I've gor an article on Comment is Free under the above title this afternoon, analysing the Taxpayer's Alliance proposal for a flat tax in the UK.
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Couldn’t resist commenting on one of your “Cheeky Git “detractors.
And adding a second, predictable plea for an article on alternatives to the fractional reserve banking.
Richard, I notice you have put the apostrophe before the final “s” ie the taxpayer is singular. I have taken to doing the same thing deliberately as they do not seem to be a properly constituted organisation ie they represent nobody and for all anybody knows there could be just one rich person behind the whole thing. Or the Koch brothers, I wouldn’t put it past them.
You can demolish them from one end. LVT supporters can do it from the other. I notice they are in favour of abolishing all property taxes, which is the perfect formula for a massive land price bubble. Taxpayer’s Alliance are also in favour of the unworkable local income tax – if you think it is workable, ask the Swedes. It is a pain in the neck and requires the tax authorities to keep everyone’s current address on their database.
Localising taxes leaves some areas awash with money and others hard put to raise anything. This is also true of LVT which is why we have given up supporting it as a local tax and want it nationally. Councils would be accountable for their pot of money, and yes I know that creates difficulties in deciding how to allocate money, but the same applies to any scheme of equalisation.
Hard core LVT campaigners are of course in principle against income tax and VAT at any rate above 0% all so 30% is still too much, and they do not propose to do much about VAT. The deadweight cost of the residual taxes they want will leave the same massive poverty problem we have at the moment with no money for the government to pay the welfare bill.
In seeking to abolish property taxes, these people are the biggest free-riders of the lot. Public money must be continuously spent in order to sustain land values.
If one follows the cash flows, the richest pay for the poor – their overall contribution to tax coffers is greater than that of the poorer. Read the treasury figures
That is a wholly spurious argument
And one I would sincerely hope were true. Do you know the rich have more money than the poor? That’s why we might expect them to pay more?
But under flat taxes proportionately they wouldn’t
That’s why flat taxes are wrong
We need more progressive taxation
Poverty is caused by the rich – by locking most people out of the opportunity for earning a livelihood for themselves. The process can be traced to the land enclosures of the eighteenth century and earlier.
Once land was enclosed most people had no opportunity but to pay rent and work for wages. The landowning minority then got wealthy by sucking up what had been produced by other people, whose wages were driven down to the minimum acceptable level.
Actually a flat tax could be progressive – IF it was accompanied by a universal flat benefit payment.
Consider if instead of a 30 percent rate with no allowances, there was a 50 percent rate but with everyone receiving a universal flat payment (whether employed or not) of 100 Pounds per week. That would be highly progressive, combat poverty and mean it would be impossible to be worse off in work than out.
Somehow I can’t see the TPA supporting this though because the middle and top would pay attention lot more!
No tax system is likely to be really progressive without serious benefit payments….
And the TPA oppose them!
Hi Richard, great blog, wish I’d come across it sooner.
Apologies, I’m not a tax accountant so this might fail rule 3 of your comments criteria. Anyway, when I hear flat taxes being proposed, I can’t get past the idea that typically the very richest have earned their wealth by, among other things, more greatly leveraging all that the state provides – by that I mean a workforce that is healthy, educated and secure, an infrastructure that allows national/global interactions (transport etc), and more besides. Therefore taxing them at a higher rate seems entirely ‘fair’ to me.
I have no doubt this is an extremely crude version of a well-established theory out there – could you (or any of your readers) tell me what it is? I’d like to learn more about it, including counter-arguments, so I can decide if this is a sensible thing to think, or if I’m an idiot.
You’re spot on
The theory hardly exists
It needs to be written
I’m working on it
Indeed – I should have more on it over the weekend – look out for my CLASS paper….