Why did PWC want to sponsor this?
In fairness, the report ends up saying hypothecation is not a panacea.
But it does not dismiss it and that's because the assumption is that tax pays for government services.
It's becoming deeply frustrating that many supposedly engaged in debate on tax do not even seem to understand what it is, what it does and what it is for.
Getting the basics right would really help.
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Hmmmm………………….
Do not understand?
How about just plain and simple lying?
Hypothecation is only interesting as a communications strategy, and there is a debate to be had about how such a communications strategy could shift national priorities, change levels of resentment towards the state, etc.
It is a way of making clear who the economic losers will be from a particular policy. Imagine if the government were to say “We are increasing spending on the NHS by 50% this year. At some point later, if the economy is looking robust and can take it, we may cancel some of that spending in the form of increases in taxation.” It is not clear who the losers might be because (1) no one knows who will be hit by the additional taxes and (2) there is a fear that inflation might diminish the buying power of accumulated wealth if new taxes are not raised. In this scenario, everyone has reasons to be afraid.
However, if the policy was announced as “We are adding a “highest earners” rate of 75% on incomes over £1 million to pay for an increase of 50% in NHS spending,” this economically illiterate announcement would be much more reassuring to the public. First, there is security in knowing (for most people) that they will not be hit by the additional tax and second, that the value of their assets will stay relatively simple because the new spending is ‘being paid for’.
Since money is figment of our collective imagination anyway, figuring out the best ways of moulding the imagination of the public is a valid exercise, is it not? Your objections to statements like “tax pays for government services” are really about arguing over what the rules of the imaginary game are. The imaginary game has real-world effects, so it is worth arguing about, but let’s not talk about money and taxes as if they were anything more than an artificial expression of (and a way of measuring) our social stratification.
Perhaps what’s more important is to identify what keeps some human beings plugging away to make what is clearly a work in progress, the human race, have greater reasoning ability.
Isn’t Covi a somewhat duff outfit anyway? They’ve invited me to a lot of stuff over the last few years but I’ve never actually made it along…
Howard
You might say that
I couldn’t possibly comment
http://www.taxresearch.org.uk/Blog/2016/02/04/is-the-all-party-parliamentary-group-on-responsible-tax-serious-or-just-a-kpmg-front/
Richard
“search for economic truth based on observation, not abstract theory.”
Hi Richard. You said the above in an earlier blog.
Where do we search for truth based on observation about MMT?
Which modern economy has used in most successfully?
It’s not a matter of choosing to use it
It is how things simply are
The problem has been not recognising the fact
Barry Maltravers says:
“search for economic truth based on observation, not abstract theory.”
Where do we search for truth based on observation about MMT?
Which modern economy has used it most successfully?”
How about, the UK, EU, USA, And Japan for starters?
How else do you think 20 Trillion Currency units, (probably calculated as dollars) has been injected into these economies in the past ten years. ?
OK Bazzer – taking your ‘point’- given that we’ve had for some time a certain model of capitalism in use in this country since the late 1970s and the (how many is it now?) crashes it has induced on quite a number of occasions – do you not think it time that we tried MMT? You know – something else? You’re big on evidence so you have to accept that something is wrong.
And as for evidence Baz that MMT principles work, one could argue that the financial sector and the gambling addicts who run it got a certain form of MMT in 2008 with Quantitative Easing (QE).
There is evidence that suggests strongly that after 2008 and QE (or shall we call it Heavily Indebted Rich Persons MMT?) that the main beneficiaries share of income and wealth (say the top 5% of earners) went up considerably, whilst those at the bottom saw their share decline sharply as they increasingly had to deal with austerity.
Now that wealth growth alone for the top 5% is a result that counts as evidence Bazzer. All ‘real’ MMT does is make the QE aspect more widely available to society. And the rich investor still gains from the resulting improvements in economic activity in the real economy.
The money printing aspect of MMT Barry does not and should not just benefit rich gamblers in the financial sector and the DUP (hey – that was a result for Theresa May wasn’t it? It got her an improved working majority in Parliament! More evidence for your there Baz!).
MMT is needed now from the top to the bottom of the economy. You should consider my response and also accept that it worth giving MMT a go.