Here's a diabolical scheme for getting rid of income tax, tempting business people to abandon the vital tertiary industry of assessing and collecting tax for the Commonwealth, in favour of the anachronistic racket of creating wealth:

http://blog.lvrg.org.au/2011/07/opting-out-of-income-tax-gst.html

(the horror... the horror...).

Interesting proposal, Dr Putland! Actually granting the CHOICE of opting into the new system or staying within the current one, AND raising the same revenue without ANY losers. Who could disagree with that, except people opposed to choice?

I think that is a bit of a cop out and a simplistic view of why
we stopped much manufacturing. So what about Germany, Switzerland,
Japan, Korea?

Fact is that the manufacturing industry which we had, was a mollycoddled
one which got fat on tariffs. When it had to compete
globally, it was not up to it, unlike say the Germans.

Real estate certainly creates distortions. Put your money in a house,
you might make a tax free gain, so people do it. Put your money
in the bank, inflation takes half the interest and tax the other
half. Inflation indexation of bank interest could solve that one,
but the Govt won't part with the revenue, so people invest in houses
instead.

Given our regular migrant intake, real estate development is far
easier to do then compete globally on competitive markets. Besides,
Govts do load up industries with more taxes and charges, wether they
export or not. So entrepreneurial Aussies take the easy option
and do real estate.

First Aussies rode on the sheep's back for generations, now they
ride on the miners and farmers back. Life is too easy for most
Australians, to have to bother to compete in the real world.

So much of the Eastern States economies are based on people trading
houses with each other at globally ridiculous values, as the Economist
regularly points out. One day, who knows when, it will be proven
as unsustainable.

Yabby says: Fact is that the manufacturing industry which we had, was a mollycoddled one which got fat on tariffs

Fair comment, welfare rarely works positively.

Yabby says: When it had to compete globally, it was not up to it, unlike say the Germans

Why might this be though ? Is some of the reason as per the article ? 10% of the GDP (primary industry), does most of the work (60% of the exports) for the nation, most of the the rest of us take each others laundry off the line. It has long been this way, even longer then Professor Horne's iconic observation in the '60's

That's right. And Germans don't believe in owning their own house at any cost. Two-thirds of them rent, and only one third own their own homes. We're the opposite, because we believe agents' spiel. Who else but Australian idiots actually applaud someone who has paid too much at an auction?

I suppose a country could continue to use some of its income (from the tax payers) for improving its infrastructure until the land owners become so speculative in their rising-value properties, that they drive out of business any entrepreneur. Such a competetor wants to compete with the bigger manufactures, whose land was gotten when it was cheep or free.

It is not simply that LVT is nice to have etc. Without it the present democratic kind of macroeconomy is unstable and will eventually get to the point where the polarization of the classes in its society result in neither of them being able to share the production of goods nor the labour needed for its activity. (The US is going that way fast.) I am not writing about the 18 year "business cycle" so beloved by the Georgist arguments, but about past civilizations which cannot manage when their class-structure becomes so extreme after more than a few decades.