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Economy think pieces
What Alistair Darling should have done Print E-mail
Written by Tom Clougherty (November 2008)   

In this think piece ASI policy director Tom Clougherty outlines his reaction to the Chancellor's pre-budget report of November 2008, arguing that Alistair Darling's so-called 'stimulus package' is really a manifesto for wasteful spending, record levels of government borrowing and public debt, and higher taxes in the long term. He argues Darling should instead have announced a substantial rise in the personal allowance balanced by public spending restraint.

 
A Flat-Rate Income Tax System - Just wishful thinking? Print E-mail
Friday, 16 November 2007

The idea of a flat rate income tax system is attractive, and the arguments in favour are well rehearsed. It is simple, transparent to the taxpayer and easy to manage, with low administrative costs; it enhances the incentive to work; if it is extended to investment income it encourages the saving and investment necessary to stimulate economic growth in a competitive global market; it attracts entrepreneurs from abroad to a business friendly environment; it provides the conditions for increased employment; counter-intuitively, and given a sufficiently generous non-taxable personal allowance, it favours the lower paid over the affluent; and it quickly leads to higher tax receipts that enable government spending elsewhere.

Flat rate income tax has existed for many years, but has only recently attracted widespread attention after its adoption, to good effect, by several East European countries. On the evidence, which is becoming extensive, there is little to object to and, yet, it is likely to be difficult to introduce such a system to the UK, principally for reasons of short-term affordability and popular perception. It is an unfortunate fact that, whilst the benefits of a flat tax have been widely discussed by a growing number of advocates, the considerable obstacles that could decisively frustrate its realisation in the UK have largely been ignored. These difficulties need properly to be exposed and addressed if flat tax is not to remain wishful thinking.

 
The consequences of economic ignorance Print E-mail
Written by Graham Cunningham   
Friday, 16 November 2007
Seventeen years on from the political assassination of Margaret Thatcher, her legacy seems to be an enduring transformation of our national economic fortunes. Her political courage was the sledgehammer that was needed to knock Britain out of its pathetic performance as a manufacturing nation. Seventeen years of media establishment vendetta however have sought to deny her any of the credit. This travesty of the truth has been made possible because there is in Britain a widespread ignorance of our economic history.


Self-delusion and decline

The hard fact is that our relative decline in manufacturing began right back in the second half of the 19th Century, as soon in other words, as better adapted societies like Germany and the USA began to compete with us. It had continued relentlessly ever since. No economic policies of either political party had ever made a jot of long-term fundamental difference.
 
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Words of wisdom

"There is no art which one government sooner learns of another than that of draining money from the pockets of the people."

The Wealth of Nations, Book V Chapter II Pt II

 

"What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable."

The Wealth of Nations, Book I Chapter VIII

Words of wisdom

"The natural effort of every individual to better his own condition... is so powerful, that it alone, and without any assistance, is not only capable of carrying on the wealth of society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operation."

The Wealth of Nations, Book IV, Ch V

 

"It is in the interests of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same, whether he does, or does not perform some very laborious duty, it is certainly his interest... to neglect it altogether"

The Wealth of Nations, Book V, Ch I, Part III


About the ASI

The Adam Smith Institute is the UK's leading innovator of free-market economic and social policies. Politically independent and non-profit, the Institute promotes its ideas through reports, briefings, events, media appearances, and its website and blog. For further information, click here.

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