Sunday, March 29, 2009

Timmy has this post, which directs to this one, which has me repeating myself and posting the following comments:

He’s absolutely right, of course, but as a politician he should know better than to talk sense. It’s the quickest way to get dismissed as an extremist or a nut.

The Guardian, Obama and a disturbing number of powerful people really do believe that all money belongs to them, and that if you manage to keep a bit you’re cheating them. It’s very hard to argue with people who are incapable of questioning their own arguments, or understanding yours.

Anyhow, nice one, Dan Mitchell.

The only legitimate reason for taxing people in the first place is to be able to pay for things that the individual cannot provide for himself- defence, police, healthcare? poor relief? etc; the idea that tax rates must be set, not to cover the cost of these things, but to engineer some vision of social justice (and avoid competition between states) is the sort of demented socialism which has me reaching for the nearest lamppost.

A further reflection:

Like "unfair tax competition", "transparency" is an invention of people who want to take your money. It is useful, indeed essential, to governments to know what we have and what we do with it, so they can take it from us. And so they try to turn "transparency" into some kind of moral imperative, when it is no such thing.


AntiCitizenOne said...

I like the Land Value Tax as the sole tax.

You can't avoid it and it tends to be"progressive" (as rich people tend to live in more expensive areas), whilst not being a punishment for earning, and thus harming the economy.

It also correctly aligns the government as being owned by the people, rather than taxes on income which imply the government owns the people.

Bruno Prior said...

Land Value Tax is more pernicious than any of our existing taxes. It disincentivises improvement. It makes the false assumption that most increases in land values are attributable to public-sector actions, when most increases are actually to do with (a) availability of credit and (b) supply and demand. It provides an incentive for planning authorities not to give permission, to drive up prices in the area and therefore increase revenues. It threatens to turn out on the streets widows who are unlucky enough to live in an area of rising prices whose pensions cannot cover the increasing values. In Spain, of all places, you should understand that land values move in a way that is not necessarily related to real wealth or ability to pay. There is a reason why sensible policy-makers have ignored this since the days of Henry George, but I fear that in these particularly stupid times, there is a bandwagon of irrationality gathering behind this idea.

Back to the original post: where do you draw the line on honouring sovereign rights and encouraging tax competition, which I agree with, and preventing complicity in the sheltering of criminal proceeds? We are investing in Switzerland at the moment, and the tax position is one of the many attractions, but that is a legitimate transaction, which I feel no need to conceal. Is not some degree of international cooperation to deal with illicit transfers warranted, and would not some degree of "transparency" be a part of that? For instance, would you agree a system where a foreign government would present evidence of criminality to a court in a tax-haven country, and if the court were satisfied that the evidence did demonstrate criminality, details of that person's transactions would be provided to the petitioning government, who would be able to launch proceedings in the tax-haven's courts for recovery of the funds, on an agreed basis. Wouldn't some treaty to that effect respect sovereign rights sufficiently, but cut down the rampant laundering that is going on in some of these locations?

Nice blog, by the way.

CIngram said...

@ Bruce Prior

I agree that land Value Tax, in effect a wealth tax, but with your wealth determined by the state, more or less arbitarily, is not a solution. I didn't mean to agree with that part of the argument, just to suggest that many of the accepted attitudes to tax are wrong.

As you point out, in Spain land values are frequently and easily manipulated by local government, and a tax on the notional value of a property would have to be found, every year, in cash, which can cause severe difficulties for many people.

Possibly a flat tax, simple,transparent, reasonably fair and cheap to collect, on all primary income, would be better, and we must stop collecting tax on money every time it changes hands. (Many countries and regions have abolished death duties, for example). In answer to your other question, yes, I like the sound of the idea, to follow the proceeds of crime, if it were agreed in bilateral treaties passed by Parliament, rather than in some imternational forum with no Parliamentary scrutiny. I say this to provide some assurance that sovereignty will be respected, and that some attempt will be made to justify the underlying philosophy of tax. One problem, witnessed many times, is that powers created or ceded in order to tackle crime are used for other purposes of which the public would not have approved.