In a recent essay published on this blog1, the present author proposed a short series of aims that would reduce the burden of taxation on economic prosperity, in comparison to a programme proposed by the Adam Smith Institute (ASI).2 Part of the ASI’s programme consists of “replacing [the] income tax with a progressive consumption tax, so savings are not taxed”.3 In relation to this, we explained, briefly, that all taxes are paid for out of one of two sources of production – either income or wealth – and that
The individual names of all of the different taxes refer not to fundamentally different types of tax; rather, they denote either the specific kind of good to be burdened (i.e. property, alcoholic beverages, etc.) or the particular event that triggers the tax liability. For example, within the category of taxes on income, an income/payroll tax taxes the income at the point it is earned; a VAT or sales tax, on the other hand, taxes the income at the point it is spent.
Consequently, we concluded that a proposal for a consumption tax amounted to little more than simply moving a tax burden around and calling it a different name rather than eliminating its depressing effects upon economic prosperity:
Changing the precise moment when a tax is levied ultimately does nothing to ameliorate the effects of the tax – it simply means that you might be able to hang on to your money for a little bit longer before having to give it up. Neither also does changing the triggering event have any effect upon who, ultimately, pays for the tax. All taxes must be paid for out of production and so the burden of any tax always falls upon producers.
This essay will elaborate on why, for a programme that wishes to give a serious boost to economic prosperity by reforming taxes, the proposal to switch to a consumption tax from an income tax is a relatively pointless endeavour which should not be considered as a priority. We will also explain why the claim that “savings are not taxed” is utterly fallacious before exploring some particular difficulties that are inherent to introducing and operating a consumption tax. Although this essay concerns, mainly, the effects of a consumption tax upon economic prosperity, we will then move on to highlighting some further problems this method of taxation presents from a purely libertarian perspective. Finally, we will conclude by pointing out that any benefits a consumption tax could bring are unlikely to be realised in the absence of fostering a general government commitment to lower tax rates. Read more
Whenever there is the appearance of some headline berating large corporations for arranging their affairs so as to pay as little tax as possible on profits earned in the UK, the indignation from the general public seems to centre on the belief that the “lost” state revenue was somehow a “lost” benefit to the average citizen. After all, won’t lower tax revenues result in fewer hospitals and worse schools? Such was the fury greeting the news, on August 3rd of this year, that Amazon UK’s tax bill fell from its 2017 figure of £7.4m to just £1.7m in spite of pre-tax profits having almost trebled.
Unfortunately for libertarians, tax avoidance (together with the deliberate blurring of the legal and moral distinction between that concept and that of tax evasion) has become a favourite topic of heavily indebted governments as they attempt to balance their books without reducing their profligate spending. Read more
In a recent essay published on this blog1, the present author highlighted the need for a libertarian strategy to be firmly and uncompromisingly radical, rooted in challenging the inherent injustice of the state as the ultimate destroyer of liberty. This is in contrast to gradualist or, we might say, deliberately half-hearted approaches, which are forced to accept the state’s basic injustices (such as its taxes, regulations, and monopoly over law, order and defence) and replace any radical principle with some kind of utilitarianism.
While it is wonderful that liberty brings with it heightened economic progress in the form of material increases in the standard of living, libertarians recognise that these ends do not justify the means. For example, if it could be demonstrated that murdering red heads would add a few percentage points to GDP we would still regard such acts as evil; the ability of everyone else to buy a few more pairs of shoes would do nothing to change this fact. Therefore, while leaps and bounds in the standard of living certainly add moral weight to the case for a free society they fail to add moral decisiveness.
Interestingly, however, it seems as though wedding oneself to a fundamental principle allows one to examine the economic effects of liberalisation more pertinently and that even on their own terms, gradualists, neo-liberals and utilitarians fail to make proposals which would bring the highest economic benefits. In other words, libertarians such as ourselves, who are derided for being too “utopian”, “principled” and “unrealistic”, seem to have a better grasp of the primary utilitarian case for liberty than do their more pragmatic brethren. We will elaborate on this observation here by examining the problem of taxation. Read more
This morning, on the Jonathan Vernon-Smith show on BBC Three Counties Radio, Godfrey Bloom, our Honorary President, defended the Queen’s personal right to invest in overseas locations, given the recent press coverage on this topic.
After Mr Bloom’s opening remarks, Graham Smith, the Chief Executive Officer of the Anti-Monarchy campaign group, Republic, and a frequent contributor to the Guardian newspaper, also spoke, after which Mr Bloom replied with his concluding remarks.
If you would like to listen to the exchange, please click on the audio link below:
I wonder when all of these politicians will actually come together like the G20, and actually find out, or make a discovery, if you will, of something that might actually help ‘The people’ and ‘The chldren’
PEOPLE ACTUALLY DON’T LIKE PAYING TAXES AFTER ALL
I‘m really trying to get sort of a message board started, so please comment on this, or else……
The stalinists currently sitting and drinking in Westminster the Government are trying to look like they “care about the children” by proposing a 12 month “Stamp duty holiday”, whereby HM Land Registry will not only not charge people for buying a house up to £150,000, but now by not charging them an impost for one up to £175,000.
Of course! I was forgetting! The extra £25,000 over £150,000 allows you to find houses with large indoor swimming pools included, as opposed to not. I’m not sure most people round here, be we all yokels who say “urrrrrrhhhhhhh” when asked the way, could tell the difference even here between a £149,999 house and a £174,999 house, without careful scrutiny for the proximity of bureaucrats’ offices and the like.
Either “Stamp Duty” is a registration fee for the recording of the legal transfer of a piece of Landed Property, in which case in 2008 the fee is about £12 (and that’s generous – that’s what your credit card charges you for being late) or else it’s a progressive taxation.