EBCOR

The Theorem

EBCOR — Excess Burdens Come Out of Rent — is a theorem in Georgist economics associated with Mason Gaffney, presented as a companion to ATCOR (All Taxes Come Out of Rent). While ATCOR holds that the revenue from taxes on labour, capital, and trade ultimately reduces land rent, EBCOR extends the claim: the excess burdens — the deadweight losses — created by those distortionary taxes also come out of land rent.

[CITATION NEEDED: direct primary source for Gaffney's EBCOR formulation — the acronym and its specific articulation as a named theorem need verification against Gaffney's published work]

Relationship to ATCOR

ATCOR, as stated on this wiki's ATCOR page, holds that "any tax levied on labour, capital, trade, or production ultimately reduces wages and returns to capital down to their marginal (opportunity cost) level, and the difference shows up as a reduction in land rent." EBCOR adds a second layer: the deadweight loss itself — the output forgone because a tax discourages work, investment, or exchange — also depresses land rent, because land rent is the residual surplus after all productive activity.

[VERIFY: whether Gaffney explicitly distinguishes EBCOR from ATCOR as a separate named theorem, or whether EBCOR is implicit in his broader argument about hidden taxable capacity]

Implications for the LVT Revenue Base

If EBCOR holds alongside ATCOR, the case for land value tax revenue sufficiency is strengthened beyond what ATCOR alone implies. The deadweight loss page notes that "estimates of this excess burden typically range from 20 to 50 cents per dollar of revenue." Under EBCOR, abolishing distortionary taxes would expand the land rent base not only by the revenue recovered (ATCOR) but also by the excess burden eliminated (EBCOR) — meaning the total rent base available for LVT is larger than conventional estimates suggest.

This is consistent with the argument in Gaffney's "The Hidden Taxable Capacity of Land" (2009), which argues that "conventional estimates drastically understate land's taxable capacity by omitting categories of rent and by ignoring how the tax base expands once distortionary taxes are removed." Gaffney invokes ATCOR to argue that removing distortionary taxes "causes land values — and thus the LVT base — to rise." EBCOR, if it is a distinct theorem, would extend this mechanism to include the recovery of deadweight losses as well.

Assumptions

EBCOR, like ATCOR, depends on assumptions about:

• Market completeness and competitive conditions — the ATCOR page notes these "may not hold in all real-world contexts"
• Land rent as a pure residual surplus — the claim requires that land rent absorbs all net losses to the economy, not just tax revenue
• Medium-to-long-term adjustment — Gaffney and Fred Harrison argue the mechanism operates over the medium-to-long term, not instantaneously

Caveats and Criticisms

The same caveats that apply to ATCOR apply to EBCOR, potentially with greater force. The ATCOR page notes that "critics argue that not all taxes are fully shifted onto land rent, particularly in the short run or in internationally open economies." EBCOR's claim that deadweight losses — not just tax revenues — are fully absorbed by land rent is a stronger assertion that requires the economy to be sufficiently closed and competitive for the residual-surplus mechanism to operate completely.

[CITATION NEEDED: specific critiques of EBCOR or of the claim that deadweight losses are fully capitalized into land rent]

See Also

• ATCOR — the companion theorem
• Deadweight Loss — the concept EBCOR extends to land rent
• Mason Gaffney — primary developer
• The Hidden Taxable Capacity of Land — Gaffney's revenue-sufficiency argument
• Land Value Tax
• Economic Rent

Sources

1. Mason Gaffney (2009), "The Hidden Taxable Capacity of Land: Enough and to Spare." PDF — used for the ATCOR mechanism and the argument that removing distortionary taxes expands the LVT base.
2. ATCOR — wiki page — used for the ATCOR formulation, its implications, and its caveats.
3. Deadweight Loss — wiki page — used for the concept of excess burden and its estimated magnitude (20–50 cents per dollar of revenue).
4. Mason Gaffney, collected publications. masongaffney.org — used for Gaffney's broader body of work on land's taxable capacity.

[CITATION NEEDED: a direct primary source for the EBCOR acronym and its specific articulation as a distinct theorem. The concept appears to be a natural extension of ATCOR and Gaffney's hidden-taxable-capacity argument, but a specific published statement of EBCOR as a named theorem needs to be located and cited.]