<p>The acronym itself might be new but the idea actually predates 2009, and is generally rejected in mainstream economics. For example, see <a href="https://www.journals.uchicago.edu/doi/abs/10.1086/260566" rel="nofollow noreferrer">Feldstein (1977</a>) 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.</p>
<p>———————————————————</p>
<p><strong>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:</strong></p>
<p>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.</p>
<p>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 <a href="https://www.ifs.org.uk/publications/mirrleesreview" rel="nofollow noreferrer">Mirlees review</a>(s), Tax by Design and Dimensions of Tax Design for overview of modern literature on optimal taxation.</p>

CC BY-SA 4.0
2023-08-01T17:48:06.413Z
**Comments have been [moved to chat](https://chat.stackexchange.com/rooms/147603/discussion-on-answer-by-1muflon1-do-all-taxes-come-out-of-rents-atcor); please do not continue the discussion here.** Before posting a comment below this one, please review the [purposes of comments](/help/privileges/comment). Comments that do not request clarification or suggest improvements usually belong as an [answer](/help/how-to-answer), on [meta], or in [chat]. Comments continuing discussion may be removed.
1muflon1
CC BY-SA 4.0
2021-02-11T00:39:09.787Z
2021-02-11T10:48:00.347Z
2021-02-11T10:48:00.347Z
1muflon1
<p>Fundamentally land is the good with probably the most inelastic supply. You can increase supply of land of a certain quality by developing it, and you can increase the supply of accessible land by building better modes of transportation for accessing land. But unlike most goods, you can't outright produce land.</p>
<p>The result of this is that most value in a region is absorbed by the land. If a region improves, the land value goes up by the amount the region improves, minus a small amount over time based on how much more land can be made accessible via better transportation.</p>
<p>These days as transportation by car is worsening, this is actually increasing the amount of value that land takes on to nearly 100% of the regions value. As other modes of transportation (bike infrastructure, maybe public transit) improve things, land might absorb a little less of the region's value. Regardless, I would estimate that at least 90% of the regions value is absorbed by land.</p>
<p>What does this have to do with taxes? Well taxes in this day and age generally cause losses to the community from deadweight losses as well as inefficient use of funds by governments. If you increase a tax, the use of those taxes creates some benefit to those taxed, but that benefit is generally substantially less than the cost to those taxed. Deadweight losses of taxes are <a href="https://governology.substack.com/p/taxes" rel="nofollow noreferrer">estimated to be 30% of the amount raised</a> and use of funds by government is likely <a href="https://www.aeaweb.org/articles?id=10.1257/mic.20190018" rel="nofollow noreferrer">more than 15% less efficient</a> vs private use. So one might guess that the total cost of a tax and the government use of those taxes is approximately 50% of the amount taxed.</p>
<p>What this implies is that a tax raise of 10% should mean that landlords retain 5% less of the land-rent they collect.</p>
<p>So does All Tax Come Out of Rent? The answer is that the full tax does not, because there are benefits from the use of those taxes. But the net loss of those taxes is likely mostly absorbed by land. So the spirit of ATCOR I think is valid to a large degree.</p>
<p>I wrote more about the dynamics of land value in <a href="https://www.aeaweb.org/articles?id=10.1257/mic.20190018" rel="nofollow noreferrer">this article on how a land value tax would affect the economy</a>.</p>

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2023-08-02T17:44:13.210Z
2023-08-02T17:44:13.210Z
Governology
<p>Mason Gaffney (<a href="https://www.emerald.com/insight/content/doi/10.1108/03068290910947930/full/html" rel="nofollow noreferrer">2009</a>) coined the term ATCOR (all taxes come out of rents) for his finding that taxes depress land rents.</p>
<blockquote>
<p>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.</p>
</blockquote>
<p>Has this argument been developed, or challenged, including by other schools of thought?</p>

CC BY-SA 4.0
2021-06-28T22:32:35.127Z
Terry Dwyer does some review of this concept in Taxation: The Lost History https://www.jstor.org/stable/43817496?seq=128#metadata_info_tab_contents which you might find useful.
user13353
<taxation><land>
Do all taxes come out of rents (ATCOR)?
sba222
# Do all taxes come out of rents (ATCOR)?

(Asked by: username_0 on 2021-02-10)

Mason Gaffney ([2009](https://www.emerald.com/insight/content/doi/10.1108/03068290910947930/full/html)) 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?

**Tags:** taxation, land

> **Comments:**
> **username_1**: Terry Dwyer does some review of this concept in Taxation: The Lost History https://www.jstor.org/stable/43817496?seq=128#metadata_info_tab_contents which you might find useful.  

---

## 2 answers

### Answer by username_2 on 2021-02-11. Score: 1

The acronym itself might be new but the idea actually predates 2009, and is generally rejected in mainstream economics. For example, see [Feldstein (1977](https://www.journals.uchicago.edu/doi/abs/10.1086/260566)) 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.

———————————————————

**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](https://www.ifs.org.uk/publications/mirrleesreview)(s), Tax by Design and Dimensions of Tax Design for overview of modern literature on optimal taxation.

> **Comments:**
> **username_2**: **Comments have been [moved to chat](https://chat.stackexchange.com/rooms/147603/discussion-on-answer-by-username_2-do-all-taxes-come-out-of-rents-atcor); please do not continue the discussion here.** Before posting a comment below this one, please review the [purposes of comments](/help/privileges/comment). Comments that do not request clarification or suggest improvements usually belong as an [answer](/help/how-to-answer), on [meta], or in [chat]. Comments continuing discussion may be removed.  

---

### Answer by username_3 on 2023-08-02. Score: 0

Fundamentally land is the good with probably the most inelastic supply. You can increase supply of land of a certain quality by developing it, and you can increase the supply of accessible land by building better modes of transportation for accessing land. But unlike most goods, you can't outright produce land.

The result of this is that most value in a region is absorbed by the land. If a region improves, the land value goes up by the amount the region improves, minus a small amount over time based on how much more land can be made accessible via better transportation.

These days as transportation by car is worsening, this is actually increasing the amount of value that land takes on to nearly 100% of the regions value. As other modes of transportation (bike infrastructure, maybe public transit) improve things, land might absorb a little less of the region's value. Regardless, I would estimate that at least 90% of the regions value is absorbed by land.

What does this have to do with taxes? Well taxes in this day and age generally cause losses to the community from deadweight losses as well as inefficient use of funds by governments. If you increase a tax, the use of those taxes creates some benefit to those taxed, but that benefit is generally substantially less than the cost to those taxed. Deadweight losses of taxes are [estimated to be 30% of the amount raised](https://username_3.substack.com/p/taxes) and use of funds by government is likely [more than 15% less efficient](https://www.aeaweb.org/articles?id=10.1257/mic.20190018) vs private use. So one might guess that the total cost of a tax and the government use of those taxes is approximately 50% of the amount taxed.

What this implies is that a tax raise of 10% should mean that landlords retain 5% less of the land-rent they collect.

So does All Tax Come Out of Rent? The answer is that the full tax does not, because there are benefits from the use of those taxes. But the net loss of those taxes is likely mostly absorbed by land. So the spirit of ATCOR I think is valid to a large degree.

I wrote more about the dynamics of land value in [this article on how a land value tax would affect the economy](https://www.aeaweb.org/articles?id=10.1257/mic.20190018).


---

