OPINION:Why we should redefine wealth taxes as fines on anti-social wealth

The definition of ‘wealth tax’ is too narrow….and the past is no guide to the future. The likes of Vince Cable should set out to be more Eliot Ness and less Ed Balls in the way they go about it.

There’s a long and well-argued piece in the Telegraph today from arch-Rightie Fraser Nelson of The Spectator .  As often happens when a neocon gets on his hind legs, deliberately simplistic arguments are sometimes presented as absolute truth and settled science. But this following extract gives a flavour of the intelligence Nelson applies to the issue:

‘The idea of taxing wealth is dangerously seductive, even to some on the Right….Denis Healey once believed this, too. A wealth tax was in the 1974 Labour manifesto….Healey gave up, saying he could not find any wealth tax that would be worth the political hassle….There are serious questions to be asked about the wealth gap in British society. Quantitative easing may yet emerge as having done more than anything else to widen it….The basic truth is that Britain is already taxed as much as it can bear; it is spending that is out of control. Finding deeper savings in the government budget is not without its political risks. But a wealth tax would be the biggest, riskiest and craziest gamble of all.’

When Fraser Nelson says “it is spending that is out of control”, he is right on the money. When he worries about wealth inequities, he is being more thoughtful than most of his ilk. But he’s giving far too narrow a definition to the term ‘Wealth Tax’.

As Fraser knows perfectly well, the considerations relating to the Wealth Tax debate have changed through 180 degrees over the last forty years.

Today, the debate is really twofold. First, if very rich individuals and corporations evade tax by going offshore, push jobs offshore, and use sovereign stimulation to falsely inflate profits without tackling debt, how is one to dissuade them from their sociopathy? The answer would seem to be via some kind of wealth tax they can’t evade – preferably with the added element of prosecuting those who collude in it. With some $35-40 trillion estimated to be illegally hidden in tax havens, this is grand larceny on a scale to dwarf anything the Mob could match.

Second – and this plays directly to one of Nelson’s points – if Western bureaucracies continue to be 100% resistant to attempts at slimming them down – and rewarding success not abject failure – then there too we need an ‘indirect’ wealth tax called (1) Summarily firing them without compensation; and (2) removing pension emoluments they awarded themselves without the required reference to a sovereign legislative body. (In the UK, for example, I am talking about the obscene increases in pension liabilities to the Sir Humphreys of Whitehall after 2006. The retribution I have in mind is far more of a fine and a tax).

I have long argued for the abolition of income tax, to be replaced by a system of fines for corporate and individually anti-social behaviour. Whereas income taxes are entirely gratuitous and indefensible, a tax system escalating in direct proportion to selfish lawlessness has both a solid criterion, and an ethical imperative capable of become a catalyst in the repair of our woefully degraded values as a civilisation.

There isn’t a single person of any significance in the Anglo-Saxon (or the EU’s ClubMed ‘democracies’ like Greece and Italy) with the spine to tackle these issues. The reasons are:

i. They are dependent on big business money
ii.Their bureaucrats know where the bodies are buried, and always blackmail their way out of the noose
iii. Banks hold most sovereign fiscal and stimulation plans to ransom, often misusing them for their own ends anyway.

The mansion tax is idiotic and not cost-effective to collect. But by tackling the real troughers with ruthless courage, George Osborne could wipe out around £1.2 trillion of UK debt by Thursday next week. He knows it – and everyone with any Sovereign finance nous knows it. Were he to do this, the markets would reward Britain more than handsomely.

But he lacks the bottle to face out the blackmail. And so thus far, the Draper has cut £13bn off the spending bill, seen it all eaten up by new spending, and stood by as Swervin’ Mervyn blew £280bn on pointless QE.

That really is gesture politics – and we all know the number of digits involved in it.

Related: Shell’s outrageous hypocrisy in the face of EU regulation

36 thoughts on “OPINION:Why we should redefine wealth taxes as fines on anti-social wealth

  1. For me that’s one reason we need UKIP. They have no skeletons in the cupboard, no bodies buried, at least as far as I know. They will have hopefully what it takes to remove those greedy scumbags from Whitehall.

    • Some of the policy details of UKIP sound great from a libertarian POV.

      Sensible look at monetary reform, direct democracy, broad taxation changes, distributed/localised governance, “Fairness” vs “equality”

      Of course non of this suits those with their hands on the levers of power, so it’s not going to happen unless something really bad happens.

      Why call yourself an independence party, not something far more broad reaching and less divisive ?

      Why “accidentally” cock up basic electoral procedures and listings on ballots?

      Why do they not rock the boat regarding Westminster scandals? Merely the EU mess (which is bad enough) but I guess this does divert attention from our own shores.

      I fear they are a mere distraction (JW has alluded to this too), to drag out a portion of the more understanding voters (from all sides), and potential grass roots candidates, into something the press will gladly keep printing as “unelectable” / “single issue” fringe, hence negating the impact on the current political status quo.

      All this to just ensure the 2 main parties carry on with their smoke and mirror show, is so important to TPTB, divide and conquer.

      The age old use of rhetorical differences the vast majority of the populace will lap up without question, yet the resultant policy action remains nigh on indistinguishable :(

      • @SMacA: I’m afraid I have to agree with all of that, doesn’t stop me wishing though! TBH, I think if everybody in the country voted UKIP they would ignore it or say it was electorial fraud.
        The main two parties are running a duality, you might think you are voting for one of them but, in the end it makes no difference either way as they agree in private on the issues that keeps Westminster they way they like it.

      • @KFC I wish too…

        My vote never counts anyway as I’m in a safe seat for Labour (esp. after boundary changes). Going by the mainstream party rhetoric I’d vote for lower taxes and individual responsibility over social equality, e.g. Tory

        So might as well waste my vote on UKIP rather than Tories. :)

      • SMacA
        Nigella Mirage’s goal is obvious: to destabilise Camerlot and merge with a more right-wing, anti-EU Tory Party.

  2. I’ve been re-reading Carlyle recently (The French Revolution) and one is constantly drawing parallels with Europe today .. fascinating. Anyway, when I read your comment about the mandarins I remembered this bit spoken by Robespierre (before he got so awfully enthusiastic about giving people haircuts):

    “If they are Caesars or Cromwells, they seize power for themselves. If they are spineless courtiers, uninterested in doing good yet dangerous when they seek to do harm, they go back to lay their power at their master’s feet, and help him to resume arbitrary power on condition they become his chief servants”.

    If ever this country is to arrest the seemingly inexorable slide into mayhem, a useful and necessary first step would be to disenfranchise this poisonous class of bureaucrats. I’m not awfully bothered one way or the other as to how that may be achieved, but if the Sir Humphreys were wise they would do well to find out what happened to Robespierre – and how suddenly – when the mob had had enough of him.

  3. Pingback: John Ward – Opinion : Why We Should Redefine Wealth Taxes As Fines On Anti-Social Wealth – 28 September 2012 | Lucas 2012 Infos

  4. I am puzzled by who you are referring to by Sir Humphreys. Are you talking about the whole UK civil service, or just senior civil servants?

    You claim bureaucracies are 100% resistant to change. What do you mean by this? The government department I work for has continually lost posts in the 13 years I have worked in it, and has lost a third of posts in the last two years (as our budget, which had already been subject to 5% reductions each year, was cut by 33% as a result of George Osborne’s 2010 spending review). My department employs fewer than half the number of people it did when I started, and while other departments may not have not suffered as big a fall, they all seem to have lost many posts.

    I don’t know what you are referring to about pensions. The previous government introduced changes which would have meant the costs of public sector pensions falling as a proportion of GDP over the next 50 years (with the peak already passed). Average civil service pensions (before the present government’s disastrous (explanation below) changes) were £6,500 p.a., or £4,500 if you discounted the senior civil servants. Hardly a life of luxury in retirement.

    Why the pension changes are disastrous (apart from punishing people who were no part of the cause of the present economic malaise (I think the banking industry should hold its head in shame there, instead of pocketing a yet bigger share of the national pie)) is that it has taken money out of the pockets of a large part of the workforce, at a time of low demand in the economy. My increased pension ‘contributions’ which lead to a lower pension, are in fact a straight wage cut. Add this to the pay freeze I am suffering (a real terms wage cut), and increasing unemployment and pay restraint among public and private sector workers, and it doesn’t take a genius to see why the economy is contracting. With so many people being made poorer, where is the demand coming from? With slower economic growth and fewer people in employment, the tax take is lower (even public sector workers are taxpayers), and therefore it is no wonder the deficit is growing.

    I have to confess to not knowing the way out of our current malaise, but I am quite sure that making a large proportion of the population worse off is not helping. The UK government’s overall debt levels are historically low, and the rate the UK government is being charged to borrow is amongst the lowest it has ever been. Maybe the bond market’s hint should be taken; perhaps the UK government should borrow and spend to replace and generate demand in the UK economy. Seems like a better policy than self-defeating austerity.

    • I’m sure you’re a jolly well-meaning chap, and it sounds to me like you’ve been rather unlucky. If you refer back to a previous post focusing on this issue, you will find plenty of evidence to support the naked protectionism of Mandarins: http://hat4uk.wordpress.com/2012/09/22/saturday-essay-the-benefits-of-neoconservative-economics/

      Ultimately, they are like a sort of posh UNITE: job survival is the A-Z of their raison d’etre.

      I’ve also made it clear many times in the past that it is largely the Whitehall and local government bigwigs who take the piss. For further info on the pension embezzlement, use the search engine both here and at the Daily Telegraph.

    • MickeysDad73: In fairness to JW, he does seem to refer to the pay grade of Civil Servant that has the power to award themselves pension top-ups, because they “know where the bodies are buried” and therefore can stare down politicians. They are, in civil service terms the,……………. now where have I heard this before?……….the top 1-3%………………of civil servants.

      If you’re an ordinary Joe with the tag of Civil Servant, as I am in Ireland (I’m a prison officer…civil servant in name only), then I don’t think JW is referring to you.

  5. @ Caratacus

    “If they are Caesars or Cromwells, they seize power for themselves. If they are spineless courtiers, uninterested in doing good yet dangerous when they seek to do harm, they go back to lay their power at their master’s feet, and help him to resume arbitrary power on condition they become his chief servants”.

    I suppose that more or less sums up what we have. 40-45% bother to vote, the other 55-60% a] believe it is just a waste of time, b] all parties are just the same.
    We have a Government in power even if they have a majority 2/3rds of the electorate did not choose them. This is called Democracy, that we in the west have allowed our politicos to kill millions to impose on the rest of the world.

    Is it better to have a relatively Benign Dictator, Who provides free health care, education and social housing for his people. Improves the Countries infrastructure out of all recognition. Provides water for the Irrigation of the Countries Farms, so that they are self-sufficient in basic food.

    This was done without borrowing, nor high taxes, just using the Countries Oil Wealth wisely. Then again he was not your average characterless politico and would not play their game. Who was he? He ran a Country in North Africa and his son is still in jail awaiting trial in the Hague, that is if he is not killed before coming to trial.

    • Agreed Lapulco.

      He may not have been ideal son-in-law material and so forth, but the one ‘crime’ which the Americans could not countenance was his attempted independence from the petrodollar. Syria too .. and Iran. If I were a more observant sort of chap I may see some sort of connection here ..

    • @Lupulco: He also spent 30 years and a great deal of money on the Great Man Made River. He would have been able to irrigate the desert and grow enough food to feed most of Africa, That apparently didn’t go down to well with Israel….He also, again I don’t know how much truth is in this but, was in talks with Mandela with a view to uniting Africa under one currency backed by his 4000 tons of gold, which funnily have wittled down to few tons now according to different news reports I have come across. But suspect it’s all lies, you only read the truth in the MSM……

      • @ kfc1404
        You are correct, he tried to model himself on Nasser with a Pan-Arab Alliance, But he was knocked back as he was not technically an Arab. Libyans are Berbers and were conquered by the Arabs.
        So he looked towards Africa, with a combination of the use of selling their mineral reserves in Gold using a Pan-African Dinar. Backed initialy using Libyan Gold. Forming a Central Bank of Africa.

        The idea was to trade their way out of debt, ignore the major world fiat currencies and Trade either in Gold or a barter system. [ similar to what China is doing] If you build up the Countries Infrastructure in Roads, Hospitals, Education Facilities, Sewage and Water systems everyone benefits.

        Except of course the established system. Plus as you said, 4000 tonnes of Gold as simply vanished, probably to the same lock up as Iraq and Haiti’s Gold? [google Haiti's Gold]

  6. Hi John, off topic I know, but I do go back some time to the death of Jimmy Saville, when you were eulogising about him. I questioned this at that time, based on what I had heard – and that there were questions regarding abuse etc. Now it seems to be coming to a head….(see Guido)
    Guido has hinted at the coming BBC Jimmy Savile cover up scandal previously, and things are certainly hotting up today. The final edit has just been made of an explosive new documentary alleging that Savile sexually abused up to ten girls as young as thirteen while at the height of his fame. On BBC property.

    As Guido reported in February it is claimed Savile molested underage girls in hospitals, schools and BBC studios, allegedly giving his victims seats in the audience in return for sexual favours. The spotlight will now fall on what the BBC knew and when, why a Newsnight report containing the allegations was mysteriously spiked and why they failed to inform the police about the evidence they had uncovered. New York Times president Mark Thompson, then the BBC Director General, has some very difficult questions to answer…

    • @Cronshd: Like everything else that doesn’t suit them or embarrasses them, they will pull the usual stunt of ‘Drawing a line under it’ which is politic speech for STFU.

    • As a teenager in 1960s Leeds, I was an occasional attendee at the lunchtime ‘discos’ he ran there – most of the attendees were school-age, many stayed away all afternoon paying truant.

      Savile’s habit was to identify one or two young girls, usually 13 -15 year-olds, encourage them to stay on, then take them back to his place in his car for the afternoon, so they got back home at their usual after-school time and no awkward questions would be asked.

      Most of the teenagers there knew it went on, but all (including me) stayed quiet about it – it was considered just a little ‘stardust’ being sprinkled on the turgid everyday life of a fortunate few. Given the choice of submitting willingly to the ‘galmorous’ Jimmy Savile or being groped by the local priest, it seemed a comparatively good deal at the time.

      • I love it Mudplugger! This is why we are doomed. Either we are dazzled by the powerful or groped by the faithful. Some choice.

    • I just always knew there was something definitively shifty about Saville. He used to visit the Yorkshire Ripper in prison ffs. What was that all about?!

      • It may also emerge that his frequent ‘support visits’ to a range of hospitals usually included a period of solitary, unsupervised attendance in the hospital’s mortuary. One may only speculate as to why. Both ends of the spectrum ?

  7. I must apologise but this made nearly wet myself.
    “They are just revolting, there is nothing pleasant about seeing anybody in a mankini. We have had a real crackdown on the fake penises. Devon and Cornwall Police Superintendent Julie Whitmarsh said.

    http://www.telegraph.co.uk/news/uknews/law-and-order/9573238/Revolting-mankinis-banned-in-Newquay.html

    I’m telling you, I’m giving up with the diet and trying to cut down on the sauce, the way it’s going it ain’t worth hanging on for…

    • Well, she’s right. Fashion tips from the pool:
      You have to be about 16, slim, gorgeous and erring on the underdeveloped side, to carry it off.
      Or part of the nipple ring brigade.

      Sorry chaps!

    • Interesting and I can see her point about these things……….but haven’t we had the ‘national debate’ on whether we should be ‘banning clothing choice’ in this country ?

      Strange that the ‘choice of clothing’ can be banned so long as it is ‘the right sort of people’ who have their choice of clothing ‘banned’ when ‘the right sort of people’ find it offensive. Hypocrisy rules the waves in the UK.

  8. A Land Tax is the answer, as proposed by Henry George in the 19thC. Simple, transparent, fair.

    I think that a really important point re. “wealth” taxes is that it is better for the many “wealthy” to keep their money (yes, assuming that it has been taxed like everyone else), since they will tend to use it more wisely than the alternative, which is to give it to politicians and, just as bad, bureaucrats.

    I can remember at least two occasions in the last fifteen years in Hong Kong (where most people aren’t millionaires) when the government stimulated the economy by giving everyone tax rebates. ie giving the money back to those who earned it in the first place. They will spend that money more wisely than the Government. Efficient Keynsian stimulus.

    Our problem isn’t wealthy people, it is politicians in a deeply flawed “democracy”, where we give votes to people who then vote for a living.

  9. John 11% who take 90% of income pay a total of 56% of all tax,if tax was fair,they would pay 90%,So 89% who take 10% of income pays 44% tax
    this is why the gap continues to grow,some love to quote that if the 11% left we would lose more than halve of our tax,this is a lie.
    the rich rely on the income from the real economy this is drying up because of this imbalance.
    this is were the real re-balancing of the country should take place,34% of tax receipts would stimulate the economy without printing a single pound
    would make investors more likely to invest ,so this would not need a 90p tax rate

  10. So, John is, as usual 99% right, and maybe understands it all fully, his instinctive advice and judgement seems to suggest that BUT as a very international advisor in strategy/tax/investment he leaves some big gaps not made explicit, and that the ordinary Joe, and one country politicians do not thing widely enough, though John is instinctively VERY GOOD.

    First, a wealth tax is annoying and counter-productive, it prods high nett worth individuals to ask “Why do I have assets there”, and then they liquidate them and move them.

    With 86% effective tax the UK is grossly overtaxed, cant raise tax revenue (there is no-one to pay) and has been accustomed to unsecured borrowing, AKA soveriegn debt and QE. This is OK at first but Greece, Spain, Portugal … in Europe have drunk that well dry.

    As an old glider pilot, you can trade height for speed, but not for ever … and there is hard high terrain ahead.

    More tax, anywhere, in old Europe will cause capital flight, and then a run on the banks, which is game over for modern feckless politicians.

    MFG, omb

  11. Off topic, but referring to Gaddaffis Great Man Made River.
    I had a colleague who worked close by, on the project in Libya. The sections of large concrete pipe were stored in a sealed compound. He was curious as to the reason, and managed to get into the compound and look at the pipes, he found the sealing between the pipe sections were defective,so they would fail after a short working period. He reckoned it was a deliberate act of sabotage design.
    He got a right rollicking when his superiors found he got inside the secure compound.
    Another aside, when the Libyan uprising’ kicked off’ in Benghazi, the first decision the rebels took was to create a Central Bank
    Gaddafi refused to be embroiled in the great fraud of international banking, along with Cuba, North Korea, so he became a parhia,, and had to be removed,along with his gold based monetary system.
    So much for the Arab Spring, it is just another loot and plunder by the money power.

  12. Our politicians could make this better from tomorrow onwards if they really wanted to. But, it seems they would rather ignore the public, ignore criticism, ignore history, and continue on with expensive wars. I think our politicians have evolved into ruthless businessmen continually fed by each other’s arrogance and the revolving door they have created between them. The thinking, however, hasn’t evolved past the repilian.

    This island can & does generate enough to look after everyone comfortably when it functions properly, but instead we are subjected to a giant push & pull game by our politicians until most people don’t know whether they are coming or going. Over the years our political system has smashed the engineering in this country and whittled away most, if not all, the help through thousands of guango’s up and down the country.

    What we have/are experiencing is an injustice bordering on treason. There, I said it. But it’s plain and simple, and in full view. Our gov’t workers, whatever you want to call them, know it and yet keep quiet. Our voting/elections are a sham, yet they keep quiet. Our court system is a racket. Rubber stamping gov’t edicts in which people lose livehoods, jobs, savings, poverty safety nets, because of crimes committed by our banks and acquiescence by our gov’t depts. Yet they keep quiet and continue to selfishly stamp away.

    Gaddaffi had it right and his people had the best living standards in Africa and most european countries, after they stopped fighting each other and before he shook the hand of his assassin. Maybe he was just another ex CIA man gone rogue like Saddam. Check out the aquifers in Libya. The assassination of the country’s leader might not have been all about oil, gold, banks and “humanitarian aid”.

  13. Wealth Tax
    Nick Clegg was revising an ‘old Liberal’ idea when he put forth Liberal Demercrat’s intentions to tax the wealthy: by rewarding ‘hard work’ but levying unearend wealth.

    This bombshell of the Deputy PM’s temporary wealth tax has shook Westminster; upsetting both Tories and Labour MPs into from their summer hiatus. Both parties have poured critisism on Mr Glegg’s plans for a “time limited contribution” from society’s rich.

    [Liberals have for decades believed in focusing tax on wealth. In his interview he spoke of "an old Liberal idea that you should be rewarding initiative and hard work but you should be making people who have unearned wealth make a contribution". - 'Nick Clegg puts space between Lib Dems and Tories with tax bombshell' - Guardian Politics 29/08/12]

    Further Cuts
    Chancellor, George Osborne, is planning to target the poor with an extra £10bn in welfare cuts (to come into intergration 2016) which were introduced in the budget. Mr Clegg -although he accepts some cuts to welfare- would rather target the top echelon “than starts at the bottom.”

    However, it seem unlikely that the Chanellor will be swayed by Mr Clegg’s proposal.

    (taken from LIB DEMs TAX Unearned Wealth) i-thorts’ i-Politics

  14. Their bureaucrats know where the bodies are buried, and always blackmail their way out of the noose

    This is of course the problem throughout the EU, and especially in Greece, Portugal and Spain. Corrupt societies breed further corruption. It’s exponential. Any guesses on what percentage of the total Greek economy is ‘in the black’ after all the interventions and ‘help’? My best guesstimate is 50%, an extreme case but not all that much more than other countries in the south.

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