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Mason Gaffney (2009) coined the term ATCOR (all taxes come out of rents) for his finding that taxes depress land rents.

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.

Has this argument been developed, or challenged, including by other schools of thought?

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The acronym itself might be new but the idea actually predates 2009, and is generally rejected in mainstream economics. For example, see Feldstein (1977) which shows that in fact even tax on pure land rents can be shifted onto other factors, which implies that all taxation can't be just shifted onto land.

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This part addressed question if land tax can serve as a basis for funding whole government that was originally part of the OPs question but after this answer was written it was deleted:

Next, even though in public economics there exist a 'Ramsay Rule' which states that less elastic bases should be taxed more than more elastic ones (as they create less distortions), which should favor land, it is generally also agreed that it is difficult to value land and hence they are often not considered good source of revenue.

The best sources of revenue according to the literature are considered to be income (broadly defined) and consumption taxes, since they are able to raise much more revenue for the government. Income taxes have an added benefit that they contain information about people's ability which is useful information for the government that allows it to optimize taxes for most efficient redistribution given government's social welfare function. See the famous Mirlees review(s), Tax by Design and Dimensions of Tax Design for overview of modern literature on optimal taxation.

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  • $\begingroup$ I don’t think the second and third paragraphs on the operability of land value taxes are related to the question. The Mirrlees Review did of course conclude that “there is a strong case for levying a land value tax, which is a tax on pure rent—if the practical difficulty of valuing land separately from the buildings on it can be overcome.” $\endgroup$ – sba222 Feb 11 at 2:09
  • $\begingroup$ Feldstein concludes that a tax on land rent is partially shifted to capital because (in the long run) investors will accumulate more capital, reducing capital returns. Doesn’t this effectively mean that a tax on land rent reduces the possibility to “invest” in land rents and thus reduces the cost of capital of productive investments? So Feldstein says that ATCOR is false because actually some taxes do not come out of rent but ouf of the social opportunity cost of capital being invested in unproductive land in the absence of the tax. Technical point taken, but does that change the argument? $\endgroup$ – sba222 Feb 11 at 8:19
  • $\begingroup$ @sba222 you asked about whether the arguments of a question we’re challenged. Literally in your question you state that the author has “idea that land rents would suffice to fund the government”. This is what 2 and 3 paragraphs answer for you. The second paragraph is precisely based on that quote from Mirlees review - the justification for land taxes would come from Ramsey rule, however practically it is difficult to value land in itself (it is mixed with capital, and in fact labor embedded in upkeep etc). However, nowhere in Mirlees review or even else in literature you will find $\endgroup$ – 1muflon1 Feb 11 at 10:33
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    $\begingroup$ @sba222 for the question above that is suffice to show. However, additionally there is famous Chamley-Judd result that shows that capital taxes are further shifted on labor (see Chamley, 1986; Judd, 1985). The papers actually argue that all cap taxes are ultimately borne by labor - that was shown (at least empirically) not to hold perfectly, but again the result mentioned in that paper from your question requires all taxes to be fully shifted onto land - if any part of tax burden is shifted elsewhere then ATCOR simply does not hold - no matter if it is just capital or capital and labor. $\endgroup$ – 1muflon1 Feb 11 at 11:44
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    $\begingroup$ @sba222 as mentioned in the introduction of Feldstein his paper shows "that the tax on pure land rents is at least partly shifted". If taxes are partly shifted ATCOR cannot hold anymore as it requires 0 shifting $\endgroup$ – 1muflon1 Feb 11 at 13:27

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