back to article Tax Systems: The good, the bad and the completely toot toot ding-dong loopy

A loyal reader of these 'ere pages, Rich Bryant, writes in with an interesting question. There's a proposal for an entirely new taxation system out there, The Reset, and is it something that mainstream economists are ignoring because the paradigms of mainstream economics just cannot deal with it - or is it because the plan is …

Silver badge
Big Brother

"Tax and tax, spend and spend, elect and elect!"

If We Only Spent All the Money, Then Everyone Would Be Prosperous!

On the front of today's New York Times business section is a remarkable—or should I say remarkably unremarkable—news article whose entire premise, unchallenged in the course of 1,341 words and input from 10 sources, is that more government spending is a very good thing because it leads to more government jobs and therefore helps the economy. Hooray! (...)

Credit where it's due: As government-spending euphemisms go, "preserving the wow factor" is surely in the Top 20...

I have only four questions for the NYT and those who agree with its premise that the more government spends, the more prosperous we are:

1) Why were states not measurably more prosperous after increasing government spending by more than 80 percent in real terms between 2003 and 2007?

2) Between the time of Bill Clinton's last submitted budget of $1.8 trillion, and Barack Obama's first submitted budget of $3.6 trillion, did the average American become more or less prosperous?

3) The United States after World War II, Canada in the 1990s, and Australia in the 1980s all became significantly more prosperous—despite ample warnings to the contrary—after cutting, not increasing, government spending. Wha' happen?

4) Is there a ceiling on what percentage of GDP the government should account for, and if so why should there be one, and where should it be?

11
7
Silver badge
Coat

Re: "Tax and tax, spend and spend, elect and elect!"

I sometimes think Americans have an inbuilt ability to forget how much and who pays for the military and wars.

10
1
Silver badge

Re: "Tax and tax, spend and spend, elect and elect!"

Lars, it seems you're not familiar with Reason. They are quite aware how much and who pays for the military and the associated costs of universal militarization.

0
1
Silver badge
Happy

Re: "Tax and tax, spend and spend, elect and elect!"

@Eddy Ito. I am not sure how to read your comment, thanks for the links anyway. My post was an effort to be kind and thoughtful in not pointing out that the sentence "time of Bill Clinton's last submitted budget of $1.8 trillion, and Barack Obama's first submitted budget of $3.6 trillion" has a sting of amnesia as there was Clinton and then something happened before Obama that was not mentioned for odd reasons I cannot understand. Oh well.

7
1
Silver badge
Pint

Re: "Tax and tax, spend and spend, elect and elect!"

Ah, I see. As a fairly regular reader of Reason I took it as less amnesia and more a double shot of rubbing noses in it. Specifically to the red team in the sense of "it wasn't there before and it didn't suddenly get there by magic so what happened to the small government thing" and to the blue team "just because the government spends money doesn't make it a magical cure all". Granted as a response to the NYT it was most likely a direct jab toward the blue team but has the benefit of smacking down any smirking by a member of the red team.

0
1
xyz

Re: "Tax and tax, spend and spend, elect and elect!"

>>is that more government spending is a very good thing because it leads to more government jobs..

More government jobs leads to more tea drinking, pension hungry, lard arses who immediately leggit to HR screaming "STRESS!" if anyone asks them to do anything.

Just my 2 cents (ex VAT)

Tax is like the clap...best avoided

3
2
Silver badge

Re: "Tax and tax, spend and spend, elect and elect!"

>after World War II

A little clue in there. Taxes fell after the war spending ended, and productive activity started again.

1
0

Re: "Tax and tax, spend and spend, elect and elect!"

Well, yes, but the definition of productivity shifts during wartime. It would hardly be fair to say that the war effort wasn't productive.

1
0
Silver badge

I wonder

if before we start changing how tax is collected, we should ask why?

I mean, you say collect tax like it's a good thing... but given that taxes collected from me are theoretically spent for things that benefit me, should we not first be having the conversation about what benefits I actually get?

Don't get me wrong; I do think that governments provide benefits - but it's not always clear what they are; nor how big they are: for example, is HS2 a benefit? Spend £45B and encourage, what? People to live further away from London? The ability to 'work' on a train for a shorter time? When only two hundred years after inventing the bloody thing the fact that train companies are pricing to avoid customers suggests that encouraging more users may not be the best approach.

But that was just an example; it gets worse. Every year the Chancellor gets on his hind legs and brays about 'and this will raise a million pounds', 'this will save half a billion', 'reduce tax by a penny in the pound', 'save the average family two pounds a week'... they're all numbers without context, and it's rather tricky for the average bloke on the street to find the actual numbers and how they relate to the real world.

Every few years we are asked to decide which set of politicians we'd like to lie to us for a while, based largely on financial predictions they make which we are unable to judge and which do not bind; we know neither whether they speak sense nor whether they will hold their word. It's madness.

23
5
Silver badge

Re: I wonder

HS2 frees up capacity on the West Coast Mainline for more local train services, so that the commuter trains for people who live to the north of London are less overcrowded.

11
7

Re: I wonder

I deliberately try to avoid this very conversation in the piece.

A rough estimate of average deadweight costs is 30 % or so. Every £100 we raise in taxation destroys £30 of economic activity.

Hmm. Well, I'm certainly convinced that the value of a criminal justice system is higher than 30% of the amount of money we spend on it. So, that would be justified spending.

I'm deeply unconvinced that the value of spending £100 on diversity advisors is greater than £130.

Some things government does are very definitely worth the costs of raising the tax to pay for it. Others not so much: but as I do say in the piece, that's an argument for another day.

14
0

Re: I wonder

Part of the problem is that there is very little "we" in it. The state can take money from whomever and wherever it choses and spend it on any thing it likes, moderated only by fear of riot or electoral defeat at some future date.

This is one of the key areas which the Harogate Agenda bods are seeking to address (see R North/EU Referendum, etc.) by putting the government's budget to popular vote for approval. Little chance of success of course - too many people with a vested interest in the existing rotten system.

8
1
Silver badge

Re: I wonder - North London commuters

True - but £42 BEEELION seems rather a lot to pay to let commuters avoid breathing sweaty armpits. Wouldn't buying a few more coaches for the commuter trains be a bit cheaper?

10
5
Silver badge

Re: I wonder

Tax destroys economic activity. Government spending creates it, and some forms of spending create more than others.

2
6
Silver badge

Re: I wonder - North London commuters

No actually, it isn't, because that requires longer platforms, which depending on the layout of the station, and other stuff round about it, ranges in price from moderately expensive to virtually impossible.

7
1
Silver badge

Re: I wonder - North London commuters

Double decker trains as commonly used in the rest of Europe?

4
4
Anonymous Coward

Re: I wonder - North London commuters

tunnels?

3
0
Silver badge
Coat

Re: I wonder - North London commuters

"Double decker trains as commonly used in the rest of Europe?". I think a big (expensive) problem in the UK is all the low bridges you run under.

6
0
Silver badge

Re: I wonder - North London commuters

It would cost more to upgrade an existing line to take double decker trains than build a brand new line. HS2 will be built to continental loading gauge so will be able to take double decker trains.

Another problem with double deckers is that it takes a lot longer for people to get on and off, so they have to wait longer at each station.

6
1

Re: I wonder - North London commuters

JohnathonB,

I can only hope you've never tried to eat Pringles from a tube. It must have been terribly wasteful. After all, with you were stumped at not being able to eat more once your hand couldn't reach them, there was likely 3/4 left!

Fortunately, the rest of us simply move the tube and slide the contents up, so bringing them in reach.

Which might provide a clue for how to add 'extra' platform at the short stations.

Those where you can chuck a few hundred tonnes of concrete down would be fine, of course - and far cheaper than £45 billion!

5
8

Re: I wonder - North London commuters

@ Lars "problem in the UK is all the low bridges you run under"

A fine point. The East Midlands line is gradually being electrified and even this requires substantial works on bridges and tunnels to fit train plus overhead lines.

The problem the UK rail network has is that it survived the war largely unscathed - so no need to rebuild as happened across Europe. So we have a network designed for steam engines carrying masses more than it was ever designed to do.

5
0

Re: I wonder - North London commuters

Yetanotherlocksmith

did you ever see what happens when you try and fit, say 3 tubes worth of pringles in 1 tube...

it aint pretty.

now think commuters.

and about that 'few thousand tonnes of concrete'... we want to put it in your front garden, is that ok?

5
2
Anonymous Coward

Re: I wonder - North London commuters

Ok, a Little history lesson might be in order here.

Only TWO sets of double decker trains have been used in the UK. These were built for exactly the reason people are suggesting them now. i.e. More bodies per carriage.

They ran on the lines into Charing Cross and were losely based upon the 4-SUB multiple unit designed by O.V. Bullied, the CME of the Southen Railway. They were class 4-DD (no bras size comments please.)

http://en.wikipedia.org/wiki/SR_Class_4DD

for a picture of one.

The reason why these failed as will other suggestions for using Double Decker trains in the UK is the size of the loading gauge. The UK one is smaller than the UIC Gauge used in Mainland Europe.

The only UIC Compliant line in the UK currently in use is HS-1.

The old Great Central line from Marylebone to Sheffield was built to continental loading gauge but most of this was cut by Beeching. The Woodhead line from Manchester to Sheffield was built to this standard.

So we could use DD trains on HS-1 and HS-2 and HS-3 if they ever get built BUT those trains would probably NOT be able to use the rest of the network.

We currently use 12-coach trains on the WCML and on the SR 3rd rail network. Going longer is just not an option because the stations just don't have long enough platforms.

Network Rail is spending millions extending Waterloo platforms 1-8 to take 10 coach trains. 12 is jut not possible without a totally new station.

We could improve the frequency of trains but most current signalling systems are limited (for obvious safety reasons). Until we move the whole network to ETRMS and moving block we are stuck with basically a Victorian network.

IMHO, we should build HS-2 and HS-3 without delay OR OR OR

make more people telecommute.

10
0
Silver badge
Unhappy

Re: I wonder - North London commuters

Wouldn't buying a few more coaches for the commuter trains be a bit cheaper?

Figuring out how to save them having to make the journey would be even better. I have to travel 60 miles to get to work (albeit the hour on the train is actually quite pleasant thanks to Chiltern). Yet I have everything I need at home. Okay not everyone does but how about investing in local rentable offices for all major towns. It seems silly to me that any office worker has to travel more than five miles to get to a desk they can use.

3
0
Anonymous Coward

Re: I wonder

Personally, I do not feel that Reset goes far enough. An automated payment transaction tax as defined by Professor Feige is even better, see

http://en.wikipedia.org/wiki/Automated_Payment_Transaction_tax

This proposal would automatically tax ALL transacations (mostly electronic anyway) by 0.35 % (to be paid by buyer and seller) and abolish all other forms of tax, which are usually wasteful to collect, unfair and a major drag on the economy.

This tax would apply to every transaction from multi-billion stock market deals to a pack of chewing gum. No more income tax, no more death taxes, no more VAT, no more capital gains, no more sin taxes. The thousands of paper tiger cuts that kill us all a thousand times daily would disappear.

Not to mention the constant bickering about who gets to tax the book you purchased on Amazon.

Of course HRMC, the IRS and tax accountants, tax lawyers and other useful members of society would need to re-train.

To counter the avoidance problem, Feige proposes that all cash withdrawals be taxed at 0.7 % whenever the cash leaves an ATM or is deposited into a bank. This effectively destroys any incentive to avoid electronic transactions, which are far more convenient anyway. It means everyone gets taxed the same based on their consumption, even the underground economy. Even better, people could spend their money in complete anonymity, without worrying about who is peeking into their private affairs.

If the 1.5 trillion of UK GDP was taxed once a year at 0.7 % that would already equal 105 billion in tax. In fact, the revenue would likely be much higher after all individual transactions were factored in. It would surely be enough, probably too much.

In an electronic economy, you have to wonder why we continue taxing only those things that cannot easily escape the King's men, such as land, property, salaries and purchases. This is the system used since the first protection rackets were exerted on pastoral economies by their better armed rulers . This same antiquated approach was then transferred to feudal and capitalist economies. Why are we still doing this today?

I would say it is high time for a reset and a complete reformat of the entire tax file system. APTT is a good way to do it, TIm, and deserves a better hearing than you have given Reset here.

2
10
Silver badge

Re: I wonder

I pay for stuff with my credit card, a taxable transaction, then at the beginning of the following month, pay of the credit card, another taxable transaction. I could half my tax bill by paying by debit card instead.

Lots of companies in other countries have money in UK banks, so much so that more Euro denominated transactions take place in the UK than in the rest of the world put together, and more US Dollar transactions take place in the UK than in any other country. Those companies could reduce their tax bills by not using British banks.

Then I don't think you will find that 0.35% is anything like enough to cover the government's budget.

3
2
Anonymous Coward

Re: I wonder

@jonathonb,

There are a helluva lot more transactions going on in the economy than your credit card bill, mate. 0.35 % x 2 on every single transaction every day adds up to a lot.

Read the paper, do the math.

http://apttax.com/

1
4
Silver badge

Re: I wonder - North London commuters

make more people telecommute.

I'd be happy if I was allowed to telecommute, even just a couple of days a week.

1
0
Silver badge

Re: I wonder

So I arrange my affairs so I buy everything through my employer.

At the end of each charging period, they calculate my total expenditure, subtract it from my salary and pay me the difference minus the transaction tax.

Their suppliers do the same.

To minimise tax liability all you have to do is bring income and outgoings as close as possible.

The logical result is a massive monopoly - not just for one product, but for all products, and to charge your employees so much that their take-home pay is zero.

2
0
Silver badge

Re: I wonder

Indeed there is, but the point is that most of them could be avoided if there was a reason to avoid them.

1
0

Re: I wonder - North London commuters

You might want to try a switch over the economic commentary. I wrote this piece in Portugal and am adding comments from the Czech Republic.......

:-)

0
0
Silver badge

Re: I wonder @Ilmarinen

The state can take money from whomever and wherever it choses and spend it on any thing it likes, moderated only by fear of riot or electoral defeat at some future date.

Unfortunately, it's not even that good.

Most of those deciding what the state will do, where it will raise money, and what it will spend are wholly immune from the electorate. Civil servants are in jobs for life, the same with much of the public sector.

There are only 2 ways we'll ever see an increase in efficiency - 1) Reduce taxes to such a low level that they have no choice but to cease certain activites. 2) Cap the length or service within the public sector to 10 years within a working career, thus ensuring a continuous supply of new ideas, and removal of roles for which there is no real world equivalent (obvious exceptions will have to apply such as medical specialists etc, but for paper shufflers and those at HQ it's workable).

Neither of those options would be at all palatable to much of the electorate, so we persevere with the public sector growing less efficient every year, trying to do more and more, and soaking up an ever larger share of the nations wealth to feed itself. Riots & elections don't touch them.

4
1
Silver badge

Re: I wonder @AC

To counter the avoidance problem, Feige proposes that all cash withdrawals be taxed at 0.7 % whenever the cash leaves an ATM or is deposited into a bank. This effectively destroys any incentive to avoid electronic transactions, which are far more convenient anyway.

This obviously won't work, and I'd hope you already know why.

0.35% transaction tax at either end, and you want to tax cash withdrawals at 0.7%. Great, I'll just transact in cash and refrain from depositing it. Sure, you get 0.7% of the cash as tax, once only. After that I continue using cash for all daily expenses and you never see a penny of it. I get paid cash by people I do cash work for, and pay cash for products or services consumed.

I may not be able to wholly avoid the tax using the above, unless I am prepared to buy and sell goods face to face for a living, in which case my tax rate will be pretty close to zero. As a professional, my salary might get taxed in part, but I'll just sit on as much of it as I can in order to avoid taxes becoming due on it.

My mortgage payment is about £1400. To have that money to pay the mortgage with I have to earn £2414 before tax. £1014 being paid in tax on the part of my salary that pays the mortgage. Your tax will raise only £85. The state is going to have to cut back a helluva lot to recoup that through efficiency - I believe in a small state, just not that small!

1
0
Anonymous Coward

Re: I wonder @LucreLout

Why would you want to take your mortgage payment underground ?

I don't think you get this idea at all.

If you withdrew cash at 0.7% and can convince everyone you deal with to take cash forevermore, you may indeed save 0.35 % on each transaction. But the first person who puts that money back into the bank will have to pay 0.7 % tax. He might prefer to just pay 0.35 % instead. Particularly, if he is a cheapskate like you and can't convince the electric company to take your greasy notes.

Nor do I think your bank manager will be too happy with that arrangement either, since he will lose out everytime he deposits your cash.

I also don't think the news agent will think saving 35 cents on every 10 dollar purchase (his only tax payments) is worth the risk of keeping a box full of used notes under the counter, just so you and he can avoid a 0.35 percent contribution.

Do you think Amazon and Ebay are going to implement a "cash only" policy where everyone can send brown envelopes to a cash handling center? I don't think so. They are close enough to the 0.7 % taxation mark as it is.

I suggest we use Tim's 3 way yardstick instead, to dissipate arguments like "everyone will just use cash".

1) Efficacy. I admit the jury is still out until this is put into practice, BUT, Feige estimates that 70 % of US GDP is personal consumption. Tax that at 0.7 % and it indeed becomes a shedload of money. My calculator breaks when I use the entire number so let's try per capita figures instead.

In 2013, US GDP was 53,142.89 USD per head. That is 37,200 USD of personal consumption per person.

Multiply that by 0.7 % (buy / sell) and that becomes 2604 USD x 316,100,000 people which becomes 823,124,400,000 USD in tax revenue.

823 billion dollars is about 15 % of the 5.4 trillion USD the US took in in global tax revenues in 2013.

So yes, at first view we do have a BIG shortfall.

However, this assumes that everyone is making only one transaction a year. And we are not taxing stock transactions in the above figures.

On Jan 2 2015, the NYSE had a total trade volume of 33,253,336,431 USD.

Taxed at 0.7 %, that would collect 2,327,733,550 USD in tax for just ONE DAY (YES, 2.3 BEELION dollars). I think this will help cover the shortfall nicely, but someone else should check because I am getting RSI now.

Ah to hell with it, lets do the math. 2.3 billion times 180 working days = 414 billion.

No wonder no one wants a Tobin tax. But we are now up to 1.5 trillion in revenue. Still not enough for 2013 right?

The underground economy (i.e. you and your merry men) would also have to pay tax every time it injects or removes money from "legit" payment systems. Some estimate that the shadow economy represents 2 Trillion dollars a year. SO 0.7 % of that would reap quite a bit as well. Let's go for broke and say another 140 billion, since every little helps. Now we have 1.64 trillion

Today, 65 % of US businesses and 45 % of US citizens effectively pay no taxes at all after loopholes, subsidies and transfer payments are calculated. When they start paying something and perhaps receiving less handouts, money will flow in, but more research is needed to see how much that non-payment really amounts to. So we don't know yet.

And what is 30 % loss on 5.4 trillion again? I get 3.8 trillion left over. 3.8 - 1.64 = still 2.16 trillion short. So we are getting a little closer. Maybe we will have to cut down on government spending a bit or do this more progressively, starting at the state level first. Perhaps a few less global wars, less bailouts and a balanced budget will help.

More figures please:

Social Security, Medicare, Medicaid and DOD spending represents around 65 % of federal spending, which is a lot. 24 % of that is spent on administration. So there is much work to do.

Also note that the total revenue gathered for 2012 was only 4.9 trillion (as opposed to 5.4). As we gather more, there is a tendency to spend more.

If people suddenly find they have more disposable income when they no longer pay income tax,land tax, fuel tax, sales tax, etc. (not to mention having more free time after binning their tax forms) won't they go out and spend a bit more ? I'm guessing yes. The result would be more tax revenue.

So I will concede that the jury is still out on Efficacy. But you must break eggs to create omelettes, and omelettes made from freshly printed QE notes don't taste as good they used to.

2) Efficiency. This one is my favorite. If the transaction tax was levied at every sale, from every till, every credit card or paypal transaction and every bank transfer and then instantly pushed into the state's bank account, much goodness could arise.

Let's look at a few of the benefits:

No need for tax declarations, tax audits, tax inspectors, printing of those cute little stamps and forms, no large bureaucracies to make sure everyone pays their "fair share". Not to mention the disappearance of the enormous mountains of regulations that businesses and individuals must wade through every year. If all that went away, I would humbly suggest that tax collection would be mightily more efficient, and not with the 30 % loss rate quoted by Tim.

Face it, a system that must keep track of which tax rates apply to Jaffa cakes is not efficient, it is a fucking joke.

So one out of 2 isn't bad and less loopy than we might think

3) Equity. People will argue until they are blue in the face about this, but most would agree that consumption taxes are about as fair as it gets. Everything else has been legislated and lobbied to death or designed to ensure that one set of taxpayers loses out to another (usually the middle class). Don't forget the loss of human potential, dignity and faith in government that comes with each new tax hike or "favor".

A 0.35 % tax on stock trades might seem unnecessary and harmful to some. However, if the brokerage and traders no longer need an army of accountants, tax lawyers and the constant fear of audit, they may actually come out ahead. Brokerage fees will be taxed at 0.35 %, as well.

Today, people on low incomes and small businesses pay an inordinate amount of tax vs income and also contend with Vat rates of 20 %. The very wealthy pay hardly any tax at all in comparison. This isn't fair and even the rich know it isn't fair.

If everyone pays a little bit every time they buy something, no one is going to argue about tax disparities because everyone will have to pay every time they consume, including the Pentagon, the NHS and all other bureacracies living off the working man's back. What could be fairer than that?

I'd say 2 out of 3 ain't bad, your flames and comments are welcome

0
5
Silver badge

Re: I wonder @LucreLout

Why would you want to take your mortgage payment underground ?

I don't think you get this idea at all.

You either didn't read or didn't understand my post.

Small transactions would get taken underground. the mortgage payment example I used applied your full tax rate upon, and found it lacking more than 90% of the tax currently gained from the application of income taxes. Where do you propose that can be made up from?

The rest of your post is predicated on the flawed assumption that people won't use cash between themselves for as many payments as are possible, so I've ignored it for the purposes of this reply.

3
0

Re: I wonder @LucreLout

823 billion dollars

Err, 82 billion dollars. it's 0.7%, or x0.007.

"2) Efficiency. This one is my favorite. If the transaction tax was levied at every sale, from every till, every credit card or paypal transaction and every bank transfer and then instantly pushed into the state's bank account, much goodness could arise."

That's not the meaning of efficiency we're using. Rather, we want to know how much of other stuff would levying the tax in this manner screw up.

"On Jan 2 2015, the NYSE had a total trade volume of 33,253,336,431 USD.

Taxed at 0.7 %, that would collect 2,327,733,550 USD in tax for just ONE DAY (YES, 2.3 BEELION dollars). I think this will help cover the shortfall nicely, but someone else should check because I am getting RSI now."

The EU estimated that a Tobin Tax of 0.1% (and 0.01% on derivatives) would shrink the economy by something like 1%. So we've just decided to reduce the collective incomes of all americans by 7% just by and only by, applying this tax to hte NYSE.

It's not a great recommendation for it.

5
0

Re: I wonder

But is it really deadweight? In order for the money raised to be actually useful, it has to be spent and it is, both through wages and purchases, rents, etc. Government pays staff who buy cars, groceries, etc. Government needs a cruise missile, it buys one and so on. Arguably government is very good for cashflow revenue and turnover in a way that savers (who lock up capital), are not.

0
0
Silver badge

Re: I wonder

@ Riku

"But is it really deadweight? In order for the money raised to be actually useful, it has to be spent and it is, both through wages and purchases, rents, etc. Government pays staff who buy cars, groceries, etc. Government needs a cruise missile, it buys one and so on. Arguably government is very good for cashflow revenue and turnover in a way that savers (who lock up capital), are not."

So the gov is good because it takes money off people in case they might save it (maybe for their security) and instead works on the assumption that it can spend it better than we can (e.g. expenses, jollys, their own pay rises, pet projects, back handers and of course finding new ways to rob the population)? However there is the cashflow issue that when they stuff it in their own pockets and horde it, or when they spend it on pet projects which often requires paying foreign companies to deliver.

Maybe if that money was in the hands of the population there would be more spending.

1
0
Anonymous Coward

Re: I wonder @LucreLout, my bad

Fair enough on the numbers and bad percentage calc. I admit that my head gets a little dizzy when doing the sums.

I still believe people like Feige and Reset have much to contribute to these debates. At least someone is seeking alternatives to a system that taxes very inefficiently when it isn't also taxing unfairly. Automation, automation could be the answer.

I agree that Piketty's 80 % tax on the super rich will not solve the problem either. However, dismantling the maze of regulations that protect the super rich and many others would at least be a start. We need something simpler. The APTT at least deserves a good look. We can hardly make things worse.

The beauty of APTT is that as long as you are buying things you will continually pay into the state's coffers. VAT is a poor substitute because the end user pays it all.

With APTT no one needs to chase you, or keep building intricate new rules to take more money away from those still willing to pay or unable to move countries. A tax that is hard to escape, in sum.

Nor should this be confused with a robin hood or Tobin tax. If all transactions are taxed to replace the many other taxes used to extract feathers from the goosed economy, than it is clear that stock transactions would need to be taxed as well. Maybe a 1 % hit is the price we will need to pay to release more liquidity into the economy and reset some counters.

The real question for me is this: what system will allow money to better flow through an economy and benefit the most players?

A complicated, wasteful system where people with the best tax lawyers and lobbyists benefit the most and throw scraps to everyone else? Where unearned wealth accumulation is the best and safest strategy to the detriment of everyone else?

or

A simpler system where smaller players can build up their wealth too?

The over-concentration of wealth into too few hands has repeatedly and historically been a recipe for revolution, economic calamity and societal breakdown. We are all skating on some very thin ice here.

Resetting the roulette wheel has many attractions. Doing more of the same does not.

0
2

Re: conversation about what benefits I actually get?

No. This exactly the point where discussions about taxes go awry. Phrased the way you did, it becomes a power struggle to see who can shaft the other guy the most often and most deeply.

The accurate question is "what benefits does society get, after taking into account moral hazard?" Granted, you're not going to get a whole lot of agreement about this, but it is what is essential. So as a rule of thumb, I'd say you practical definition is 70% of the people agree it is an appropriate expenditure for government to undertake. I'd prefer 90%, but realize that even 70% is a difficult number to achieve. What we most certainly do NOT want is for it to be 33% or less, which seems to be the experimentally determined percentages these days.

1
0

Re: convinced that the value of a criminal justice system is higher

I'm not. Granted, I'm a 'Merkin so its a bit different over here. OTOH, we adopted most of the bits that have led to this problem from you Brits*, so it seems likely to apply to you as well.

I'd concur with the sentiment that it ought to be. So that gets more into the question of exact governance, which is admittedly outside the scope of this article.

*No I don't mean the bits we kept in 1776 like common law and how the rights initially granted in the Magna Carte evolved over time.

0
0

Re: government's budget to popular vote for approval.

I don't see that you'd get much change even if it were put up for popular vote. The voters select the people passing the taxes now. Their as likely to fall for the same lies on the tax vote as they are on the representative election votes.

0
0

Re: that requires longer platforms

Why?

Why does the entire length of the train have to be on the platform? Why not simply have longer trains and change the doors at which people will be loading and unloading? I've never understood this.

Granted I'm not in the UK, and here in the US commuter trains are what passes for passenger trains in Europe, but when we pull into certain stations, the conductors announce which doors will be used for loading and unloading. Most stations they open two sets of doors, a couple they only open one.

0
0

Re: helluva lot more transactions going on

You seem to have completely missed his point. That may be true NOW, but it won't be if your rules go into effect. Figure on keeping 1 in 10 not losing 1 in 10.

1
0
Silver badge

Re: I wonder @LucreLout, my bad

Where unearned wealth accumulation is the best and safest strategy to the detriment of everyone else?

Its amazing how hard I had to work to earn the wealth that generates the "unearned" income I derive from it. The money I save to invest in assets is no detriment to anyone else as it is being put to work in the economy as loans, shareholdings in companies needing to raise moeny for capital projects to grow their revenue (and thus the economy).

Maybe a 1 % hit is the price we will need to pay to release more liquidity into the economy and reset some counters.

Your thinking is clouded and irrational because you are trying to achieve political aims (your much beloved reset of other peoples rightfully held and oft earned wealth) with changes to the tax system to garner a higher tax stream.

The APTT at least deserves a good look. We can hardly make things worse.

It's been looked at and dismissed as bunk by greater minds than you or I. It doesn't work, couldn't work, and absolutely definitely would make things worse. Much worse. Tax revenues would collapse and the public sector would go unfunded. While they may like to speak the language of saints & martyrs, very few of our public servants would still be showing up 12 weeks after they were last paid to do so.

Think of it like this, if I can come up with workable means of avoiding the tax, then the tax doesn't work. I'm not an accountant, though I have worked with some of the best the tax arbitrage industry has to offer. APTT takes no more than 30 seconds to dismiss due to the existence of cash, offshore entities, and alternative tax jurisdictions.

1
1

Incentives matter

VAT is currently 17.5%. Most people avoid it occasionally; most people do not bother avoiding it most of the time; no-one avoids it all the time.

Could someone explain why a rate of 0.35% will have such stronger incentives than 17.5% that it would induce everyone to put up with massive inconvenience in order to avoid it absolutely all the time?

0
0
Silver badge

Re: Incentives matter

"Could someone explain why a rate of 0.35% will have such stronger incentives than 17.5% that it would induce everyone to put up with massive inconvenience in order to avoid it absolutely all the time?"

Oh the days of 17.5%. So long ago and almost forgotten. I cringe now when I see 20% when I already considered 17.5% added to the price of pretty much anything (bar a few random exemptions) to be daylight robbery of customers. And the brain dead Gordon Brown reducing it temporarily to 15% as if the gov was doing us a favour by not slapping us as hard as previously. But of course having that extra kick in the teeth by pushing it up to 20% doesnt make me feel happy.

It is interesting that tax rarely goes down but often goes up. It is interesting that people consider rising tax or creating new ones as a good thing. It is terrifying to think some of these people graduated from an education system.

1
1

Repressed memories.

You know, I knew it was 20% now, but had somehow blocked that information from my mind when I was writing my earlier comment. The truth must have been too traumatic to confront.

> as if the gov was doing us a favour by not slapping us as hard as previously.

See also when the Chancellor "gives" us something in the budget by not raising the duty on it. Oo, thanks, Chancellor! Now, where will I spend it?

1
0
Anonymous Coward

Land Value Tax

Never thought about that as a "basis" for the tax system - but in the UK it could be very beneficial as there is only so much land. Dampening land value escalation is both good for the non-rich in and around London, and would also promote regeneration of former industrial areas (Middlesborough etc.).

4
0

Re: Land Value Tax

LVT would not make any difference to development of land. Amending the planning system would do that. LVT is a stupid tax as will tax people who have no income but lots of value in their home, e.g. pensioners. So will they have to sell their home and move to a cheaper land value property? Or will there have to be lots of exceptions - which complicates the tax system and downgrades its efficacy and efficiency.

11
7

Page:

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Forums

Biting the hand that feeds IT © 1998–2018