Stop the piffle and get with reality, Laddie
A lawyer called Stephen Kinsella (and not the economist of the same name) takes to the pages of the Independent to demand he be charged higher taxes. The first response to that is, well, are you already paying higher taxes then, Laddie? As one of us was the first to point out in the UK - back in 2006, surely long enough for people to have noted - it’s wholly possible to pay more tax. Just send a cheque to the Treasury. If you’re doing that then perhaps your opinion might be backed by your action. If you’re not, well:
When the tax’n’spend brigade show us their thank-you notes, we should listen: until then we should ignore them and insist that our money remains, fructifying, in our pockets.
A second response might be:
One idea that will not go away is a wealth tax – this would be a tiny tax of 2 per cent on wealth over £10m, affecting a mere 20,000 people or 0.04 per cent of the UK population. It would generate a significant sum to the tune of £24bn a year.
Will millionaires leave the UK if there is a change in tax policy that might have an impact on the richest?
That’s not a tiny tax. The risk free return these days (gilts) is perhaps 5%. Before inflation that is. Upon which one of these decamillionaires will be paying 50% in tax (OK, 45%, but, simple maths). Take 2% off the capital sum each year as well and this leaves 0.5% nominal, or, a negative real return with inflation running well above 2%. That’s not a small tax - that’s wholly wiping out any income at all, it’s a 100% tax, not 2%. Of course there will be a rat run.
Then there’s this:
We are shown time and again how countries with higher tax rates and better wealth distribution are often some of the happiest in the world.
Well, that’s a testable proposition. The World Happinness Report is here. Of the top 10 happiest countries only one - Luxembourg, which as a city state is a little different - has lower wealth inequality than the UK. Those facts called into the argument insist that Britain is too equal to be happy.
And finally, if wealth inequality really is something you want to mither about you’ll be glad to know that it is already falling. Quantitative easing was a deliberate attempt to raise the value of assets. So that people would borrow cheap to produce those newly expensive assets and so prevent another fullblown Great Depression. Sure, sure, we can all argue about how well that worked but that was the idea. Then that we should tax the people doing exactly what government policy was trying to insist they do is the epitome of real, real, stupidity. But even if that does not attract as a statement of fact it is still true that we’ve raised interest rates again and asset prices are moderating. The FTSE100, house prices and the rest are all falling as multiples of real median income. Relatively, asset prices are falling - we’ve already done what is necessary to reduce wealth inequality. By, you know, raising interest rates.
So, Mr. Kinsella’s argument is some appeal to what he’s happy to do without any proof that he’s doing it. Followed by describing a 100% tax as tiny. With a claim that - contrary to the actual evidence - we’ll be made happier by doing something about a problem already solved.
Well, yes, eh? Stop the piffle and get with reality, Laddie.
Tim Worstall