So, a question for economic types

It’s well known (umm, OK, not well known but in detail some people know it) that at some point of revenue raising you’ve got to go off and tax the poor. You just can’t squeeze enough out of the richer to pay for a large State.

For example, an American economist (whose name I can never damn recall, which is annoying because he made a significant pledge to my unsuccessful kickstarter to do a book on the subject) keeps pointing out that if the US wants to move to a welfare state of European size it will have to have a VAT – a regressive tax. He also points out that the Swedish et al systems pay for themselves by taxing the poor more, not the rich that much more.

Which leads to a bleg. The information is definitely out there, but has anyone collated it?

We have the distributional impacts of taxation. The top 10% pay y % of all tax (usually we just see income tax, but the calculation for the total tax burden exists for UK and US at least). Top 20% z% and so on.

OK, has that all been collated?

My question being, well, do larger States ever manage to finance themselves by higher tax burdens on the richer? Or is it always done by taxing further down the income levels?

That is, do we have collated somewhere the percentage of GDP raised on the top 1%, top 10%, top 50%, bottom 10% and so on. Which can then be cross referenced against government as %ge of GDP? Or has this even been done?

Anyone?

27 comments on “So, a question for economic types

  1. Tim,

    Not sure if you have ever seen some of the Hans Rosling TED talks. If you go to gapminder.org thay have an interactive ‘play with the data’ area that you can chart an amazing amount shit against any other amazing amount of shit. May not have exactly the comparative you seek – but I’m confident you’ll enjoy playing there anyway.

  2. Yes, TMB. An erudite political economist would have information like this at his fingertips. Simply a matter of asking, surely?

  3. This is very rough:
    The counciltaxsupport web-site had an analysis up that when you charge the lowest income groups more than 20% of the standard charge it is counter-productive – they stop paying, get taken to court by the thousands, more gets written off, admin costs are ridiculous. Roughly the bottom 10% are on CTR of some kind.
    So if councillors start trying to get the bottom 10% to pay more than 2% of local government taxation, then they should think again.
    That sounds plausible at national level to me.
    The middle classes is where you want to get your income from if in government.
    Could go to the ASI suggestion of standard VAT on food and energy and kids clothes, and raising the applicable amounts of benefit claims to compensate, which wouldn’t be much as the benefiterati don’t buy much VAT-free food anyway – moar tax and moar redistribution

  4. @ Bongo
    Funny – that didn’t happen when each Town and Couty Council set rates based on the calue of dwellings but included the rates in the rents paid by council tenants.
    The tax revolt over the Community Charge had *nothing* to so with ability to pay – it was purely a political campaign intended to bring down the government (and it succeeded in bringing down the Prime Minister).

  5. The French under the Valois and Bourbon kings had the right idea.

    ONLY tax the poor, the rich/nobility could either avoid taxes altogether or become intendants and farm the monies from the peasants at great personal gain.

    Trebles all round !

  6. John77 is spot on.

    I was hugely in favour of the Poll Tax, but I couldn’t see how the wife and I got to pay more under it than the previous rates system, given how many people live in the average council house and who paid nowt before.

    I’m also in favour of poor people paying more tax, reducing the tax free allowance to zero, and getting maybe 5% of it in as tax. Once people pay tax, they need to be reminded how it hurts. Every time it goes up for one, it goes up for all.
    I’m also in favour of a religion tax. Perhaps £1000 for a believer, although exempt for followers of the state religion, and a reduced amount for religions basically the same as it. We don’t have a name for this in English, perhaps adopting one from a foreign language would help – maybe ‘jizya’ will do. Perhaps Atheists could count for a reduced tax too. But it would need to be exempt only if the person declared that they curse the name of all prophets, particularly named ones – a list could be appended to the declaration. Add in to the regulation that whenever a terrorist outrage occurs, the Jizya tax goes up 10% the following year. If we introduced severe penalties for non-payment it could take the place of the BBC licence fee prosecutions in our courts!

    Then we could tax people who read the Guardian. Or people who are Remoaners. Or foreign bitches like Gina Twatface Millar.

  7. “Then we could tax … foreign bitches”: harsh!

    I think, though, we should tax British residents on property they own abroad.

  8. Of course the problem with the Poll Tax was that people who lived in well run councils didn’t pay much ( we were in Wandsworth and our bill was 48 pounds each ) but if one lived in a basket case like Lambeth then it cost the equivalent of the Bolivian National Debt.
    As the highest paying authorities were exclusively Labour it’s no wonder that they mobilised so much opposition to it.

  9. @ Excavator Nan
    The council tenants *did* pay rates – but not visibly because they were just added to the weekly rent.

  10. @john77,
    Sadly, both my grandmothers are long gone & therefore not posting on this site!

    As for may council tenants the rent was not that much more than the rates would have been, they therefore lived effectively rent-free. No wonder the lists were long then, even before we decided to house people with little or no connection to the country.

    As for taxing overseas property, presumably those properties are taxed by the overseas states, and if not, their regimes are missing a trick – unlikely that any can be found so benevolent.

  11. I agree with Excavator Man.

    “I’m also in favour of poor people paying more tax, reducing the tax free allowance to zero, and getting maybe 5% of it in as tax. Once people pay tax, they need to be reminded how it hurts. Every time it goes up for one, it goes up for all.”

    People should be treated equally under the law. If you are going to have an income tax, it should be applied at equal rates to all.

  12. @Gamecock, Even better, why not tell Benefits Claimants that they are being paid nett of 20% income tax and NI? (Better still, actually deduct them!)

    @dearime, harsh maybe, but true!

  13. “presumably those properties are taxed by the overseas states”: oh we shouldn’t let that interfere with taxing Guardianistas. Maybe we should have not only a tax but a special surtax for Tuscany and Umbria. Because we can.

  14. @ Excavator Man
    Both my grandmothers are also long gone but in one case the sadness is just that old age weakened her – she would not want to be 130+ – the other died years before I was born, when my father was 17, from septicaemia which would have been curable with moden-day medicine.
    In the 50s most council tenants were those who had been rehoused from slum clearance (or had their houses destroyed in the war); private sector tenants with controlled rents (frozen by Lloyd George during WWI) generally had rents that wre even lower.

  15. @john77, December 22, 2017 at 2:14 pm

    The tax revolt over the Community Charge had *nothing* to so with ability to pay – it was purely a political campaign intended to bring down the government (and it succeeded in bringing down the Prime Minister).

    +1

    Benefits were increased to cover the average amount unemployed had to pay. Aim was to make all voters evaluate cost/benefit of council they elected.

    No representation without taxation.

  16. @Gamecock, December 22, 2017 at 4:42 pm

    People should be treated equally under the law. If you are going to have an income tax, it should be applied at equal rates to all.

    +1

    Flat Tax

  17. “People should be treated equally under the law. If you are going to have an income tax, it should be applied at equal rates to all.”

    It always infuriates me when someone talks about “a penny on income tax to pay for the NHS”. No-one ever suggests taking an equivalent percent of benefits and pensions. If you don’t you just get people voting for tax increases for other people.

  18. The big flaw with the Poll Tax was that it was a fixed pound amount per person, so somebody on £1million a year would pay £500, and a person on £2k a year would also pay £500. (My first Poll Tax bill was 1.2 times my actual income!) The original policy design for the Community Charge was that it would have an ability-to-pay element, making it close to a local income tax.

  19. “If you don’t you just get people voting for tax increases for other people.”

    More perverse. The people voting for increases for other people expect to get some of that money. Welfare and progressive income tax create an abomination.

  20. My take on the poll tax is this: Your tax should be due and payable in full one week before the national election day. No withholding, and no estimated payments. Proof of payment would be the admission ticket to your polling place.

  21. jgh,

    I’m very much in favour of there being a single rate per person. Our council tax is 8 times the average. Despite this we still only get the same number of bin collections as Mr and Mrs Average, our street doesn’t have a footpath and the density of street lighting is less than average. We’re not given a pass to give us special access to council facilities. In short, we pay 8 times more for less than Mr and Mrs Average, how is that remotely right or fair?

    Getting all, or even the bulk, of income tax from a small minority is immoral, even if what distinguishes members of that minority from others is their high income. Progressive tax is equally immoral as it imposes on a minority rules that do not apply to the majority.

  22. DocBud: because it’s a TAX, not a service charge. You get exactly the same protection by the armed services as your neighbours, is your national tax bill the same as everybody else’s?

  23. In the case of council rates, here they are based on unimproved land value, not income. My income is 4-5 times the national average, my wife’s is a little above the average, hence our combined income is about 3 times the combined average income, so how is it fair for us to pay 8 times the average?

    It just illustrates how progressive taxes are immoral and unfair.

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