You might have missed yesterday’s editorial on inflation in the Guardian. This said:
Why should ordinary households be made poorer when a few groups operating at the top of the economy are driving so much of the price pressure?
The obvious solution to this would be for the Bank to ease off on interest rate rises and for the government to tax high earners. It is usually said of taxes on the rich that they don’t raise much money, but the objective here would be to dampen inflationary demand. The cash it would yield could go towards investing in green energy, so as to make the UK less reliant on rollercoaster fossil fuel prices. Higher taxes are unpopular – when they are on you. When they’re on someone else, on the other hand, they can be quite acceptable. If Mr Sunak is appalled by the idea of taxing his former workmates in the City, perhaps one of his opponents might take it up. Did someone mention the shadow chancellor, Rachel Reeves?
I do, of course, agree with the sentiment. Why not tax the wealthy more?
As Spud, his own glirousness, has been known to note. Taxing high earners doesn;t change their consumption. Because they earn enough to save. So, tax them more and they save less and maintain their consumption.
But it is consumption spending that drives inflation, not saving. So, taxing the rich more doesn’t reduce inflation. And that really is derived from what Murph has already told us.