EBCOR

The Claim

EBCOR — "Excess Burdens Come Out of Rents" — is a claim in Georgist economics coined by Mason Gaffney as a companion to ATCOR (All Taxes Come Out of Rents). Gaffney introduces it in "The Hidden Taxable Capacity of Land: Enough and to Spare" (2009) as Element #12 of his sixteen-element case for land's taxable capacity — "Gains to rent from removing excess burdens: the concept of EBCOR (Excess Burdens Come Out of Rents)" — and states it directly: "'Excess Burdens Come Out of Rents' (EBCOR), so removing them adds to rents."[1] 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.

Gaffney argues the gains from removing excess burdens are larger than conventional analysis suggests because "they entail quantum leaps from lower to higher uses of land," and "these benefits accrue to rents and land prices."[1] For him, the visible form of excess burden is "shunting land from more to less intensive and productive uses," and abolishing the taxes that cause it yields "a double gain to land rents": "if we untax work, trade and capital we thereby add a great deal to the value of land on which one may now work, trade and build free of the former taxes, and free of their excess burdens."[1] He explicitly rejects the mainstream "Harberger triangle" framework for measuring excess burden as too small: in his telling, the conventional analyst depicts excess burden as "the area of a trivial little triangle where supply and demand curves cross" and then "dismisses excess burdens as minor" — a model Gaffney contends "does not fit the case."[1] This is Gaffney's own characterisation; mainstream public finance continues to measure deadweight loss with exactly those tools.

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.

Gaffney does distinguish the two explicitly, presenting them as separately named effects rather than a single argument: "Using the land tax to obviate other taxes raises the tax base via three effects: the ATCOR Effect (Element #11); the EBCOR Effect (Element #12); and fostering better allocation of land, the tax base, by the cash-drain effect on dilatory owners of derelict land."[1] Note that Gaffney's own label is "effect" or "concept," not "theorem" — EBCOR is a proposition within his Georgist framework, not an established result of mainstream public economics.

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 extends this mechanism to include the recovery of deadweight losses as well. Gaffney adds that the land value tax itself works in the opposite direction from distortionary taxes: "The land tax imposes a kind of 'negative excess burden', that is a positive push to use land better."[1]

Assumptions

Gaffney states his simplifying premises openly: he models a tax jurisdiction as "an open economy" in which "arbitrage equalizes all after-tax rates of return on new investing, at levels determined in world capital markets," labour "is free to come and go," and product prices "are set in world markets" — and concludes, "Given those premises, all taxes are shifted to land, the only factor fixed in an otherwise open economy."[1] Whether those premises hold is precisely what critics of full tax shifting dispute. 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.

No published work engages "EBCOR" by name outside the Georgist literature, but the incidence premise it rests on — that the burden ultimately settles on land rent as a pure residual — has a direct mainstream challenger. Martin Feldstein's "The Surprising Incidence of a Tax on Pure Rent" (1977) argues the classical premise is false: "the tax on pure land rents is at least partly shifted, and … the price of land may be increased by the imposition of a tax."[5] In Feldstein's growth model, taxing land rent shifts household portfolios between land and reproducible capital, so part of the burden is borne by capital rather than resting entirely on rent — precisely the residual-surplus assumption EBCOR (and ATCOR) require. If a tax on rent is not fully borne by rent, the symmetric EBCOR claim that excess burdens are fully absorbed by rent is weakened on the same logic. (Feldstein's result is itself contested — Calvo, Kotlikoff & Rodriguez (1979) and Fane (1984) show the classical full-incidence-on-land result returns once intergenerational bequests or a properly compensated tax experiment are admitted — but Feldstein remains the standard mainstream statement of the doubt. It is a distinct line of challenge from the Bentick–Mills timing-neutrality critique, which concerns assessment basis rather than savings-portfolio incidence.)

The EBCOR mechanism has, however, been modelled independently of Gaffney. Tideman, Akobundu, Johns and Wutthicharoen (2002) use "a dynamic general equilibrium model to develop estimates of the magnitudes of reduction in excess burden that can be achieved in the United States by … incrementally shifting revenue from five broad-based taxes to land."[6] Their finding — that shifting taxation onto land recovers large excess burdens — is the same effect Gaffney names EBCOR, derived from an explicit general-equilibrium model rather than asserted, though it rests on the same open-economy, land-as-residual assumptions Feldstein disputes. EBCOR therefore remains an attributed proposition: independently quantified on one side, contested at its incidence premise on the other, and not an established result of mainstream public economics.

See Also

• ATCOR — the companion claim
• 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," International Journal of Social Economics 36(4): 328–411. Working-paper PDF · author copy · journal version — primary source for EBCOR: Element #12 ("Gains to rent from removing excess burdens: the concept of EBCOR (Excess Burdens Come Out of Rents)"), its stated logic and premises, its explicit separation from the ATCOR Effect (Element #11), and the "negative excess burden" characterisation of LVT.
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.
5. Martin Feldstein (1977), "The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question," Journal of Political Economy 85(2): 349–360. DOI · wiki summary — used for the mainstream challenge to the premise that a tax on land rent (and, by extension, its excess burden) is fully unshifted and capitalized into land rent: "the tax on pure land rents is at least partly shifted, and … the price of land may be increased by the imposition of a tax." A new source for this wiki, not yet in sources/registry.csv.
6. Nicolaus Tideman, Ebere Akobundu, Andrew Johns & Prapaiporn Wutthicharoen (2002), "The Avoidable Excess Burden of Broad-Based U.S. Taxes," Public Finance Review 30(5): 416–441. DOI · wiki summary — used as the independent, non-Gaffney dynamic-general-equilibrium estimate of the excess burden recoverable by shifting broad-based taxes onto land (the EBCOR mechanism, modelled rather than asserted). A new source for this wiki, not yet in sources/registry.csv.