Thursday, September 08, 2005

Moonbat Mode

If you didn't see Newsnight yesterday you missed the rather extraordinary spectacle that was Ed Milband being described as a romantic egalitarian. It's about 25 minutes in, during a debate on a possible flat tax. This debate is definitely an uncomfortable shift in something or other.

So I'm going to talk about tax for a bit. I did study economics but I've forgotten most of it if I'm honest. As such, I make no claims to be an authority on any of what follows. Those averse to fact light opinions based on naive idealism may want to look away now.

Supporters of a flat tax say that it would generate increased economic growth and very soon everyone would be better off. First up, is this a fact or an opinion? The American economist on Newsnight made the point that economics is a science "like physics". Well, it's really a social science so I'm not sure that really holds up very well. Economic is as much about assumption, ideology, and opinion as it is about fact. The suggestion that economists can accurately predict the effects of such a tax is debatable at best. My opinion is that introducing such a tax wouldn't lead to the kind of growth Estonia experienced as the situation in the UK is very different. But, I do accept that a flax tax might significantly increase economic growth.

My own view is that the introduction of a flat tax would be undesirable, even if it was absolutely certain to lead to the levels of economic growth claimed by it's supporters. I fundamentally believe in the principle of progressive taxation. A flat tax would increase the discrepancy between the highest and lowest levels of reward for work and I do not believe that such an outcome would benefit UK society. It might benefit the economy, but that's a seperate issue.

Market forces do many things well, but I do not believe they provide levels of reward for work in an acceptable manner. On an economic level, it is far from a perfect market. Many outside influences act to distort the level of rewards available. It is, in my opinion, unsatisfactory to allow market forces to be the sole arbiter in this case. Government intervention is required.* Taxation should be a means by which the government tries to correct some of these distortions.

There you go, attempted economics. In a nutshell, I believe that income distribution, in the form of progressive taxation, is absolutely necessary in the current free market system. Those on high incomes should pay tax at a higher rate than those earning very little. And now, let the brickbatting begin.

*Preferably not this government though. I should add that I believe that the structure of democracy in the UK is in need of the most urgent reform. It's difficult to support government intervention when your government is full of unaccountable incompetant lickspittles.

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