Ritchie’s got company

Instead on focusing on the absolute income tax contribution, in our research we have developed a novel and holistic index which tracks the ratio of the effective income tax rate per income group divided by the percentage of total personal wealth (alternatively, one may use the percentage of national income) owned by the same income group.

Under this metric, we show that the bottom 99% pays in relative terms at least 10 times (1,000%) more tax than the top 1%.

From the social justice perspective the “money tree” will blossom when the richest 1% will pay a higher and fairer income tax rate.
Professor John Hatgioannides
Faculty of Finance, Cass Business School, City, University of London

Someone even vaguely to do with economics wants to look at the relationship between income tax and wealth? Srsly?

Note that his result simply does not hold at all when we use income tax against income.

What is it about Islington Technical College?

16 comments on “Ritchie’s got company

  1. Quite a nice apples-to-oranges comparison there. An income tax to wealth ratio.

    No wonder lefties have difficulty understanding the difference between socks and flows…

  2. The use of the word ‘holistic’ immediately reveals this as new-age woo, so beloved of our future king.

  3. I read somewhere that the top 3,000 pay the same amount of tax as the bottom 7,500,000. I’d be interested to see what his definition of “fair” is. The dictionary tells me that it is “treating people equally without favouritism or discrimination.” Surely that means everyone should pay the same amount of tax regardless of circumstance, wealth, religion, skin colour, gender, or anything else?

  4. The link is to a Guardian letters page entitled “Make the magic money tree work for everyone, not just the rich”, where absolute wankers complain that, instead of sharing those pots of gold found at the ends of the rainbows, “Tories” are keeping them all to line their already bulging pockets.

  5. As someone who is probably a little younger than the average here who earns a lot but does not own a lot, it pisses me right off that I’m probably paying more tax every year than my retired mortgage-free Labour-voting grumpy bastard of a next door neighbour has in his life (who of course has managed to doublethink his way into hating inherited wealth but wanting to pass his house on to his daughter), despite his rather higher net worth. I know Tim often speaks of an economic consensus regarding the efficiency of taxing income and the badness of taxing capital, but could either he or someone else point me in the direction of something reasonably easy to digest on the matter…

  6. “.. holistic index which tracks the ratio of the effective income tax rate per income group..”

    Does this mean it will show State employees have an effective rate of 0% as their income is paid from taxation?

  7. Dennis’ Law: Any time you read the phrase akin to “we have developed a novel and holistic index” in an academic paper in the “social sciences”, you’re dealing with pseudo-intellectual Marxist bullshit.

  8. What he means is that a person on average wage of £26000 currently has a tax rate of about 35% (IT,NI and VAT on purchases) on his income leaving him with around £17000, a person on £1million per year should be taxed at 98.3%

    Professor John Hatgioannides probably just makes it into the top decile in terms of income from all sources (a surprisingly low bar) so his tax rate should be 72%.

    Does anyone care to ask him if that is fair ?

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