Ritchie on flat taxes

Man\’s amazing, really, he is.

Those on low incomes would almost certainly pay more because around the world flat tax systems are associated with high National Insurance contributions – that hit the lowest paid hardest.

The extant proposals are in fact to merge NI and income tax and then have a flat rate with a large personal exemption. So, err, no, it won\’t hit the lowest paid hard.

And as for simplification? That won\’t happen, first because business needs complex tax systems to let it do the complex trades it undertakes,

What?

We can simplify business taxation in a trice. Abolish corporation tax and tax dividends and capital gains at that new flat rate. And any one who says that this will make business more complex is a loon: or the Murphmeister.

13 thoughts on “Ritchie on flat taxes”

  1. So Much For Subtlety

    I suppose he is well known for his objections to VAT then. You know, given it is worse than a flat tax and is actually genuinely regressive.

    No doubt he condemns places like Denmark and Sweden for their high VATs all the time …. right?

  2. Tim, you missed off Ritchie’s second reason-

    “and second, because most of the complexity is about defining just what is taxable. “

    -which is the real problem. While people continue to want differential taxes on different things, Pigovian taxes, and the like, you’ll never get a simplified tax system and talking about a flat tax is basically a joke.

    The complexity of modern taxation is down to zillions of differnt interests all wanting various taxes on this but not on that, for the common good, or because of nebulous externalities, and biscuits but not cakes (or is cakes but not biscuits?) and so on.

  3. look at the taxes that are easy to collect and have few defaulters. Asset-based taxes are much much easier than ones based on defining financial flows in different ways – income, costs, expenses, allowances, benefits in kind, fixed asset purchase, improvements, repairs, fixtures, plant etc

    Business rates, council tax and Land Value tax would get rid of most of the tax collection and benefit payment infrastructure in this country.

  4. So if we made tax simpler, business would really, really suffer; OK. And if we got rid of it altogether, business would completely collapse; right.

    Meanwhile, back on this side of the looking glass…

  5. From reading his blogs, I can’t see that Ritchie has ever really got his head around the notion of tax simplification. Perhaps it goes against the notion of say being able to manipulate tax at the micro level to support an ideology, for example? Who knows?

    @ Ian B – I totally understand where you come from: ie, with inept and useless politicians running the show, this simply isn’t going to happen, but that shouldn’t mean that it isn’t feasible.

    If we were serious, we would start from principles, rather than from the vested interests; ie top down rather than bottom up. To use your analogy, words like biscuit (or cake) – and much much more – would simply never appear.

  6. Rob

    No!!!

    Fewer, simpler taxes: business collapses. So we need, NEED DAMN IT, more taxes and more complicated.

    Keep up!

    MMT works on the same principle (the world always has actually but only a couple of academics in East Coast Unis in the early 21st Cenetury could see it). You see: taxes drive growth. No taxes; no growth. Or negative GDP as Heidi Moore would say.

    Again Rob, try to keep up.

  7. He’s one of those people – like Brown – who you have to disagree with to know you’re making sense.

    On the one hand, he never understood the corporation tax regime in the EU, because it is complex. so he resorted to saying that companies should pay the tax that he said they should. Which is as simple as it gets, then.

    On the other hand, he’s now saying that business taxes (presumably he intentionally means companies, partnerships, LLPs and sole traders and not just companies) should be complex.

    And they are really two irreconcilable stances.

    I think it’s called schizophrenia…

  8. I know this is a bit off topic, but having mentioned it once already I really can’t help saying that the whole biscuits vs. cakes tax thing is indicative of a society gone mad.

  9. You simplify the tax system and at the same time reduce or remove the majority of exemptions and rebates. So all these corps who’ve paid zero tax suddenly can’t offset costs to lower their tax bill. Instantly HMRC get MORE tax collected.

    Given Ritchie is so quick to highlight tax avoidance you have to ask why the resistance to the notion of a flat tax and reduction of avoidance?

    The cynic in me would say he enjoys buttering both sides for self gain.

  10. Lets not forget that Ritchie is a bought-and-paid-for shill of the main taxman’s union the PCS. Thus he will campaign for anything which increases HMRC numbers and thereby PCS union membership.

    All this bollox about country-by-country reporting or getting out the thumbscrews on tax evaders is just rent-seeking by proxy.

    Hang the fucker!

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