct taxes are not, and that sumptuary taxes are intended to discourage the consumption of particular commodities but not consumption in general.

With that, the legislature would have finished its work. The real reform would be done by individuals and firms entering into leaseback agreements in order to qualify for the exemption under the legislation.

5.1  Political feasibility

Enabling legislation, however simple, cannot be passed if it is not politically acceptable. In this case, however, the enabling legislation would only say that those who satisfy certain criteria shall be exempt from certain federal taxes. Tax concessions are normally seen as politically advantageous (which is why we have so many of them). The political advantage is presumably greater when everyone has the opportunity to qualify for the exemption, greater again when there is more than one way to qualify (sell the building or keep it), and greater again when the exemption does not cause a loss of revenue that must be made up by other taxpayers (who also vote). Those who consider the qualifying criteria too onerous could simply remain in the present tax system; they would not be harmed by having the choice of staying in that system or escaping from it. Any opponents of the reform, however, would have to explain why they want to impose the status quo and deprive the people of choice. That could be difficult.

6.  Q&A

Now let us deal with some objections that might be raised.

Q. Wouldn't the acquisition of land by the government require an increase in borrowing and thereby force up interest rates?

A. No, for four reasons. First, to the extent that the prices paid for land would increase the public-sector borrowing requirement, they would reduce the private-sector borrowing requirement. Second, as the government would not be obliged to accept leaseback deals, it could limit the pace of acquisition of land. (Taking this idea to an extreme, the government could even limit its purchases to occasions on which land is advertised for sale, in which case there would be no increase in turnover in the property market.) Third, while the logic of the leaseback arrangement is inescapable, the novelty of it would limit the rate of acceptance by the private sector. Fourth, in the long term, the decline in the private sector's share of the property market would cause a corresponding decline in turnover of titles, hence a decline in borrowing.

Q. Would the tax exemption for federal tenants raise the rents of federal land, or would it instead reduce the prices for which taxpayers would sell land to the government?

A. On average, it would raise rents of federal land, because the government would be competing with other landlords who would not offer the exemption. But deviations from the average tax saving would not be expressed in rents, because the rent of any federal site would be determined by competition between many potential tenants with many different tax advantages. Rather, deviations from the average would be expressed in sale prices: the greater the tax burden you are trying to avoid, the lower the price you will accept for your land in order to avoid it.

Q. As the leaseback deals would be preferentially taken up by taxpayers whose tax burdens are heavy by comparison with their land holdings, would there not be a loss of revenue?

A. No, because the same bias that raises the average amount of tax avoided by leasing federal land would also raise the rents of federal land.

Q. Would this effect stop other taxpayers from taking up the leaseback deals?

A. No, because site rents also vary with location. Most of those "other taxpayers" would already be in lower-rent locations, and the rest would be free to move.

7.  Conclusion

If entities that neither own land, nor lease land other than federal land for which full market rent is paid, were exempt from federal taxes (with the possible exception of sumptuary taxes), both taxpayers and the government would find it attractive to enter into agreements whereby the taxpayers sell land to the government, lease it back, and thereafter pay rent instead of tax. The damaging effects of taxation on the economy would fall in synchronism with the number of entities remaining in the present tax system. Thereafter, the government would fund a large part of its expenditure not from taxation, but from the returns on assets, which the government would have purchased in part by giving up its right to tax the former owners.

Notes

Revision history

Copyright © Prosper Australia (www.prosper.org.au, www.earthsharing.org.au, www.lvrg.org.au). Author: Gavin R. Putland (www.grputland.com, grputland.blogspot.com). Permission is given to copy and distribute this entire document verbatim in any medium provided this notice is preserved.