Isn’t this a balanced panel?

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.

17 thoughts on “Isn’t this a balanced panel?”

  1. I do hope a bright SWP spark asks pertinent questions of Tax Dodge Hodge and Ritchie himself. Their attempts to explain the morality of their affairs viz a viz their promoted policies would make for interestingly and pretty lively debate.

  2. A recent Freakonomics podcast was looking at the economics of fundraising: what works and what doesn’t. And they interviewed John List who said at one point (paraphrasing) “I want to find out what makes people give more. I may not necessarily like the answer, but I want to know what it is.” And he found that recruiting pretty blonde girls to go door-to-door increased fundraising among men who answered the door.

    Now the feminists among you might be saying this is outrageous. The politicians among you might be saying that something must be done to regulate it. But the economists among you will cheer that finally we know more about the incentives at play.

    Your final sentence is right, of course. But there’s a much more serious problem. Despite what he says, Ritchie isn’t an economist. He’s simply not interested in what the incentives in any particular situation are. Instead, he wants to describe what he thinks incentives should be, regardless of what the impact would be on the rest of the world.

    That’s politics, not economics. But to pretend that his work is a measured, fact-based analysis of the interaction between systems and between people, instead of an emotional attempt to persuade is, candidly, dishonest.

  3. Surely the gulf between labour and capital taxation does have a very reasonable “it’s not fair” point to be made against it? Just that even if it isn’t fair labour is still better off than if it stuck all that cost on capital. Largely because capital can go elsewhere.

    An extension of that argument then is to tax highly mobile labour far less. Can I have some money back, Frau Merkel?

  4. He isn’t remotely an economist. He is, to use the popular word of the moment, a polemicist, ie a total bullshitter.

  5. “I am taking part in a debate on tax justice”

    As this is a debate, I take it there will be a motion, a proposer, seconder and opponents?

    Or is a mutual hand job a more apt description?

  6. On Jolyon Maugham’s website, Murphy tried to rubbish a panel commissioned by PwC on the basis that the make up of the panel (which he didn’t actually know) might be biased. Now he’s happy to sit on a panle where all have the same ideas and claim it’s going to be a triumph. Of course Murphy can’t live with informed debate which opposes him so he’s happy with that.

    Even the topics are biased “what concrete proposals” can be made to make companies and the 1% pay their tax dues. Well, you fat tw*t, what ARE their ‘dues’ and what concrete evidence do you have that they aren’t paying them?

  7. “I am taking part in a debate on tax justice”

    Delusional as always. He is taking part in a group discussion between like minded individuals that will validate their mutual biases. I believe the kids nowadays refer to that as a circle jerk.

    He also seems to have forgotten to include the names of those who will, in the spirit of debate, be opposing his ‘motions’.

  8. Tee hee – this comment has got far enough for him to have to moderate

    A debate? It sounds more like a mass debate to me.

  9. They’re not all dreadful proposals though.
    1. Merging NI and Income Tax is a reasonable suggestion, and he has at least given some thought to the pension question.
    2. Raising CGT rates to match income tax rates risks driving out entrepreneurs (would Stelios have founded EasyJet in Britain under higher CGT rates?), but ultimately it’s a political decision, not a purely economic one.
    3. LVT is generally considered the least distorting tax, so that’s good. His final suggestions of a FTT and a general wealth tax are risible though.

    Overall it’s a better scorecard than we’ve come to expect from Ritchie. Tragically I expect the only outcome from the debate will be a vote for an FTT and/or a wealth tax, given the other panelists’ views.

  10. none of whom need this incentive because entrepreneurs are born and are not created by the tax system.

    WTF? Presumably entrepreneurs do pretty well in North Korea then, as they are simply born. The rest just follows, I suppose.

  11. The Ritchie Dictionary

    for ‘debate’ see also:
    ‘unfirmity’, ‘conformity’, ‘mindset’, ‘groupthink’, ‘lack of an original idea or individual thought in my entire fucking life’.

  12. So TW doesn’t support LVT anymore. And believes taxes on capital should be lower than on income. May not be Fascist (on technical grounds) : more like pre-Fascist on The Iron Heel model

  13. If you are not a mono-maniac, which is DBC’s excuse, you can read disapproval of even the extract:

    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.

    as not being explicit denial of approval of an LVT. But, hey, it’s the inter-tubes. Never be reasonable when emphatic disagreement is available and never emphatically disagree when you can fit in a spittle-flecked rant

    Explicitly we know Tim disapproves of wealth taxes and FTTs. I’ve never heard him mention a “proper gifts tax” in any way.

  14. A tax on proper gifts does rather raise the question of what improper gifts would be. Has Ritchie been shopping for his anniversary at Ann Summers?

  15. Gift tax is an interesting one. For example, James Barrie gave the copyright to Peter Pan to Great Ormond Street hospital and I guess the royalties and original gift have never been taxed. Does this make the hospital part of the tax gap?

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