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It sounds like we're mainly in agreement that pensions are essentially a wealth transfer tax from the poor to the rich. Do I have that about right? The poor die young and don't collect.
Er....no. The poor certainly do die younger but that is nothing whatsoever to do with pensions per se.
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I proposed a VAT surcharge and current account expenditure. What was your alternate proposal?
I like pensions
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VAT is a different subject but I think you'd be well to observe that the Conservative government in Canada (led by an economist who for many years helped guide the fiscally conservative Fraser Institute think tank) has consistently lowered the rate while their Liberal and NDP (socialist) opponents have always established that it could be raised. VAT are not regressive unless they are applied unequally.
And the opposite is true in this country. What is your point? Things do not happen in a vacuum, and the decisions of political parties are informed by many things.
VAT is intrinsically regressive.
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Payroll taxes are and always have been more unequal against the poor. As incomes rise, a larger portion of household revenues are earned from non-payroll sources. Moreover, each succeedingly wealthier quintile is able to take further advantage of tax deferrals offered as incentives to invest for retirement. None of this would be happening (or need to happen) with a secure VAT and plenty of oversight.
As I have said: payroll tax is not what we are talking about.
You are correct that as income rises a larger proportion comes from sources other than paid employment. But it is not a significant proportion until you get quite high up the income scale. And some of those other sources are also subject to tax. You may recall that one of the justifications for lowering the level of income tax was that high rates led to "tax exiles". The argument is that if you levy high rates of income tax people will choose to move abroad to avoid it. Or in other words they will refuse to accept the rules which benefit the wider society when those rules don't suit them. On that premise it is further argued that tax revenue will actually be higher if you have lower rates. As Ms Hellman allegedly said in a different context: tax is for little people.
It follows that the point you are making is not important: although it has some element of truth. Because either that analysis is true, in which case the proportion of rich people's revenue which does not come from paid employment is not that high: or it is false, in which case the myth serves some other purpose. That leaves out other taxes of course: they are also in play in this discussion
The taxation of other types of income is perfectly possible, too. Obviously there is a kind of "arms war" whereby tax rules are laid, and then the rich and their servants find ways to minimise their liabiities. The poor do that too, but are not very successful precisely because their income is taxed at source through PAYE, in this country. But that is not so true elsewhere, perhaps. I hear americans talking about filling up tax returns at the end of the financial year, and sometimes getting refunds. I do not know how their system works but I infer that they make some payments through the year, presumably through deductions at source calculated on some estimate of income: and then square up at the end of the tax year. I do not know if those estimated payments are mandatory, however. It does not matter much for the purposes of this discussion
You are also skipping over the fact that there is nothing either necessary or desireable in offering tax concessions such as you describe. That is no more an act of god than anything else we are discussing. It is a tax break the poor don't share, as I pointed out in my last post. But once again your account is smuggling in the idea that there is no alternative. Or so it seems to me. That is a story we have been told for 30 years: it was a lie then and it is a lie now. It doesn't get truthier with repetition.
The fact that people do not wish to pay tax is taken as read: that is not true as an inescapable fact of human nature either, though the right would like us to believe that. It is more true now than it used to be: but that is also an effect of the drip feed of propaganda over many years. Once again I draw on the "truths" I learned from my family and culture: one of our family sayings was " I love paying tax: the more the better. They cannot take it off you if you don't have it". I am sure you can see the point
That said, let me accept the premise for the purpose of this argument. What follows? According to you the rich will hide their wealth in order not to pay tax on it: and the answer is VAT. No, it isn't. If it is true, the rich will still avoid paying tax: they will spend their money abroad just because they can. We actually know this is true: there are booze cruises to France so that people can purchase their wine there: there are duty free shops in airports that poor people cannot access. Tax avoidance is always going to be a problem no matter how tax is levied. So your case that it is harder to avoid VAT is not proven.
In short it is ridiculous to base a tax regime on the interests and circumstances of the very wealthy as if they were just like us: they are not. They have more money; and that makes a qualitative difference in this context, as elsewhere.
Tax avoidance is enormous: that I will concede. But it is not necessary that it should remain at its current absurd level. That is also a political decision. For example, any regulatory regime, no matter how well designed, can do nothing without adequately resourcing enforcement. But enforcement of taxation is not well resourced. An average tax inspector brings in many many times the cost of employing them. In a sensible world, (or even one where the otherwise much vaunted business models were applied to this aspect, as they are to others) we would keep on employing more tax inspectors until we broke somewhere near even. But we don't. In fact the numbers of tax inspectors is being reduced from an already wholly inadequate level.
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I think this whole discussion is an interesting exercise in exploring those assumptions which are not stated, but which serve to underpin the argument presented. I am aware that you are a professional in this field and probably have a great deal more knowledge than I have: but the fact remains that to date you have made assertions without doing much to support them. I am wondering why that is, since your sources have to be better than mine, I think. What I suspect is that you are swimming in water where a great deal is taken for granted: and so am I, but what I take for granted is very different. What would help, I think, would be for you to try to lay out those assumptions plainly: that is what I am trying to do, too.
