Martin Wolf wrote this in an article in the FT yesterday. I have edited it lightly without changing the meaning:
The British must not get hysterical about their current tax levels. Yes, taxes are higher than in, say, the US. But British values are not those of Americans. They are in fact more European. The Netherlands, a richer country than the UK, had a tax ratio of 44 per cent in 2022 against the UK's 39 per cent. As Oliver Wendell Holmes Jr. said: “Taxes are what we pay for a civilised society.”
On this, I agree with Martin Wolf.
I also agree with him when he said:
We should also not assume that faster economic growth will solve the dilemma. As economies become richer and wages increase, the relative costs of public services tend to rise, as does the demand for them.
This is correct - and exactly why UK public spending is rising, and needs to rise (much) more, because that is the only way to meet the demand for essential public services when for the majority of people private needs are actually being met.
This was also true:
Taxation is ultimately driven by spending. How much (and where) a country spends, and how it pays for it, is a political decision. It defines the sort of country it wants to be. That is the issue, not fantasies of cuts that pay for themselves or magically engender growth.
Wolf is right, again.
The whole point of the Taxing Wealth Report 2024 is threefold.
First, we need more tax revenue as spending is going to rise and its inflationary impact has to be eliminated.
Second, in a country with gross inequality, this means that the wealthy must pay more.
Third, there are choices to be made about this, which is why I will be offering many more ways to raise taxes than are required to fulfil this goal.
What is required is the honesty to admit that these choices will have to be made. To pretend that growth will avoid the need for these decisions is false in a world where economic growth as we have known it needs to stop. What also needs to stop is the pretence that there is no money left.
So, let's face reality and talk about taxing wealth in 2024.
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Simple gain. Equalise tax reliefs
Eg all pension contributions get 20%, whether you pay 0, 20,40 or 45% as top rate.
Similarly for salary sacrifice.
It is fair. Why should a wealthy person get 42% contribution from other tax payers when a much less wealthy one gets far less?
Have you been reading this blog of late?
The benefit of your approach is that when you compare tax rates in a direct, practical way it is easier to form a fair and equitable policy position: which is why the neoliberals hate your analysis and launch furious, evidence free, gratuitous ad-hominem assaults. Think of it this way: your opponents are now reduced to Liz Truss as their leading thinker. I rest my case (we all have all the evidence we need – we lived through it).
🙂
I am deeply concerned that the BBC was prepared to trumpet Liz Truss in a way that was disturbingly reminiscent of how they led the British public astray with their disproportionate promotion of Farage. Offering no apology in a grotesque excuse for her failure, Truss began her speech by saying, “The policies I advocate simply are not fashionable on the London dinner party circuit!” I cannot believe the brass-neck of this dangerously delusional woman; does she genuinely have no shame regarding the catastrophic damage she inflicted on the UK public? Her damaging speech touted a further lurch to the ultra-right fantasy economics of lower taxes, asset stripping, deregulation, and a much smaller state with even more crippling implications for the most vulnerable in our society; this requires a swift and dynamic progressive response.
On Politics Live they rebroadcast the most toxic components of her speech. Liz Truss said “We also need to reduce marginal tax rates, to make it worthwhile to work at every income level, further changes like abolishing the tourist tax, abolishing the windfall tax…. We also need to get a grip on the bullying welfare and pensions bill. This means, slowing the rate of increase to benefits and tougher work requirements, it means raising the retirement age further and, as a party, we have to deal with the difficult issue of the cost of pensions, the current trajectory is not sustainable.” I felt physically sick imagining how our most cash-strapped working poor could possibly be subjected to even greater austerity, expected to work harder and starve while subsisting on even less.
The BBC were determined to have the public choke down a robust defense of Liz Truss, who is now shamelessly demanding her own honors list to reward her supporters, following her thankfully very brief time in office. Shadow Defense Minister Luke Pollard was the most critical, but neither of the two journalist or even the Tory MP offered much support for Truss. The presenter then introduced Julian Jessop, from the totally unaccountable free market Think-Tank, ‘The Institute for Economic Affairs’ and asked, “Why should we still be listening to anything Lis Truss has to say?” A strong supporter, Jessop tried to refute the fact that Liz Truss had crashed the economy, describing the failure of Trussonomics as “a convenient scapegoat for something that would have happened anyway.”
Jessop marginalized what Truss got wrong saying, “she acknowledged mistakes around communication…. underestimating the nervousness in the market and the hostility of much of the establishment…” He went on to claim that “she also got a lot right, the importance of economic growth!” He coopted the Labour Party in support of that investment free miracle growth concept before saying of Truss that, “she has moved the dial and we should listen to her”. They did play a clip from a speech by former Bank of England chief, Mark Carney, whose verdict on the Truss premiership was scathing. He said that “when Brexiteers tried to create Singapore on the Thames, the Truss Government instead delivered “Argentina on the Channel”.
The serious disinformation touted this morning by Liz Truss in her arrogant speech, was unreasonably promoted by the BBC, despite the overwhelming consensus belief that her brief, but disastrous, premiership caused significant harm to the UK economy. I worry that comments claiming the “hostility of the establishment” are designed to prime the public for offering support to ‘victim Truss’ as a UK style Trump. There is an urgent need for Richard Murphy’s logical economic changes, as outlined in the ‘Taxing Wealth Report 2024’, to be given an equally high-profile platform to rebut the total rubbish that Truss spouted this morning. The BBC cannot claim to be ‘politically neutral’, as required of our public broadcasting company, if an opposing position is not given equal consideration.
The choice of Jessop was very toxic
Excellent. So many good points. This might have been best…”This is correct – and exactly why UK public spending is rising, and needs to rise (much) more, because that is the only way to meet the demand for essential public services when for the majority of people private needs are actually being met.”
This article presents many good points on why taxing wealth needs to be seriously discussed by 2024.