We find that we’ve got to do that most unlikely thing here, agree with the Resolution Foundation. If you raise taxes then yes, you will indeed have raised taxes. Can’t really disagree with that point although whether it’s a good idea to increase taxes, whether these are the right ways to do so are more interesting questions we think. Possibly ones where the answer isn’t quite so obvious.
Hammond 'can raise £7bn a year by scrapping tax breaks'
Scrapping a break and raising taxes are the same thing.
Philip Hammond could raise an additional £7bn a year for the Treasury by scrapping tax breaks for the richest in society and tightening up existing wealth taxes, research from one of Britain’s leading thinktanks shows.
In a report prepared ahead of the chancellor’s government spending review, which is due later this year, the Resolution Foundation said that the additional funds could be raised to help finance the higher spending on public services needed to meet the demand of Britain’s ageing population.
Except, of course, it isn’t quite that simple. What they’re suggesting is that wealth taxes should pay for those desired services. Instead of ludicrous rates of income tax that is. And yet we do know something about taxes - all have deadweight costs. That is, the ill effects upon the economy from the simple existence of the tax. And wealth taxes have greater such effects than income.
What this tells us is that if spending would need to be financed by unsupportable levels of income tax then the financing of that spending is even more ludicrously damaging if done through wealth taxation.
The Resolution Foundation warned that, should the government opt to fund the increase through income taxes, the basic rate of income tax would need to rise from 20p in the £1 to 39p.
The very insistence that 39% is an insane starting rate is the proof we need that wealth taxation ain’t the way to do it either.
All of which underlines a point we’ve been making for decades now. We can’t afford the welfare state we’ve already promised ourselves. That’s exactly why they’re all shouting that taxes must rise to fund what we’ve already promised ourselves.