The Centre for Policy Studies have published a handy summary of the way our welfare system is designed and why it doesn't 'work'. Before we slag off 'scroungers', I find it very helpful to look at why the system enables and encourages it. Blame the system, not those who appear to be abusing it, is my motto.
It's titled Benefit Simplification (hat tip - John Page at the Benefit Fraud 'blog), and although Appendix 3 makes some useful suggestions, it doesn't IMHO go far enough. If we really want to simplify things, the way forward is to roll all welfare payments (including old age pensions), subsidies, tax breaks (including the tax free personal allowance and tax-breaks for pensions saving) and other forms of redistribution, such as 'free' State education and 'free' NHS care into one single, age-related universal, non-means tested, non-taxable Citizen's Income payment together with education and health vouchers; preferably combined with two flat rates of tax - one on incomes and one on land/property values (and no other sneaky taxes like VAT, the income tax that dare not speak its name, and no poll taxes or jealousy surcharges).
Having established what is fiscally neutral, we can then have a good old-fashioned argument as to how high the payments should be*, but seeing as the payments are the same for everybody, what the argument is then really about is how high the taxes** should be to fund them, and in turn, what the balance should be between taxes on incomes and on land/property values***.
* I'd always choose "something that costs ten or twenty per cent less than what we are doing now".
** Our main problems are the quangocracy and public sector pensions, that between them cost nearly as much as the welfare state, that's the spending that I'd cut first.
*** I'd choose "less tax on incomes and more tax on property values" but I know a lot of people disagree.
Stormlight
3 hours ago
11 comments:
You've by and large convinced me on the flat tax theoretically, but practically I think it'll never happen.
One advantage, surely, of income taxes is that they are levied on what they actually required, ie money. 50% might be annoying, but by definition you can pay it. £5k on a house is somewhat different, even if the market rental would in fact be that high.
Matthew, that's the clever bit.
Lower income people would trade down to house with a lower tax bill and higher income people would trade up. So ultimately, your LVT bill would be proportionate to your income (plus or minus your desire to live in a nice house) but without the dampening effect on the economy.
This whole 'ability to pay' nonsense is just that - nonsense. It's like saying BMW's pricing policy is unfair because owning a BMW depends on 'ability to pay'.
I like this, of course. If you could boil the system down to three figures: income tax rate, lvt rate and amount of CBI, it should be possible to determine the values by
by referenda, choose two values, the third is calculated.
Quite right: Attack the Sin, not the Sinner... Some wise old Indian fella, who screwed the Brits out of India
"It's like saying BMW's pricing policy is unfair because owning a BMW depends on 'ability to pay'." (MW)
My mate, an kitchen salesman whos fallen on hard times (ironically neglecting to do his tax returns tipped him over the edge) is currently hiding his 3-series from the leasing company and clinging onto his last vestiges of prestige.
Although BMW ownership might depend on ability to pay, I'd suggest that their distribution policy doesn't.
S_L, you can physically hide a BMW to a certain extent, hiding land/buildings is nigh impossible.
Mark
"Lower income people would trade down to house with a lower tax bill and higher income people would trade up."
I live in a 250 year old farm labourers cottage - no cavity walls - the usual lack of ameneties (buses, gas, street lights etc.) because it's in rural location. My family have lived in this house for over 170 years - maybe more.
I don't have a high income. I have never wished to fill my house with plastic shite. I live in an old cottage and that's the way I like it.
Partly because of my belief that an ever growing economy is unsustainable, partly because I enjoy growing veggies and like living in the country, I have never felt the urge to slave away and get myself a bank book full of numbers, or to aspire to keep up with the Joneses. I have a small stash - just enough to cover emergency expenses. I don't need any more. Never thought life was about money. Self sufficiency is my bag.
The problem is, is that my house is now worth a small fortune. Location, location, location. And a high council tax band to suit. People have told me that if I sold, then any buyer would demolish it and build a brand new mansion on the site. Means nothing to me, it may as well still be worth the £100 my grandad paid for it in 1920 when the big landowners had to sell up. I never want to sell it. As I said, this is the way I like it.
Whereas I completely agree with your universal benefit for all concept, where does this leave me in your tax proposal? Do you think I should sell up and move to some grotty little town? I have seen this happen to the rest of the village in the past 30 years. The only people who can afford to buy here are outsiders. They then buy a field off a farmer and display their wealth by buying horses, and tarting up their houses. I call them the lego people. Hell - nobody but me grows veggies anymore - that's a bit like hard work.
Universal benefit - brilliant idea. Taxing houses on an artificially conceived value - not good.
But don't worry about me. If the stuff hits the fan I will just become a Freeman on the Land, and fuck their taxes right off.
Hermit, where does this leave you?
Well, going by Marksany's suggestion, you could vote for a low property value tax and a high Citizen's Income. The chances are, the CI would pay off the LVT and that would be the end of that.
As to becoming a Freeman On The Land, if the stuff really hit the fan, and the State shut down, your land would be worthless anyway because there'd be nobody to guarantee your exclusive possession.
Thanks for your reply Mark. Fair comment:-)
Oh my god, I was typing too quickly. You haven't convinced me on a 'flat tax' and never will - I think it's an absurd idea. I meant on a 'land value tax' (I think perhaps you realised that).
Matthew, that is what I assumed you meant.
But do not confuse 'average' with 'marginal' income tax rates. if you subscribe to the [flawed] idea that income tax should be high, then you can vote for that.
If you see the CBI as negative income tax, although the marginal rate will be the same for everybody, the average rate (tax minus CBI) will be much lower for lower earners than for higher earners.
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