I’ll be debating John Rivett at lunchtime today on the subject of Easytax. Rivett is a lawyer who works with John McRobert, the main proponent of the tax (three Johns have got a bit confusing at times). Details are here
I’d have preferred a free event, but I left it to the proponents to organise, so I can’t complain I guess. I’ve attached my presentation, which gives a fair idea of what I’m going to say, and I believe a video of the event will be made available.
John Quiggin 
Rather than vertical integration I suspect many companies would switch to supplying services. In your example many (all?) abattoirs already work this way – they don’t buy cattle and sell parts, they charge a fee for processing them. Even many butchers will do this on request – you supply the (dead) beast, they cut it up for a fee. Transport companies etc already work this way.
I suspect we would see the low-tax services industry grow at the expense of the buy-transform-sell sector.
I found a 1998 “explanation” of this which had little to no actual explanation and a huge amount of repetition of the term “Easy Tax”.
Looking at the JQ presentation it is clear that this is yet another attempt to minimise tax for those with the ability to earn the most and pay the least contribution to the running of the country. The point about services being taxed just the once spells out how this would play out.
Those who need to spend their entire income to live would pay the most proportionally. Those with the highest spending power would import most consumer hardware and employ more personal assistance as this would become relatively cheaper ie attempting to head down the US path of low cost labour to make life easy for a privileged “class”.
So apart from being the non progressive flat tax wet dream of the Neoliberals, this is actually the reverse of a progressive tax as its impact is proportional to the level of discretionary spend an individual has and the options they have for directing that spending.
Separately it has only just occurred to me where the money is coming from to drive the credit boom across the globe. I now suspect that the amount of tax haven money which once extorted from its source economy cannot be repatriated without penalty, is the source of the money banks in secondary countries are using to power their ever expanding credit card offers.
Good presentation John. Easy tax is a zombie economic idea. I’m surprised it keeps returning.
I think the only new tax worth talking about would be a capital transaction tax (0.1% or something worthwhile but minimal) as this would make all capital flows visible and open to scrutiny. Such a tax could be offered as the alternative to the bank tax. It would be interesting to see which they scream about the loudest.
A better critque might be to ask “what rate would be needed to match the current tax take, and what effect would that have”. 3% or more seems likely. Makes all those multipliers seem worse if nothing else. But yes, if the proponents are absolutely fixated on 2% saying “it would need to be 3% to pay for the quantity of government we keep voting for” might not work.
Or simply ask them which third of government spending they propose to eliminate. When we’re talking big numbers like that simply imposing efficiency dividends doesn’t cut it, they have to eliminate whole segments. The military would probably not be able to keep their above-inflation increases regardless of what The Great John Howard promised, for example. One other benefit might be that the money isn’t there to keep Adani from bankruptcy (a win-win, we lose a coal mine but might keep the reef).
Might be worth pointing out that the hipster artisanal ethically-sourced beard-trimming accessories trade would be in much the same tax position as the supermarket ogliopolists, since beard tools from Timor-Leste pay the tax at import, then the retailer/hipster pays the tax and now the customer/hipster has their beard widget. And no-one on the far wrong wants to see their prized big business put in the same box as inner-city psuedo-intellectual beard-wearing hipsters. Bah, humbug, get off my lawn, etc.
Sounds like Clueless Tax would be a more appropriate moniker.
Interesting that in these tax debates Labor doesn’t raise the idea of progressive company income taxes. Say raising the threshold to 40% for profit above $10m and then to 50% for profit above $100m.
Would be interested in your thoughts on shifting some of the tax away from income and into property. The idea would be to encourage work and the efficient use of property.
@Black cat
The only mention I can find easily is from 2007, here: https://johnquiggin.com/2007/07/15/land-and-house-prices/
Looking at policy, the obvious thing to change, if you want to make it easier for people to buyer houses is to remove taxes on entrants, like stamp duty, and replace them with taxes on incumbents, by removing the owner-occupier exemption from land tax.
@Moz of Yarramulla
Removing stamp duty and the exemption on land tax for homes has to be the most obvious and best tax change out there. They are state changes however and are very unpopular politically.