ATCOR

All Taxes Come Out of Rent (ATCOR) is a central theory of the heterodox Georgist school of political economy. Predecessor theories to ATCOR were developed by John Locke, the physiocrats, Adam Smith, and H. Bronson Cowan. In 1998, Mason Gaffney formalized the acronym and theory, describing ATCOR as follows: The meaning and relevance of ATCOR is that when we lower other taxes, the revenue base is not lost, but shifted to land rents and values, which can then yield more taxes. Gaffney argued that ATCOR necessarily follows from the inelastic supply of land, the elastic supply of labor and capital, and observations of other forms of taxation. ATCOR has been shown to work in a few U.S. cities, including Cleveland, San Francisco, and New York City. ATCOR is complementary to the Henry George theorem (HGT), popularized by Joseph Stiglitz —as well as Excess Burden Comes Out of Rent (EBCOR), also introduced by Mason Gaffney.

All Taxes Come Out of Rent (ATCOR) is a central theory of the heterodox Georgist school of political economy. Predecessor theories to ATCOR were developed by John Locke, the physiocrats, Adam Smith, and H. Bronson Cowan. In 1998, Mason Gaffney formalized the acronym and theory, describing ATCOR as follows: The meaning and relevance of ATCOR is that when we lower other taxes, the revenue base is not lost, but shifted to land rents and values, which can then yield more taxes. Gaffney argued that ATCOR necessarily follows from the inelastic supply of land, the elastic supply of labor and capital, and observations of other forms of taxation. ATCOR has been shown to work in a few U.S. cities, including Cleveland, San Francisco, and New York City. ATCOR is complementary to the Henry George theorem (HGT), popularized by Joseph Stiglitz —as well as Excess Burden Comes Out of Rent (EBCOR), also introduced by Mason Gaffney. Mason Gaffney (1923-2020) was the first economist to name the concept, labelling it ATCOR in 1998. Taxes on labor (wages) and capital (interest), he wrote, did not increase the size of the revenue pie, but took away from what would become rent's (land's Net Product) complete aggregate, consummating all of the potential taxable income within a locational jurisdiction. In Gaffney's 1998 excerpt, The Physiocratic Concept of ATCOR, based on his previous lecture notes, he outlines the basic logic of the economic concept: A. Land supply fixed, capital and labor elastic, demand elastic. The thesis that all taxes are shifted to landowners follows logically from two premises. One, after-tax interest rates are determined by world markets, so the local supply of capital is perfectly elastic at a fixed, after-tax rate. Two, labor has been reduced to so low a level that it cannot bear any more tax burden. Anyone may test the premises by observation. He then highlights the history of economic thought behind the concept: B. Venerable tradition of ATCOR in the history of economic thought: Physiocrats, preceded by John Locke and Jacob Vanderlint Adam Smith on "indolence of landowners" Paul Douglas; Bronson Cowan; Ebenezer Howard; David Bradford, et al., 1992 NTJ; Dick Netzer (with caveats); Others? 's To-morrow: A Peaceful Path to Real Reform (1898), an early illustration of the concept later labelled as ATCOR. Next, Gaffney highlights academic hostility to the concept: C. Muddying the waters of theory. Forward shifting of property tax, a la Musgrave. This shift requires our assuming the tax is imposed on just one land use, usually housing, in one small jurisdiction. It is what Howard Jarvis seized on and used to promise tenants that lowering property taxes would automatically lower their rents, since property owners, as he put it, do "not pay one cent" in property taxes, but shift them all to tenants. As soon as Prop. 13 passed, rents shot upwards, and have never looked back except in particular micro-markets like cyclical Silicon Valley. This is one result of displacing production theory by price theory in economic doctrines. In production theory you would assume elastic demand, and focus on the effect on factor proportions (changing productive processes and products, a la Kneese and Bowers). Fixed capital supply. Harberger; Seligman; Harriss Twisting the Ramsey Rule by most economists. McLure and Zodrow; Lindsey, and most texts on public finance as examples. Notable exceptions are Ramsey himself, Pigou who inspired him, and Stiglitz. Gaffney ends his notes with a finalized summary on ATCOR: The revenue capacity of land, when it is substituted for other tax bases, is comparable to current revenues. Owing to efficiency effects, and renewal effects, it may well be higher. ==See also== Tax reform ==Notes==

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