If only the Maris Piper could think

If a government is to address the apparent under taxation of wealth then it is apparent that the rates of tax due on income and capital gains must be equalised.

Nope. Inflation exists – therefore there must be an inflation allowance for capital gains on things held over time.

The returns to capital – say, stocks – also pay other taxes. Like corporation tax. This must also be accounted for. The simplest is to abolish corporation tax and then think about equalising the CGT rate on shares with that on income – still after that inflation allowance of course.

This is even before we get to actual economics, which says that we don’t want to tax the returns to capital at all, even while we do tax any income used for consumption. That leads to a progressive consumption tax, which does in fact equally tax consumption financed from any source. But, you know that would require background knowledge.

Third, this disparity in rates will continue to encourage perverse behaviour in the economy, including the encouragement of the recognition of capital gains rather than dividends in the returns from companies.

What’s the dividend tax rate? It’s lower than CGT, isn’t it.

Why? Because we account for the corporation tax already paid on the dividend distribution. See above.

The recommendation is easy to implement: capital gains would simply be treated as the top part of income for assessment purposes.

He has, in the past at least, suggested 80% income tax rates. Now he’s suggesting an 80% CGT rate? That’ll aid in investment, won’t it?

And what fresh hell is this?

Richard Murphy says:
April 28 2020 at 1:39 pm
In the current environment I am reluctant to accept an inflation allowance.

Why is it necessary? To date inflation has only distorted economic well-being by increasing inequality. In that case why not tax it?

26 thoughts on “If only the Maris Piper could think”

  1. Dennis: Oppressor, Warmonger, Capitalist and Consumer of Petroleum Products

    In the current environment I am reluctant to accept an inflation allowance. Why is it necessary? To date inflation has only distorted economic well-being by increasing inequality. In that case why not tax it?

    OK, the above is definitely this week’s entry for the dumbest thing Richard Murphy has ever said. And given that it’s only Tuesday, that’s impressive.

  2. They said President Gerald Ford was so dumb he could not walk & talk at the same time without stumbling. “Dick Chip” seems rather similarly mentally-challenged.

  3. Both Warren Buffet and Terry Smith – let alone every competent professional wealth manager – manage portfolios to focus on companies that make high rates of return and reinvest most of those profits to achieve growth. To derive income from such a portfolio, you supplement the smallish dividends with a slice of the capital gain those companies have achieved. In one of his newsletters, Buffet goes through the mathematics of it. Was it yesterday that Spudhead was convinced the government wanted to exterminate pensioners? Today’s suggestion clearly suggests that he is intent on exterminating them

  4. Perhaps we should try a variant on this. Inflation is Bad so must be taxed. Therefore the staff and committee members at the Bank of England and the MPs should be taxed on their wealth and income, with increasingly punitive rates the greater the rate of inflation is.

    Who else are you gonna tax so that the Bad Thing actually gets reduced?

  5. He is redefining and inventing economics and finance on the fly, pure brainstorming of ideas with no barriers to reality.

  6. “pure brainstorming of ideas ”

    He hasn’t got the kit for that. Might I suggest vainstorming?

  7. Yeah brainstorming is far too generous. He just splurges onto his blog whatever pops into his head. He’s like one of those newspaper comment writers who have bits and bobs of knowledge and then thinks he is an expert in all those fields. My favourite is his bond stuff where he gets out of depth within a few replies. His huge arrogance combined with this behaviour makes him compulsive viewing. It’s amazing that he doesn’t look back sometimes and think “yeah I made myself look like a bit of an idiot yesterday.

  8. My house goes up in price, so I get taxed on it.

    My cars, clothes, computers — everything else in fact — lose value. Why do I not get depreciation on them? If I had boats etc, it would be worse.

    Far from unearned wealth, the rich lose money over time. Which is why it takes only a couple of generations to lose even fortunes. Or, in the case of most sports folk or pop stars, the same generation.

  9. @Mr Lud

    A while ago you asked for more info and source of:

    Sewage levels indicates 1 Million illegals in London

    Some of you may remember a column I wrote four years ago about an immigration court judge who was convinced there were roughly 1.5million more people living in Britain than the official population figures recorded.
    .
    He based his findings on reports from the water industry, telling the Mail on Sunday: ‘The discrepancy between the official figures and what is actually going down the pipes shows there are more than a million more people in London than are legally r­egistered, and another half a million or more outside the capital.’
    .
    So why shouldn’t we harness the technology to combat Covid-19?
    https://www.dailymail.co.uk/debate/article-8215623/RICHARD-LITTLEJOHN-answer-friend-flowing-round-U-bend.html

  10. Murphy is an approval junkie. He will say anything to stir-up interest from his fans. It does not matter much what he says on his blog because the majority of his fans are even more clueless than him on the subject of economics and finance.

    As long as he includes a few of the zeitgeisty buzz-words his retweets will flow in and he’ll feel satisfied in his smug little way. Mention “tax”, “capital”, “inequality”, “fairness” “riches”, ”income”, “redistribution”, “correction”, “worth”, “producers”, “markets” or “profits‘ and all is good. It doesn’t matter what other words he mixes into the blend, they are as empty and meaningless as the space that he uses to keep his ears apart.

    Let’s have a go: “That badgers are the capitalists cornering the market in flowerpots is irrefutable evidence that income inequality creates asymmetrical access to bathyspheres among those earning below median wages. This must be corrected by a tax on teacakes and the redistribution of undeserved earnings from the profits of wainscotting. Only then will the fair share in the economy be due to the mangle mongers and the toad polishers who have suffered at the hands of their rentier masters.”

  11. Thanks, Pcar, but it’s not a primary source…

    … And I’m instinctively suspicious of anything said by almost all immigration judges…

    Wouldn’t surprise me at all to learn that our guests far outstrip the competence of our border controls to know of them. But this material isn’t that evidence.

  12. While current interest rates are artificially low and have been for some time, even those low rates would add change the nominal value of shares even when the net present value of the shares remains unchanged, especially over a long period of time.

    Say I bought shares in Xyz PLC in 1980 for £1,000, with an average interest rate of 3.8% over that period and sold them for £4,320.44 in 2019. According to Spud I would have made £3,320.44 profit and should be taxed accordingly, but the reality is that the shares haven’t increased in real value at all, since that average 3.8% inflation rate over the decades has simply devalued the value of the pound accordingly.

    https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

    This is why Spud is an idiot, or at the very least disingenuous. I’m not sure what is worse to be quite honest.

  13. ANNRQ: the majority of his fans are even more clueless than him

    Boileau: “Tout sot trouve un plus sot qui l’admire”.

    Boileau’s posts don’t get past the admin at TRUK

  14. Supermarket report – Morrisons today 17:45, last week()

    – 2 16 Kg Morrisons Bread Flour £9 – no yeast for sale (1)
    – 6 In-store bagged 1kg Morrisons Bread Flour £0.85 (0)
    Good idea re-bagging the 16kg bags. I imagine Morrisons’ in-store bakeries selling less than usual as they won’t let customers in.

    – Pasta & Rice ~40% (40%), 5kg Macaroni most
    – Pizza: Chilled ~50%, Frozen ~50% (10, 25)
    – Baked Beans ~60% but 4 packs only, Soup 80% (60,60)
    – Crisps etc ~60% (3%)

    Other observations:
    – Meat & Fish counter re-opened
    – Isolation Mental health problems setting in:
    — People More scared of being close to others
    — People more tetchy, aggressive and selfish

  15. Little history lesson.

    Alistair Darling did away with inflation on CGT for individuals but reduced the rate to 18% because he apparently found that although the nominal rate at the time was based on higher IT rates, the average rate paid once inflation was taken into account was 18%. So it was a simplification measure.

    Spud of course wants his cake and to eat four cakes.

    A tax ignoramus of the highest order.

  16. Are you sure about Maris Piper? They’re good for chips. Spud’s more your obscure cultivar from the High Andes. Small & bitter with a hint of llama dung.

  17. The key word is “apparent”

    Inflation is, in and of itself, a stealth taxation of wealth (net monetary assets are devalued every year to the benefit of the issuer of currency). IHT, albeit largely avoidable, CGT, stamp duty, progressive rates of council tax, the use in means-tested benefits of an assumed rate of return on savings are all taxes on wealth.

  18. The Meissen Bison

    Yes, BiS, I was thinking that Ratte would be better: awkward rat-like (hence the name) knobbly things although good for potato salad. And then there’s Rooster, with pleasing word associations that might appeal. There are various spuds with Mayan as the first part of their name but they are all too nice.

  19. I wonder what Capt Potato would taste like after being passed through the chipper and deep fried. Presumably there would be a nasty, greasy taste

  20. Herr Oberst Kartoffel is probably more like Darwin’s Wild Potato:

    From https://cipotato.org/potato/wild-potato-species/

    When Darwin reached Guayteca Island on the Chilean archipelago of Los Chonos, he noted an abundance of wild potato. “The tallest plant was four feet in height. The tubers were generally small, but I found one of an oval shape, two inches in diameter: they resembled in every respect, and had the same smell as English potatoes; but when boiled they shrunk much and were watery and insipid.”

  21. @John Galt April 29, 2020 at 1:20 am

    The people’s behaviour suggests the lockdown is causing metal problems – peeps becoming agrobobic, anthropophobic and social phobic

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