Tideman, Akobundu, Johns & Wutthicharoen, "The Avoidable Excess Burden of Broad-Based U.S. Taxes"

Summary

"The Avoidable Excess Burden of Broad-Based U.S. Taxes," by T. Nicolaus Tideman, Ebere Akobundu, Andrew Johns and Prapaiporn Wutthicharoen (Public Finance Review 30(5), 2002, pp. 416–441), is the independent, non-Gaffney general-equilibrium quantification of the efficiency gain from shifting taxation onto land. Where ATCOR and EBCOR are propositions Mason Gaffney states and defends verbally, this paper builds an explicit dynamic computable general-equilibrium (CGE) model of the U.S. economy and computes the deadweight loss that could be avoided by moving revenue off labor and capital and onto land. It is the closest thing in the mainstream public-finance literature to a measured EBCOR effect, and it is the source the EBCOR page leans on for "the mechanism, modelled rather than asserted."

Key Findings

What the paper does (abstract, verbatim). "The excess burden of taxes can be reduced by shifting taxes from labor and capital onto land and by replacing progressive taxes with proportional taxes. This article uses 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 (1) incrementally shifting revenue from five broad-based taxes to land, (2) replacing the current progressive income tax with a flat tax, and (3) shifting as much taxation as possible to land."[1]

The three experiments. The model quantifies (1) the marginal excess burden of each of five broad-based U.S. taxes — recovered as revenue is shifted from that tax onto land; (2) the gain from flattening the progressive income tax; and (3) the total gain from shifting as much taxation as possible onto land, i.e. up to the limit of collectible land rent.[1]

The headline magnitude. For the full shift, the estimated welfare gain is large. As quoted by Fred Foldvary, the authors "estimate that the net gain (measured in real dollars of 2000), from shifting as much taxation to land as could be financed by collecting 90% of the land rent, would be $1308 billion or 14% of NDP in 2002 and $4,799 billion or 26.6% of NDP in 2042" (Tideman et al. 2002, p. 17).[2] The gain compounds over time because moving the tax burden onto the fixed factor removes the drag on capital accumulation and labor supply, so the economy grows faster and the recoverable base itself expands.

What It Supports

This is the quantified, model-based counterpart to the two Georgist fiscal propositions:

• EBCOR — "Excess Burdens Come Out of Rents." Tideman et al. derive from an explicit general-equilibrium model the same effect Gaffney names: that abolishing distortionary taxes recovers deadweight loss, and that the gain accrues in a form that shifting onto land can capture. The EBCOR page cites this paper precisely because the mechanism is modelled rather than asserted.
• ATCOR — "All Taxes Come Out of Rent." The result that revenue can be shifted onto land while raising welfare is the efficiency face of the ATCOR claim that the base for a land value tax expands as distortionary taxes are removed. The paper supplies a number where ATCOR supplies an argument.

Caveats

• Same open-economy / land-as-residual assumptions. The CGE model shares the premises that critics of full tax-shifting dispute. In particular, the Feldstein (1977) portfolio-shifting result is a theoretical challenge to the premise that the burden (and its excess burden) rests entirely on land rent; the magnitudes here are conditional on that premise holding in the model's structure.
• Model-dependent magnitudes. The 14%-to-26.6%-of-NDP figures are the output of a calibrated dynamic model, not a reduced-form empirical estimate; they depend on elasticities, the assumed collectible share of land rent (90% in the headline run), and the growth-accounting structure. They should be read as the model's estimate of an available gain, not a measured outcome.
• Verification note. The published article is paywalled (SAGE); the abstract is verified from the publisher's metadata, and the headline result is quoted from Foldvary's page-cited quotation of the paper (p. 17), not confirmed against the original galley. A future editor with SAGE/library access should verify the p. 17 figures directly and add the per-tax marginal-excess-burden numbers.

Bears On

• Concept (supports/quantifies): EBCOR · ATCOR
• Concept: Deadweight Loss — the excess burden this paper measures as recoverable
• Concept: Land Value Tax
• Adjacent challenge: Feldstein, incidence of a tax on pure rent — contests the residual-incidence premise the model relies on

See Also

• Nicolaus Tideman — lead author
• The Hidden Taxable Capacity of Land — Gaffney's verbal version of the same revenue-sufficiency case

Sources

1. T. Nicolaus Tideman, Ebere Akobundu, Andrew Johns & Prapaiporn Wutthicharoen (2002), "The Avoidable Excess Burden of Broad-Based U.S. Taxes," Public Finance Review 30(5), pp. 416–441. DOI · publisher (SAGE) · IDEAS/RePEc record — primary source: the dynamic-CGE estimate of avoidable excess burden from shifting five broad-based taxes onto land (A-claim; abstract verified from publisher metadata, body paywalled — see Caveats). A new source for this wiki.
2. Fred E. Foldvary, "The Ultimate Tax Reform: Public Revenue from Land Rent," Civil Society Institute / Progress and Poverty Institute. PDF — used for the verified page-cited quotation of the Tideman et al. (2002, p. 17) headline result ($1,308 billion / 14% of NDP in 2002; $4,799 billion / 26.6% of NDP in 2042) (B-claim, secondary quotation).
3. EBCOR · ATCOR — wiki concept pages this paper quantifies.