Realist, not conformist analysis of the latest financial, business and political news

Covid Windfall Taxes – Proof That The Public Are Idiots

UK tax to GDP

It appears that the Great British Public would support whisking the money off those who have done well out of the coronavirus. That being useful proof that at times the Great British Public are idiots.

And of course we all agree that they are, the only disagreement is what specific bit they’re chomping wrongly at any one time. The environmentalists – the more extreme end like David Attenborough – will insist that they wrong to want to have children. Those who plan the nation’s housing insist they’re wrong to want to have room to swing a cat in those new builds. Everyone, but everyone, on the left insists they’re wrong to note that capitalist free marketry is what makes the peeps rich. Observations on what the right get wrong are an exercise left to the reader, there’s certainly no shortage.

Here, with windfall taxes, the mistake is allowing envy to get the better of self-interest:

More than half of the UK public would welcome a windfall tax on companies such as food retailers that have thrived during the coronavirus pandemic, according to an opinion poll.

The survey of 1,682 people by YouGov also found that 61 per cent would approve of a wealth tax for those with assets of over £750,000.

The poll comes as the Treasury considers ways to deal with a deficit that is expected to soar to more than £300bn in the current financial year.

The true point here being that we want people to profit off unfolding events. Not just want, positively lust after. For a profit is proof that you are adding value. That’s actually what a profit is, it’s the value you’ve added to your starting resources. What you’ve produced has more value to consumers – in more detail, you’re able to capture enough of that greater value – than the alternative uses of those same scarce resources. You’ve added value, the amount you’ve made in profit is that extra value that you’ve been able to keep as a result of doing so.

We like people adding value, that’s what GDP is. It’s also what we consume – we do not consume earth, sky and water, we consume the value people have added by coaxing wheat out of the combination then processing that into a Big Mac bun. We eat value added therefore we want people to add value. Seems fair enough that they get some of that value added too.

Further, circumstances change. Perhaps some plague descends upon the land like Simon Cowell becoming popular. Perhaps some pandemic hits like Covid-19. Maybe all err and Jezza gets elected and so expatriation services are needed. Those already set up to provide such things will profit. Further, those who have access to the assets necessary to provide such things will organise to do so in the hope of making that profit. We thus gain more of those things which we desire given the changed circumstances.

This being what we want to be happening of course. The idea of a market economy being that we don’t know what the future holds, everyone gets to try everything and we consumers decide what we want to patronise given the circumstances at the time. Those who please us make profits, that’s the incentive for people to please us.

So, now people want to tax those who’ve been doing the very thing we want done? To misquote the bloke on the Venezuelan currency, he who serves the people ploughs the sea.

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4 years ago

Food retailers making excess profits- doubt it, not overall at any rate.
Now I’m sure there are doctors and nurses who’ve seen their pay rise due to overtime. Perhaps we should tax those greedy buggers?

4 years ago

Surely most in that 61% did some quick math and decided the proposed windfall tax wouldn’t “hit” them (the correct question being whether it would “affect” them).

Leo Savantt
Leo Savantt
4 years ago

It is clear, taxation discourages behaviour, tax the more well off and we’ll all be poor, that’s the plan as it’s the only way to achieve equality.

John B
John B
4 years ago

‘… at times…’

At times?

Quentin Vole
Quentin Vole
4 years ago

In (vaguely) related news, The Times is running a readership survey:
Should firms owned by billionaires be barred from the furlough scheme?
Voting is currently 69:31 Yes:No.

As I commented:
It’s terrifying to think that nearly 70% of (presumably) intelligent Times subscribers could fall for such transparent ‘politics of envy’ nonsense. Furlough payments must go to employees, not into the pockets of company owners. Why would anyone want to punish employees because the ‘owner’ (usually part-owner) of their company is a ‘billionaire’?

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