Flat tax is never just and never equitable

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As if in reply to my Guardian article "Havens and have-nots" Kenneth Rogoff, formerly chief economist at the IMF has an article on the Guardian blog called To have and to have not.

I've always been aware that justice is difficult to define, and equity likewise but I have to say that Rogoff and I are a long way apart when he says:

Rather than punitively taxing wealth, globalisation strengthens the case for shifting to a flat tax on income (or better yet consumption) with a moderately high exemption. Aside from the usual efficiency arguments, it is just going to become increasingly difficult and costly to maintain complex and idiosyncratic national tax arrangements.

Unfortunately, movements towards fundamental tax reform are on the back burner in most countries. One can only hope that our children's generation will grow up to live in a world that does a better job of balancing efficiency and equity than we do.

I don't want to be unkind to Rogoff, but candidly I find this pretty repulsive. The least taxed as a proportion of income in the UK are the wealthiest. That's true of many countries. So how is it that the rate of tax wealth suffers is punitive? Especially when the highest taxed in the UK, as a proportion of income are the very poorest?

No one has shown that flat taxes will alter this. In Bulgaria where a flat tax is on its way no one agrees with Rogoff that this will reduce inequality: everyone thinks the poorest will pay more. The IMF did not find an improvement in after tax income equality in Russia after the introduction of flat taxes. In Slovakia where there is 19% VAT, 19% income tax and 19% corporation tax national insurance was, the last time I looked a massive 48%, and it is, of course, charged on employed income alone.

How and why then is not taxing wealth equitable is the question I ask?

And I'll answer very simply: it can never be so. Ever. However you define justice, and however you define equity. But that's what Rogoff wants.

He abuses the English language in the process of making his claim.