I’ve been having a bit of a ding-dong with Tom Worstall on the Liberal Conspiracy site. As a result of a comment I made he said:
A rough guide to a reasonable taxation system would be one that taxes capital less than incomes and incomes less than consumption. Meaning low capital gains taxation, low corporate taxation, higher income taxation and higher consumption taxation. (Please note, I do not mean lower or higher than rates currently extant in the UK, I mean relative to each other.)
I’m not going to say Worstall is the voice of the Right: he’s clearly not, at least alone. But he’s one of the voices of the Right. And this is his perception of tax.
And it takes moment to realise that what he prescribes is regressive taxation — a system in which as a person’s income from all sources increases the amount of tax they pay reduces in proportion to their income decreases even if it increases in absolute amount .
It’s obvious why: they poorest don’t save: they consume all their earnings, so their income is subject to the highest rate of tax. The best off save: no tax on that.
The poorest enjoy little investment income: they work for a living: so more of their income will be proportionately subject to higher tax rates.
And the savings of the richer members of the community will be subsidised by low taxes on capital.
The result? Guaranteed increases in the gap between richest and poorest with regard to earnings and guaranteed increases in wealth disparity. The result? More social tension, great inequality, less stable societies and all the outcomes predicted by Richard Wilkinson and Kate Pickett in The Spirit Level.
But at least he admits he wishes for injustice.
It’s safe to assume he’s not alone.