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SCI LIBRARY

Optional Geoism -- With No Losers

An Overview

Gavin R. Putland



[A proposal prepared in May, 2005 by Dr. Gavin R. Putland, Communications
Officer of Prosper Australia (Melbourne)]


The attached implementation model is intended to transform geonomics from a historical relic into an unstoppable juggernaut. Its key features are:

  • Participation in the new tax system is OPTIONAL; taxpayers can stay with the old system if they wish. (So any opponents of the reform will have a hard time explaining why they want to deprive the people of CHOICE.)
  • The LVT threshold for each site is set so that the owner for the time being gets a 5% tax cut on joining the new system. Thus the "SITE THRESHOLD" can vary from site to site. But each site is subsequently traded with its site threshold attached. The LVT and the threshold apply to each future owner who is under the new system at the time of acquisition of the site; but the threshold is recalculated if a future owner joins the new system DURING the period of ownership.
  • If the tenant of a site joins the new system, that tenant pays a "SITE ANNUITY" calculated to give the tenant an initial 5% tax cut. The site annuity is NOT linked to the value of the site; it is a fixed annuity (not even indexed for inflation), payable by the tenant but collected and remitted by the landlord. (Of course, the more site annuity the landlord collects, the less ground rent can be charged on top of it. So the site annuity ultimately falls on the landlord; if it were remitted to the revenue office by the tenant, it would be an INDIRECT LAND TAX.) The site is subsequently traded with its site annuity attached. The site annuity is payable by each future tenant who is under the new system at the time of moving to the site, but is recalculated if a future tenant joins the new system DURING the period of tenancy.
  • Compensation for the 5% loss of revenue depends on faster economic growth and reduced welfare expenditure under the new system.


The universal 5% tax cut amounts to a promise of no losers, and the promise is enforced by the optionality of the new system, making it politically safe to introduce a highly geocratic system in one step.

From a traditional geocratic viewpoint, the site annuity may seem ideologically suspect. It shouldn't. Under the existing regime, productivity taxes on tenants reduce their capacity to pay rent and are consequently shifted onto landlords, doing much economic and social damage on the way; in other words, they are highly inefficient and inequitable INDIRECT LAND TAXES. When all these taxes are replaced by an annuity attached to each site, the shifting process is made as simple as possible, eliminating the undesirable side-effects. So IF the site annuity were remitted by tenants, it would be the best possible INDIRECT land tax. But when landlords are made responsible for remitting it, it becomes a DIRECT land tax -- very ideologically sound! Admittedly, the site annuity is payable only when there's a tenant on the site and the tenant is under the new system. But the site annuity is accompanied by a heavy conventional LVT which, as usual, gives ample incentive to seek tenants.

Moreover, the site annuity is ESSENTIAL because, in its absence:

  • Tenants (in the first instance) would get a tax cut of much more than 5%, so that land owners (in the first instance) would have to be losers in order to make up the lost revenue. So the new system couldn't be optional, because if it were, only tenants would join it, and the revenue formerly contributed by them would be lost and not replaced. But if the new system were compulsory, land owners would oppose it. Deja vu.
  • The initial tax cut for tenants would increase their bidding power, causing them to drive up rents, hence land prices. Prices might overshoot; but even if they did not, such a massive shock to the most important asset market would undermine any assurances about who would or would not be a loser. Opponents of the reform would make apocalyptic noises about tenants and first-time buyers being priced out of the market, landlords being hit by secondary increases in land value tax and shifting them onto tenants... Deja vu.


So the site annuity is there to stay.

Another aspect of the model that might disturb geocrats is the apparent tolerance of speculation, as expressed in the statement:

... purely speculative holding of land-like assets would be discouraged. But, as the speculators wouldn't be obliged to join the new system, that effect would be minimal.

The catch, of course, is that by failing to join the new system, the speculators will leave themselves isolated and exposed. Thus the OPTIONALITY of the new system sows the seeds of an electoral revolt against speculators, without giving the speculators any ammunition in the mean time.

The forces driving voluntary adoption of the new system, apart from the obvious 5% tax saving, would include:

  • The desire of businesses to reduce their COMPLIANCE COSTS and MARGINAL COSTS, either to gain a competitive edge or to remain competitive with other businesses that have already made the move;
  • The desire of upwardly mobile wage/salary earners to reduce their MARGINAL TAX RATES;
  • The desire of job seekers to reduce the compliance costs associated with hiring them, and thereby make themselves MORE EMPLOYABLE.


Moreover, when one country implements this plan, its industries, being relieved of compliance costs and tax-related variable costs, will become more internationally competitive, prompting other countries to follow suit in order not to fall behind.

The current version of the model NO LONGER INCLUDES A CITIZENS' DIVIDEND (apologies to Jeff. J. Smith), because that made the system too hard to explain to voters. But a no-losers reform of social security, including a citizens' dividend, can be implemented at some future time, and can be made budget-neutral and free of losers by a one-off adjustment of site thresholds and site annuities and (optionally) the LVT rate.

The attached is the generic version ("international edition") of the model. I envisage that many fellow geocrats, perhaps including the present addressees, will want to edit the generic version into various national, state and local editions suitable for implementation by particular governments in particular places. I have already produced an Australian Federal Edition, which is expected to be released mid-year following a multi-stage process of editing and small-group testing. But there is still time to incorporate feedback from you.

Included as appendices to the generic version are four "fact sheets" explaining the system from the viewpoints of four important interest groups. I expect that when the national, state and local editions of the implementation model are produced, the appropriately edited fact sheets will become separate documents (as they are for the Australian Federal Edition).

The implementation model seems to have instilled a new "can do" attitude in those Australian geocrats who know about it. I'm hoping that the overseas reaction will be similar.