Yes, it’s head pounding time

Firstly, Mirrlees effectively ignored taxes on wealth: it concluded they were not desirable.

If you conclude that something is not desirable have you just ignored it?

Further, Mirrlees did gain the Nobel for his tax work. Among the conclusions of which was don’t tax wealth. But of course Snippa knows best….

Then there’s this from Ritchie:

the Mirrless report argued for the replacement of corporation tax with what was, in effect, an additional VAT.

Err, no. The final recommendations list:

Single rate of corporation tax with no tax on
the normal return on investment

Sigh:

The fight for economic sanity has to go on.

Perhaps a modicum of economic knowledge first?

17 thoughts on “Yes, it’s head pounding time”

  1. Firstly, Mirrlees effectively ignored taxes on wealth: it concluded they were not desirable.

    He means, Mirrlees ignored the LHTD on wealth taxes.

  2. I don’t know if you’ve seen it Tim, but NBER Working Paper No. 26284 “Use It or Lose It: Efficiency Gains from Wealth Taxation” is worth a read. [I haven’t linked it because my posts get rejected as spam when I put links in.]

    TL;DR version: yes, CGT and wealth taxes are equivalent if all wealthy people get the same rate of return, but given that they generally don’t, a wealth tax hits the inefficient investors harder than the entrepreneurial ones so ultimately money moves from the economically useless rich to the economically productive rich, helping everybody in the economy. Sort of a free market version of the Parable of the Talents.

  3. “Single rate of corporation tax with no tax on the normal return on investment”

    This is the sort of thing that annoys real world people. Is he talking about return on equity (profit after interest and possibly tax / share capital plus reserves) or ROCE (ebit / equity plus debt)? And who decides this normal rate of return?

  4. Abolish VAT, Corp and Capital Gains taxes. Plus all taxes on investment returns. That should help the economy

  5. @ Arthur the Cat

    Where do the economically useless rich keep their wealth? Cash stuffed in the mattress or gold bars buried in the garden perhaps? Anywhere else, and it will be invested in some fashion.

  6. “a wealth tax hits the inefficient investors harder”: biased phrasing there? Perhaps some investors – because of the detail of their wealth, their income, their age, their health, their responsibilities, and their liabilities – choose to be cautious. That may be sensible, or efficient, for their circumstances.

    Is the old trick is being played of using a word – here “inefficient” – in the sense of some arcane jargon while passing it off as a commonplace usage. That trick is played all the time with “significant” and a nasty little piece of deceit it is.

  7. Quite, dearieme. The “Ă«fficiency” of an investment is the decision of the investor, not some third party. A high gain investment is the same as a high risk investment. If it was a sure thing it would have been priced higher. Losing your money is hardly efficient investment.

  8. It’s obviously “inefficient” investing if it isn’t supporting el Kartoffelmeister in Ely. 🙂

  9. Actually, I’ve a feeling that the return on all investments is the same, at least theoretically. If the level of risk is accurately discounted in the price. No? The losers balance out the winners.

  10. Bloke in North Dorset

    The response to people making out like bandits with their investments isn’t to tax them it’s to ask why they’re able to make out like bandits.

    If it’s something new and innovative that people want or benefit from we should be applauding them.

    If it’s through through seeking we should be asking how the situation has arisen and how we fix it. As most of these cases are caused by govt regulation the usual answer will be abolish govt, which is why that never happens and twats like Murphy curry favour with politicians and the hard of thinking.

  11. Yes, very good Theo. But not actually an answer, is it? Or didn’t you understand the question? If it’s true, then all investments are equally “efficient” in the sense of the Moggy’s proposition.

  12. Tuesday: Twats Attacked – Head pounding time?

    James Delingpole: The government is trying to keep us in a state of fear and panic — Correct
    https://www.youtube.com/watch?v=RerOJ9FIxA4

    There should never have been a lockdown — Correct
    “People keep saying protect the NHS. At this rate, we’ll have to abolish the NHS because we can no longer afford it”
    https://www.youtube.com/watch?v=V4hHc0FWSIY

    The indefatigable Peter Hitchens
    Excessive coronavirus fear has completely changed the country — Correct
    https://www.youtube.com/watch?v=E6bmHmZfw1U

    Someone standing up and pointing out the emperor has no clothes. TV news won’t admit they’ve been hyping up nonsense for months just for the entertainment value
    Piers Corbyn: “I’m not going to wear a mask at all… it’s complete madness”
    https://www.youtube.com/watch?v=awuCs33I338

    Nose & Mouth Masks – What about Eyes? Moist surface exposed to all in air

  13. . . . a wealth tax hits the inefficient investors harder than the entrepreneurial ones so ultimately money moves from the economically useless rich to the economically productive rich, helping everybody in the economy. Sort of a free market version of the Parable of the Talents.

    If you’re equating ‘efficiency’ with ‘rate of return’ – that is a mistake.

    Some people will choose a lower rate of return along with a lower risk – say people at or close to retirement age who no longer have the time left to make up a loss from a riskier investment profile.

    While younger people can afford a riskier investment profile, trading it for a higher rate of return.

    Neither is more ‘efficient’ than the other, the former would be eaten up by taxes in this system while the latter would be able to (barely) outrun them.

    So older investors would see their savings eaten up faster and faster as they age while younger ones would see lower effective return on their investments (leading to the need for high risk/high ROR investments) to both keep ahead of inflation *and* the taxman.

    Finally, it might ‘help everyone in the economy’, but it does so by screwing over part of the population – by literally stealing their hard-won money. It starts out with a presumption that I can kill you if it makes everyone else better off. Sure, that’s an exaggeration, but that’s still what the principle is. ‘Maximizing utility’ is horrifying when you’re getting into areas where you’re saying ‘let’s destroy portions of the population and give their stuff to other people because those other people will be made happier than the dead people will be made unhappy’.

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