Polly on Gordo

Nice to see this out in the open at last:

Gordon Brown was challenged over and again to admit a somersault in the polls made him back off – but politics always requires economy with the truth.

So, there we have it. Politics is, by definition, shits lying to us. Thanks for that , Polly.

And Alan Greenspan, the Republican who nodded through George Bush\’s trillion-dollar tax cuts for the very rich, bequeathing ballooning public debt.

Err, you do understand the American political system, do you? The Chairman of the Federal Reserve has no power over tax rates. That\’s Congress that does that.

The deputy leadership elections did briefly throw up some passion – revulsion at excess at the top, the word "inequality" spoken out loud, debates that touched on fairness in schools admissions, faith schools and all the barriers to social mobility. That\’s what Labour is for. The Tory masterplan for cutting inheritance tax by £3.5bn while taxing non-domiciles £25,000 each has drawn a key battle line. Labour may have to give assurances that the inheritance tax threshold will never reach more than the current 6% richest, but the principle remains. It will take hard work to remind people what tax is for, why it is a public good and not a burden, how it is the agent of social justice. Those ideas have been allowed to atrophy in the last decade. Labour has redistributed more than any government to the poor, at least slowing the rate of increase in inequality – but by never framing the argument in ideological terms, a generation has never heard how inheritance tax helped shape social progress in the last 100 years.

Yes, please, let\’s do have this debate. On these terms. So, the Plain People of England, what do you actually support? Equality and social justice? Or lower taxation so that you get to do what you want with your money? Let\’s have an election on exactly those grounds. I have a feeling that, as with this very minor change to inheritance tax, the answer won\’t be to Polly\’s liking.

Why not take up Harriet Harman\’s proposal for a social justice commission to overhaul our tax system, which has become grossly unjust? The bottom 10% are taxed more than the top 10%,

Well, we could take up the proposals of those ghastly right wingers at the Adam Smith Institute and raise the personal allowance to £14 k or so. That\’ll take the poor out of income tax altogether. UKIP\’s proposals are subtly different but similar. The first thing to do about the poor is to stop taxing them so damn much.

VAT at such a high rate is deeply regressive,

Indeed it is and to reduce it we\’ll have to leave the EU. Score another one up to UKIP then.

property is taxed less than anywhere else

It is? What, with Council Tax? Some OECD numbers show that 5.4% is the average share of property taxation in the overall take, with the EU below average and the US and Japan both double that average. Unless the UK is an outlier in the EU (which it might be, can\’t find the figures) . A quick estimate though: 24 million housholds, £1 k a year each Council Tax, £24 billion. Another £20 billion in business rates and we\’ve got £44 billion. That\’s er, 8.8% (call it 9% as it is very much an estimate) . This is nearly double the OECD average, the EU average, for property taxation. This is less than anywhere else?

Today\’s comprehensive spending review can\’t camouflage the steep drop in spending in most departments.

I beg your pardon? Which departments are facing spending cuts? Slowdowns in hte rises in their budgets, yes, but actual cuts? Anyone seen any of these mythical beasts?

And finally, the truly outrageous:

The spectacle of one Tory millionaire swaying votes in a few marginals to buy the next election is all the evidence anyone needs of the democratic dysfunction of party funding and of an electoral system that hinges on 200,000 bored swing voters. Jack Straw has already led the way in supporting the alternative vote, giving voters the right to put their choices in 1, 2, 3 order, a first step towards fairer voting: it could be done for the next election. Better by far for Labour to do it before a hung parliament forces them.

We might lose power so let\’s change the electoral system.

Ho hum, a standard Polly Toynbee column then.

One real delight though. She\’s recommending lower consumption taxation, higher property and income taxation. There might be merits in such plans. But you know what she\’s actually doing?

In almost all OECD countries, over 80% of tax revenues come from three taxes: income tax, social security contributions and consumption taxes on goods and services (see Table 3 and related charts). However, the relative importance of different tax revenue sources varies widely from one country to another. For example, Australia and New Zealand do not collect social security contributions, while Denmark\’s revenue from this source is well below that in other countries. Overall, the countries of the European Union rely more on consumption taxes and social security contributions and less on income tax that the OECD average. In contrast, the United States collects a higher proportion in income taxes and property taxes but less in consumption taxes and social security contributions.

Yes, she\’s advocating that we move away from the European system of taxation to the American one. I wonder if she actually realises that?

16 thoughts on “Polly on Gordo”

  1. Still drifting left. Your stuff is usually worth reading but it’s a bit difficult when the left ends of lines are increasingly cut-off as you go down the page.

  2. Quite the irony, considering Greenspan doesn’t really believe in taxing income but would rather see most revenue taken from consumption.

    …and once again, for those keeping score at home, one cannot raise taxes on the poor in the US because, for the most part, they don’t pay any taxes in the first place.

  3. “George Bush’s trillion-dollar tax cuts for the very rich”

    I know it’s not surprising, but she (and most UK journos) don’t understand the US system very well. The tax “cut” often referred to was to do something about double taxation of dividends, since there is no dividend tax credit in the US (which is why most companies there do not pay dividends and instead use surplus cash to buy back shares).

  4. KT – And was the impact of those tax cuts not heavily skewed towards the rich?

    Tim – 10.2% of GDP in 2002, so for once your back-of-the-envelope was pretty good.

    Tim adds: Whaddya mean “for once”?

  5. I give up. Your site design is truly busted on IE6. let me know when it’s fixed.

    Tim adds: Later today so I’m told.

  6. “KT – And was the impact of those tax cuts not heavily skewed towards the rich?”

    No. It was removing an anomaly that was distorting behaviour (causing surplus cash to move from an income tax regime to a capital gains tax regime). Anyone with investments (which even includes the hallowed deserving poor and “hard working families”) felt the effects of the distortion.

  7. Tim – Sorry 10.2% of revenue, not GDP. Ok, for once was a bit harsh…

    KT – You sound like a politician. As you well know just because something benefits, “Anyone with investments” does not mean it can’t be ‘skewed to the rich’.

  8. “You sound like a politician.”

    That’s a nasty insult. You sound like an apologist for Polly. There. Two can play at that game.

    “As you well know just because something benefits, “Anyone with investments” does not mean it can’t be ’skewed to the rich’.”

    Huh? Since no-one was actually paying double-tax in the US, it’s not exactly skewed to anyone, is it? Even the socialists have learned that putting tax rates up for a class of people who have changed their behaviour (and no longer pay the tax) isn’t going to raise any more revenue, and removing the daft tax is therefore not a “give-away skewed to the rich.”

  9. Apparently, property taxes are higher in the UK than in most countries, except Taiwan, there was an OECD thing in the FT last year (I cut it out and kept it because it mentioned my Bow Group report). See here. This chopping off left part of line is seriously f***ing with my head.

  10. “This chopping off left part of line is seriously f***ing with my head.”

    Get a Mac and use Safari then! 🙂

  11. That link doesn’t work, here’s the relevant paragraph.

    “The UK also tops an international comparison of property taxes using the OECD’s broader definition of property taxes, which includes inheritance tax, stamp duty on shares and property, and wealth taxes. Using this measure, the share of total taxes rose from 10.4 per cent to 12 per cent between 1995 and 2004, while the average inched up from 5.5 to 5.6 per cent.”

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