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.