JohnB wrote:The Wealth Tax Commission – a group of leading tax experts and economists brought together by the London School of Economics and Warwick University to examine the case for a levy on assets – said targeting the richest in society would be the fairest and most efficient way to raise taxes in response to the pandemic.
https://www.theguardian.com/business/20 ... wealth-taxThe group's paper at
https://www.ukwealth.tax/ discusses a one off wealth tax of 5% on all assets over £1m, collectable over 5 years, or as an ongoing 1% annual wealth tax. They say the former, with no pre-announcement, so valuation day was 'yesterday' would be much more effective, and could start collection within a year. The latter might take into the next parliament to implement, cost more to run and worry people it would never go.
While I don't like paying more tax, the paper is well argued, discusses the consequences of changing thresholds, quotes costs and is keen on avoiding exempt assets, the kind of loopholes politicians love. I suggest people read the paper before commenting.
I have just read it - all 125 pages!
You are right, it is quite readable given the academic nature and the somewhat dry topic of taxation.
What the paper doesn't address is the (immediate) necessity for an increase in taxation. Alternatives such as gradual repayment over time through the existing mechanisms, or reduction in spending, for instance, aren't considered (correctly as they are outwith the remit). There is an arguable element of desirability of those approaches too, or partial blending.
Their conclusions are clear, for such a tax to work efficiently, and to mitigate undesirable consequences, it needs to be demonstrably and genuinely a one-off and not a recurring "tax cow" to be milked. Particularly with modern mobile populations, and especially so in populations that have moved before between tax regimes (which they acknowledge the UK - particularly London is one) there is potential harm in erosion of this credibility. A short term gain of an initial "windfall" will be negated and worse from a drop in future taxation should those richest (and most generous to HMRC) have evidence and reason to conclude the "one-off" has become, or will become, a repeatable event.
Whilst the paper stays neutral on many aspects of the desirability of taxes, and their purpose, it is clear from public responses that, at least for some, current (and potential increased) taxes aren't solely to meet spending commitments (past, present and future), and for financial reasons. For some taxation is a means for re-distribution too. Society, whilst a convenient aggregate, also has the problem of ultimately consisting of individuals. It is clear (and acknowledged by the authors) that for some, and indeed many, there is a desirability of (increased) taxation to be borne by others. By the very nature of "the rich" being a minority it isn't difficult to find the free-lunch solution of "the rich" paying, and not "the others". Whilst academics can understand and factor for how the secondary and tertiary effects of such desirability play out in a society, and the economy that underlies it, such subtleties don't feature widely in the primary responses of the (non-academic) population that generally express such.
The authors also go on to point out the serious problems of implementation. In other words the politics not the economics. The proposed solution may well be the most desirable in terms of "fair and efficient", with the caveats of the report, but the fairness, efficiency, and scale of revenue raised, fall away significantly and quickly as any of those caveats are relaxed. Practical implementation of a wealth tax, that might require dilution from a political perspective, soon render the solution to be a much weaker one.