And replace it with my own feelings! So there!
Take some examples:
– This morning’s headline that 50p tax does not work, when there is no evidence to prove that case: this is just far right promotion of the Laffer curve by Mirrlees
Sir James tells us:
‘It is not clear whether the 50% rate will raise any revenue at all. There are numerous ways in which people might reduce their taxable incomes in response to higher tax rates; at some point, increasing tax rates starts to cost money instead of raising it. The question is, where is that point? Brewer, Saez, and Shephard (2010) addressed precisely this question for the highest-income 1%. Their central estimate is that the taxable income elasticity for this group is 0.46, which implies a revenue-maximizing tax rate on earned income of 56%.29 This in turn (accounting for NICs and indirect taxes) corresponds to an income tax rate of 40%. So, according to these estimates, the introduction of the 50% rate would actually reduce revenue.
So a Nobel Laureate quotes one of the best empirical papers on the subject and this is all just \”far right promotion\” is it? Sir J goes on to say that:
Whatever the precise revenue-maximizing tax rate, it seems unlikely that much additional revenue can be raised simply by increasing the income tax rate for the very highest earners. But it is important to realize that this is not the only tool available for extracting money from this group. Widening the income tax base—removing reliefs and clamping down on avoidance—not only raises money directly but also reduces the scope for shifting income into tax-free forms and thereby makes tax rate increases more effective revenue-raisers.
The thing is, you see, Ritchie\’s own work on how to get more tax out of the highly paid works on exactly this point. If you pay UK tax anywhere in the world you live then you cannot escape the higher taxes by moving. If you restrict pension relief to lower rate tax then you cannot escape it by dumping cash into your pension. All of the things which Ritchie himself recommends are based on this very damn point which he\’s now rejecting as \”far right promotion\”.
Wouldn\’t it be lovely if Ritchie could actually understand the interconnections between his own views and reality? You know, had enough foundation in theory to understand what it is that he himself is saying?
The promotion of much higher VAT
Yes, because the OECD tells us that a VAT has lower deadweight costs than corporation tax or capital taxation for the same amount of revenue raised.
The suggestion that corporation tax should be abolished to be replaced by yet mo0re VAT
No, they don\’t. They suggest that the normal rate of return, on either interest or corporate profits, should not be taxed. Only excess returns should be. The aim here is to lessen the current tax system\’s bias towards debt finance: something that Ritchie himself has been known to worry about.
The suggestion that taxes on savings should be reduced
No, the idea is that taxes on returns to savings should be reduced. See OECD above.
The idea that NIC should be abolished shifting the burden from employer to employee
And we have another Ritchiebollocks on tax incidence here. For even Ritchie has been known to agree that so called employers\’ NI actually falls upon the worker in the form of lower wages. Thus there is no transfer of incidence here, there is simply the taking away of a potential misunderstanding.
It was Ritchie a couple of days ago stating that taxes must be visible for democratic participation reasons, wasn\’t it?
I\’m sorry to have to break this news to you: Mr. Murphy is simply ignorant on the points about which he opines.