We are going to have a budget on 6 March. That is early. It is not unprecedentedly so, but it is about as early as it can reasonably be.
Does this mean that there will be a spring election, with this budget offering a pile of promises that the Tories know that they never can or will deliver, but which they will use to trap Labour? I think that likely.
There are many reasons why a May election makes sense for Sunak.
First, his chance of holding his party together for much longer than that seems to be vanishingly small.
Second, nothing he now promises on almost any issue can now be delivered, because he knows that his control of parliament is limited.
And third, sometime in mid-2024 Baroness Hallett is going to report on political decision making during Covid and that is going to be damning for Sunak, Johnson and Gove (probably in that order). He cannot wait and risk that.
So, May it looks likely to be. There will be much stupidity to suffer between now and then.
What that does mean is that I need to finish the Taxing Wealth Report. That was on my agenda for now. Covid is not helping that.
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What I dislike about your Taxing Wealth Report is that given what we know about money creation, it is unnecessary.
But what I like about it is that it enters our stupid politician’s world and uses there own faux-cognition about these matters against them. It backs them into a corner.
Clever.
My view on taxing the rich is simply this: they have undemocratic tendencies and as a result need to be brought to heel. They also seem to thing it a good idea to horde money rather than let other people have what is after all a social utility for everyone.
The rich have hung themselves over and over again throughout history on this matter.
Yes, it is good to “speak a language that is understood”. MMT is true but we can’t wait to win that argument before tackling taxation of the wealthy. But there is more…
Even if one accepts MMT as true we know that money will need to be drained at some point to control inflation and that withdrawal should be along the lines the Wealth Report suggests.
Furthermore, even if there is no need to drain money for inflation control we should heed the Wealth Report because we know more equal societies are happier and a fiscally neutral redistributive effort would be good for all (including the wealthy, if only they knew it!).
Thanks, Clive.
I’ve concluded the election will be in May, as the Tories are already leafleting my area, something they have never done in the past. The March budget probably confirms it as the election campaign usually is for about six weeks. The Tories will want the giveaway budget to still be in the mind of electors, so May it is. After May and holding out to the end is too risky given what might happen.
There is a logic to it. I suspect the budget will have some tax giveaways and public sector spending promises, but the Tories will say it requires them to be re-elected. They will also challenge Lab to honour the budget pledges. Given Lab’s cast iron fiscal rules, if they do so i.e. tax cuts, that will tie their hands even more. If they don’t, the Tories will fight the election as the tax cutting party, with Lab as tax and spend. It’s worked in the past even if it is based on lies and promises that the Tories will not keep anyway.
Add in culture wars and what is likely to be the most nasty election ever, it’s the Tories last throw of the dice. At the very least it will be damage limitation for them.
Of course, if the Tories by some miracle were to win, then all the pre-election promises they make will over time be dropped, accept for those that fill the pocket of the very rich. That’s what Tories do, rinse, repeat.
Your observations about an early election are pretty accurate I would say, and I do hope you can find time to do more on the Wealth report.
What confuses me about taxing wealth is how to tax money Wealthy borrowed against their massive wealth. It’s not income as I understand it and accumulating wealth on the principal wealth of assets can be further reduced through further asset acquisitions. It’s confusing..
I am really not sure what you are saying
Like I say, am confused about it all. If one holds massive accumulated and invested wealth in any form it continues to grow one way or another. Spending it reduces the asset. Borrowings against that wealth do not incur tax as I understand that and depending on the way they are spent can increase income producing asset base to further increase wealth. The costs of servicing the borrowings and managing that and the asset could reduce any tax on the wealth accumulated. I understand owners equity increase and that be taxed, but there seems to be a myriad of ways to use borrowing that are not taxed. I’m not debating it at all just seeking to understand what appears to be an inequity and ways of balancing that out.
I think you are confused.
Borrowing reduces a person’s wealth.
And hew borrow to live off the funds, they usually borrow to buy an asset.
By definition, borrowing is not income. It has to be repaid, usually with interest.
Your suggestion is a person buying a house with a mortgage should be taxed on the receipt of the mortgage as if it is income. That makes no sense at all. You are looking for a tax base that does not exist.
“Borrowing reduces a person’s wealth.”
Borrowing neither increases nor reduces a persons wealth. If i borrow by securitisation against wealth or assets i own then i can buy additional assets with the new funds but i have the liability of repayment. In this sense borrowing increases leverage. Leverage into the assets i buy. Housing is the obvious example. By your metric Richard a person’s wealth would fall by the extent of the mortgage. It clearly doesn’t. But through the mortgage an individual is more leveraged i.e more geared into house price moves in either direction.
The description was of borrowing to spend on consumption.
Maybe in your deluded state that has no impact on wealth.
Out there in the real world with which you should really ghet acquainted I can assure you it does.
Thanks