Tag Archives: Laffer Curve

Life on Hannan World (Part 13)

I can barely believe it. A little over 24 hours after I wrote the last “Life on Hannan World” blog, up pops Dissembling Dan with another. This time, it’s about taxation and flat taxes in particular.

Talk of flat taxes will always get right-wingers and self-styled libertarians moist. They (the followers of obscure economic theories) love the idea of everyone paying the same rate of tax. They believe that everyone (sic) will benefit from a flat tax system. Of course, it’s a lie and they know it, and no matter how plausible they make their argument sound, the simple truth is that only the rich will benefit from such a tax system.

So what’s prompted the Lyin’ King to write a piece in defence of flat taxes? This article in the Daily Mirror, which reports Oliver Letwin’s remarks about simplifying the tax system. Inevitably the issue of flat taxes is mentioned. But that’s not the reason why The Cat is interested in Hannan’s blog. It’s the fact that he actually claims flat taxes would benefit the poor (sic). Have a look at this title:

Lower, flatter, simpler taxes will help everyone – especially the poor

Gloriously misleading and, quite frankly, nuts. I once had some right-wing libertarian tell me, apparently straight faced, that the poor were “richer” at the end of the 19th century than at the beginning.  The clue is in the word “poor”. If you are poor, then you aren’t, by definition, “rich”. But it’s the way he claims flat taxes will “help” the poor that get me. It’s not as if he knows what it’s like to be poor and, at any rate, Hannan usually approaches the poor through fictional characters. Even the photo he uses to accompany his blog reveals more about his attitude to dissent that he’d care to admit.

Hannan claims, among other things, that a flat tax system would eliminate tax avoidance. But is that all? Well, no.

The real benefit of the flat tax, though, is not in stopping top-end avoidance. It’s in cutting the cost of compliance for everyone else. I have yet to come across a small business in my constituency that doesn’t need an accountant. Nor have I met a single person who has read and understood the tax code in its entirety.

Did you see that? He says the “real benefit of the flat tax” is apparently about “cutting the cost of compliance for everyone else”. The problem with taxation in Britain is this: the system is regressive. Britain has possibly the most regressive taxes in the world. Where else in the world would one have found a window tax, for example? Only in Britain, which is still run like a technologically advanced Norman kingdom. Council Tax, for example, is a regressive local tax that is not based on a person’s ability to pay; it is levied on outdated property values. Therefore, in theory, a person on an income of £12,000 per annum living next door to someone on  £53,000 a year, and living in a similarly banded property, pays the same amount in Council Tax. Got that?

Hannan claims:

Flat taxes make tax avoidance both purposeless and impossible.

Oh? And where’s the proof? There isn’t any. It’s hypothetical.

The only way the Lyin’ King can proclaim the supposed ‘benefits’ of a flat tax system is by having a pop at his greatest foe: socialists.

You’d think that socialists would approve. Instead of the super-wealthy exploiting exemptions, moving their assets abroad, emigrating or simply retiring earlier, they’d be paying a higher share of our national revenue. The state could then either spend more in absolute terms or cut taxes for everyone.

Why on earth would socialists approve of a flat tax system? It’s absurd. Only greedy capitalists adore the idea notion. The last time this country had a flat tax was in the late 1980s and early 1990s. It was called the Poll Tax.

First, almost no one is pushing for a completely flat rate – supporters of the idea recognise that, in a welfare state, there needs to be an exemption before you start paying tax at all, ideally set at around £12,000 a year. Second, a flat tax will, in a short time, make middle- and low-earners considerably better off as the rich pay more and the tax burden on the rest of us falls commensurately.

“£12,000 a year’? I wonder if Wonder Boy knows what it’s like to live on £12,000 a year? But it’s this idea that, somehow, the rich will magically pay more tax that’s a real sticking point here. If everyone is paying near enough the same rate of tax, then it’s only logical that those at the lower end of the income scale will suffer. That’s the people on £12,000 or slightly more, Dan. Have you got that?

At the end of his piece, he lets fly at UK Uncut. Why? Because he doesn’t like the way they chase down tax avoiders. He’d rather they didn’t exist.

I sometimes wonder whether UK Uncut types are happier nursing their grudges, warming themselves with the glow of righteous anger, than on fixing the problem. Or, to put it another way, whether they are keener on attacking the rich than on stimulating the economy. That, of course, is their prerogative. But what a pity to see the government humouring them.

What the Lyin’ King deliberately misses is that UK Uncut is a pressure group and is thus not in a position to “fix” the problem. They aren’t the ones who devise tax codes, nor are they in a position to implement economic policy. That’s the job of the government. The same government that Hannan supports. He whines that UK Uncut is “keener on attacking the rich than on stimulating the economy”. Why shouldn’t they attack the rich? Why shouldn’t they attack greed? Now Dan would tell you that greed is “natural”. But then, so is violence. Yet we have laws on the statute books to punish the violent, but we don’t punish the greedy.

Hannan’s claim that a flat tax system would create parity between incomes is misleading. The rich would dearly love to see a flat tax because it would mean they actually pay less, not more tax. He stands up for the powerful in society and regards the weak as parasites, draining the life force of the nation. If he talks about the poor, he regards them in the abstract. Tories can only see the world through the prisms of wealth, privilege and power. Anything else is of no consequence. The flat tax is a dangerous fantasy.

 

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Let them eat ketchup.

On an earlier blog, one poster laughingly claimed that the class war was “over” and how the working class had become “derivatives traders”.  Such wit. This is the small state mentality of our ‘libertarian’ friends: they promote the lie that unrestrained capitalism will create greater equality.  For them it’s all about the ‘evils’ of regulation, because regulation means that someone somewhere is being protected from harm at the expense of someone’s profit margin. What a bummer! In his blog today, Hannan says that governments “always find tax rises easier than spending cuts” and claims to have noticed a ‘concession’ to the poor contained in the budget. But he still isn’t happy. He wants those poor people to pay,

Not that this concession has appeased Left-wing pundits, who are insisting that the budget is unfair to the poor. It is true, of course, that any spending cuts will necessarily affect net beneficiaries of state expenditure more than net contributors.

Ah, nothing like a simple binarist rationalization: it’s all about the economy’s contributors and beneficiaries.  The poor really do get it in the neck from you, don’t they? I get the feeling you’re one of those Randists…something to do with rational selfishness…no?  But hang on, what about the Train Operating Companies? They receive massive state handouts yet none of you want to mention them or any of the other private interests who receive state funding. Are they all worth the money? It’s highly debatable, particularly in the case of the TOC”s who raise fares for the benefit of shareholders while providing a shoddy service for their passengers. But this is risible,

As Art Laffer says, if you pay people to be poor, you’ll never run out of poor people.

And Art Laffer is a numbskull…we know all about about his infamous curve and how that curve became popular with St. Ronnie and co. We remember ‘voodoo economics’ too and how ‘trickle down’ was meant to raise up the poor. The poor? To hell with them, let them eat ketchup. Next you’ll be telling us how flat taxes are ‘fairer’.

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Filed under ConDem Budget 2010, Government & politics