In considering a policy idea we do require some sort of litmus test. Some ideas can and should be considered, carefully. Others fall foul of a simple test and can simply be rejected out of hand. So, where does that 5% tax on wealth proposed by Associate Professor Advani sit? Well, we’ve just got our litmus test failure:
That gives Labour space to offer far more ambitious proposals. There is already a ready-made blueprint, developed by tax experts in 2020: a one-off wealth tax on millionaire couples paid at 1% a year for five years, they found, would raise more than £260bn. One of the architects was a tax expert whose job was to help wealthy clients navigate around tax law; their entire plan was developed by trying to prevent the rich seeking out loopholes.
Finding your economic proposal being praised by Owen Jones is as with being a couturier and waking up to realise a Love Island contestant has just declared your collection to be “really stylish.” The absolute death knell for any possible future serious consideration of what you’ve been doing – for you’ve clearly just managed to hit that very peak of naff populism.
As to why, here’s what I said to the Commons committee considering it:
The other thing that has just struck me is that people are talking about retrospective one-off wealth taxes. One-off wealth taxes are not all that good an idea simply because, once it has happened once, absolutely nobody is ever going to believe that it will not be done again. That is just the way people react to Government doing things. Currently, if the Chancellor stands up and says, “I am raising income tax,” then everybody has a choice to say they are going to go to work or they are not going to go to work, that they agree to pay that tax or they do not agree to pay that tax.
A retroactive tax is an appalling idea. It is akin to theft. Roy Jenkins did this in the 1960s. He retroactively imposed a 130% tax at the top end of capital incomes on the previous tax year that was already closed. That is just appalling behaviour. However much Government need the money, that is just not what we should be doing. Tax, just like any other form of law, should be, “It starts today. If you do not agree with it, you can change your behaviour in the future to avoid it and not do the activity, whatever.” I regard taxing people today on what they did last year, changing the law on them, as an appalling breach of civil rights.
So, it’s a vile idea to start with. Then we also get into the nitty gritty as described here, in written evidence.
It’s even possible to produce a little example of why it’s such a lousy idea. Every middle aged doctor will be hit with a £50,000 tax bill. Because the only way that it gets anywhere near to that £260 billion number is if it’s on pensions, houses and financial assets. So, that medical pension gets hit – you know, the ones already taxed so far over the Laffer Curve peak that they’re all retiring in droves?
Oh, and the manner of stopping avoidance? As in the why it’s vile – they’re just going to come steal it. It’s a retroactive tax. Theft.
But all of that is morals, economics, mature consideration and all that. Fortunately, now that Owen Jones has signed on to it we don’t need any of that. Associate Professor Advani’s idea is backed by Owen Jones. Therefore we know that it’s a bad idea. QED.
…a one-off wealth tax on millionaire couples paid at 1% a year for five years, they found, would raise more than £260bn…
Will the fragrant Mrs Sunak be having a quiet word in hubby’s shell-like? Maybe to suggest exemptions for recently-promoted politicians and their spouses?
Well yes Davidsb. You only do these sorts of things to other people.
Anyone can call themselves ‘associate professor’ or ‘adjunct professor’ it has absolutely no academic significance.
“Tax, just like any other form of law, should be, “It starts today. If you do not agree with it, you can change your behaviour in the future to avoid it ”
Umm how does that fit in with changes to the new laws that are coming in on tenancies then? The law doesn’t say ‘It starts today with all new tenancies signed after this date’ does it? No it changes the rules on the fly – people who signed contracts freely find the terms of them are changed and there’s nothing they can do about it. I didn’t see you jumping up down about that bit of retrospective legislation.
Didn’t know about it. Contrary to appearances I’m not omniscient.
The trouble with these supposedly disastrous economic ideas is the regularity they end up as Tory Government policies in remarkably short order. I’m sure the Treasury has a complete & well thumbed set of Professor Murphy’s seminal works.
My point is that governments quite often pull the rug from under people’s feet retrospectively. To say that a retrospective wealth tax was somehow breaking an unwritten rule of government is just not true. They pull this sort of sh*t all the time.
Jim is right: retrospective changes to your property rights are just theft. Tim is right: retrospective taxes on anything are theft. And I say this as someone who despises the idiocy of claiming that all taxes are theft.
Denis Healey pulled off a retrospective change to the forerunner of Inheritance Tax – the dead being unable to change their wills, ha, ha, ha. But then he was an ex-Commie. At least he claimed to be “ex”.
Millionaire family is a pretty low bar isn’t it? I read the Wealth Tax Commission summary and yes, they mean everything. Place of residence, pension, the lot.
Ok, converting into the Pacific Peso makes that about $A1.8m. Still hardly a fortune. The missus and I are at about $A1m of various assets (lots of course locked up in superannuation i.e. pension pot) with 15 or so years to go to retirement and we’re still worried about building that up enough. Pinch 5% of it? They must be joking.
BiS: ‘seminal works’ because they’re a load of wank?
By the way, isn’t ‘Owen Jones is a Wanker Day’ coming up shortly?
All wealth including property? What do they expect me to do, slice off the end of the kitchen and sell it to pay this year’s tax? Then next year, what? Demolish the garden shed and sell it off? Then the next year, what? Strip out the copper wiring? “Property” is very quantum in large quantas, you can’t slice bits off in tax.
jgh: Indeed, even the Islamic wealth tax (zakat) takes that point on board with its (rationale for the) exemption for gem stones.
When all the luvvies discover that they will be affected, watch the massive back-pedalling and leaving the country.
Especially the likes of Billy Bragg, with wealth but little income. That would be worth watching.
” I read the Wealth Tax Commission summary and yes, they mean everything. Place of residence, private pension, the lot.”
Fixed it for you.
Not state pensions or your Civil Service pension, naturally……..