Ritchie\’s slides for CLASS

It\’s really quite lovely.

He\’s claiming that we have a regressive tax system without bothering to notice that it\’s more progressive than most others. Specifically, he whines about how indirect taxes (largely VAT of course) have risen as a percentage of the tax take. Without bothering to note that this is

a) EU imposed and not the result of the Washington Consensus as he says

b) the only way that you can finance a large state and still have economic growth.

Our tax system has, over the years, been moving much closer to the Nordic one: and as it\’s the Nordics which are the desired end point of Ritchie\’s plans, quite why he\’s upset about this I really don\’t know.

8 thoughts on “Ritchie\’s slides for CLASS”

  1. Are Ritchie’s scribblings important enough to merit your repeated refutations? Surely there is more scandium to find.

    Tim adds: Entirely true: but I find myself sitting here in Germany on a Sunday as I wait for my meeting tomorrow with the blokes who have been digging into waste dumps to find me scandium…..

  2. Even more bonkers stuff from CLASS yesterday. Ann Pettifor was being regularly tweeted by Ritchie:

    “Because all money is made out of thin air there is never justification for high interest rates.”

  3. Interesting that his charts show that the tax gap (by his measures) is substantially larger in the EU (as %age of GDP) than it is in the UK.

    Which is odd seeing as the UK is run by neo-liberal nasty Tories who actively encourage tax evasion through the tax haven City of London.

    Somewhat suggests that if his calculations of the tax gap are correct (debatable obviously) his reasoning for their cause might be wholly wrong.

  4. b) the only way that you can finance a large state and still have economic growth.

    Er, what? If you tax a whisky distiller’s profits it harms economic growth, if you tax an employee of a whisky distiller’s wages it harms growth, but if you tax the sale of their combined labours producing whisky, it doesn’t?

    What? How does this magic work?

  5. Ian B, indeed. As Mark Wadsworth puts it:

    “4) VAT is NOT a tax on ‘consumption’. Taxes on fuel, fags, booze are taxes on consumption thereof for the simple reason that demand is price inelastic and supply is price elastic; but a general tax on gross profits (‘value added’) of non-favoured industries is NOT a ‘consumption tax’, however you dress it up.

    The fact that VAT appears on till receipts and not in company accounts is a red herring, you cannot change the economics with accounting rules. It is more or less impossible to design a general spending or consumption tax which doesn’t act in exactly the same way as income tax, but far worse.”

  6. Christian Spence

    Slide 9 has been tampered with. He appears to show that Labour didn’t run a deficit after 2001 and managed a surplus after 2005. He mentioned this in a post a year or so ago; he’s showed tax income a year out from when ONS does to prove there never was a deficit.

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