I am taking part in a debate on tax justice at the Class conference this coming Saturday at TUC Congress House in London.
This session will have a pretty lively panel made up of Margaret Hodge, Ann Pettifor, Prem Sikka and me,
Lively? Could you put a fag paper between their ideas?
There’s there’s the actual proposals:
Having dealt with my opener, what would a more redistributive system look like?
1) First, the bias against labour income that provides consistently lower tax rates on capital would be removed. That means either merging income tax and NIC – which would create enormous problems, especially relating to pensions – or instead creating an investment income surcharge of 15% to replicate the NIC charge paid by labour on income such as rents, dividends and interest. And yes we would have to give an extra allowance to pensioners but this could still raise billions and level a playground field.
2) Second, we have to charge capital gains to tax at the same rate as income and reduce the absurd allowances for so called entrepreneurs – none of whom need this incentive because entrepreneurs are born and are not created by the tax system.
3) We need wealth taxes, on land via LVT, on dealing via a financial transactions tax, and in wealth itself by a proper gifts tax – that would also eliminate for ever the abuse created by trusts and corporate tax shelters beloved of the wealthy and their advisers.
He never did pay any attention in his economics classes, did he? And thus entirely missed the entire point of optimal taxation theory: that, because of deadweight costs, taxes on returns to capital should be lower than (or non-existent in a perfect world) than taxes upon labour income.
Ritchie’s just not got the first clue about the economics of taxation.