I was on Nick Robinson's programme on tax and spending last night.
This second episode was better than than the first part of the mini-series, but not by much.
But it did by chance let me make my first reference to the need for Courageous politicians who will tackle tax avoidance and evasion on screen.
Watch here, starting at 47.20.
We recorded for 90 minutes when the programme was meant to be mainly about tax avoidance. Odd that this was the only clip to make it to a programme where in the end only a few minutes were dedicated to the subject.
Pleasing that they went on to show that Lamont and Darling accurately fitted my description of cowardly politicians when it came to tax.
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Funnily enough, for a BBC program, I found it compelling watching and quite sensible.
I must be getting old, or maybe I’m ill ?
Compared to the previous weeks it was good
But that was a poor starting point…
I have yet to watch this programme and I was not going to until you informed us that you had a slot. I am not a fan of Nick Robinson as I think that he indulges far too much in simplistic soundbites and his analysis is far from sound. Yesterday’s coverage on the BBC of the protests about pensions was again biased because the BBC is running scared of the Tories. I prefer to watch news items on RT.com although of course that too has a bias but at least it offers some other perspective.
We certainly do need some courageous politicians but I have no idea when they will surface. Political party machines are so tightly controlled that there is no room for any politician who is ‘out of step’ with the rest. As you discussed on Tuesday, most economists have the same mindset so it follows that most politicians who want to further their career also have the same mindset. Very depressing!!
I am sure the small screen is the way forward, less sure that Nick Robinson is the Guide of choice. How could he say that there has never been and could never be a popularly welcomed tax, and not mention a Tobin tax? How can he talk about tax dodging and not look at the weaselly laws and even more weaselly distinctions between evasion and avoidance? He bats for the other side, definitely. That said, well done for getting anything at all onto the programme!
I don’t suppose any attempt was given in the series to define money. Here is Krugman December 2010:
‘Surely we don’t mean to identify money with pieces of green paper bearing portraits of dead presidents. Even Milton Friedman rejected that, more than half a century ago. For one thing, a lot of those pieces of green paper are pretty much inert – sitting outside the United States, in the hoards of drug dealers and such. For another, checking accounts are clearly a close substitute for cash in hand. Friedman and Schwartz dealt with this by proposing broader aggregates —M1, which adds checking accounts, and M2, which adds a broader range of deposits. And circa 1960 you could argue that those aggregates were good enough. But now we have a large shadow banking system, in which things like repo serve much the same function as deposits; M3 used to capture some of that, but the Fed discontinued it, in part I think because it wasn’t clear which repo belonged there, and data on repo not involving primary dealers is scattered. Whatever. The truth is that these days – with credit cards, electronic money, repo, and more all serving the purpose of medium of exchange – it’s not clear that any single number deserves to be called “the” money supply. Intellectually, this isn’t a problem; nor is there necessarily a problem maintaining monetary policy even if there isn’t any single thing you’re willing to call money. Mike Woodford has been writing about this stuff for years. But if you’re determined to view economic affairs through a sort of paleo-monetarist lens, focused on the evils of “printing money”, you’re going to have a hard time in the modern world, where the definition of money is increasingly vague.’
Both Laws and Lamont admitted that a land tax is popular with economists but the politicians are too cowardly to consider it. What is your comment on that, Richard?
We need one
But as part of the tax system
I do not believe it can replace all other taxes
I have never said it could. Your book does not advocate it as part of the tax system even. You just propose a mansion tax – that is a property tax, not a land tax.
Well, as yet no one has shown me how they’re going to do an LVT – so do and I may change the next edition
But I’ve not seen a workable version as yet
So I’ll stick with what I propose for now, which does the job
Implementing LVT is quite simple:
1. Complete the Land Registry
2. Value all the land – and reassess every year (Denmark and Australia manage to do it).
3. Send the bills ( starting at 50% rental value rising to 100% over 5 years) to all owners on the Land Registry.
4. Abolish Council Tax, Stamp Duty Land Tax, Business Rates, infrastructure charges on developers, plus make inroads into standard rate income tax.
All this has been provided to the Treasury wonks. The only problem is the cowardly politicians.
Ignoring the power of LVT to raise huge revenues, make housing affordable for all, cut deep into wealth inequality and abolish the boom/bust cycle is insane.
> Well, as yet no one has shown me how they’re going to do an LVT — so do and I may change the next edition. But I’ve not seen a workable version as yet.
Germany solved its tax/money problem in about one week, November 1923. So we already have a template for introducing a large-scale, workable property tax system.
Germany had a grossly defective tax/money system following WWI. The problem was fixed with a four-page law creating the Rentenbank’s Rentenmark currency. It became known as the “Miracle of the Rentenmark”!
Original money/tax reform law here:
(I have a rough translation of this, if anybody wants it.)
The Rentenmark was introduced in November 1923, supported by a property tax, based on fixed 1913 property valuations. The payments were due 1st October and 1st April each year. The implementation was via “Rentenbriefe”, function like mortgage notes.
The financial crisis was solved in approximately one week using this four page law.
In the UK, an almost identical technique can be used. The UK has the advantage that property is already mortgaged, and many are already owned by the government and central bank. And the economy hasn’t yet completely collapsed, allowing Sterling to be retained.
Following the principle of the German success, The UK Treasury would simply issue new money to buy out all the remaining mortgages at the banks. Then simply convert them into the equivalent LVT payments (at borrowers choice). Bingo! What’s there not to like? It’s money-supply neutral, so there’s no impact on inflation.
So we know from history that defective money/tax systems can be fixed by these amazingly simple methods. The challenge is to overcome the resistance of the bankers and their associates. And much less “esoteric” than “dollar liquidity swaps”, let alone Tax Credits and other schemes in universal use.