As we know that committee report on the idea of a one of wealth tax to pay for Covid. Yes, I think it’s a terrible idea and so do people who know about taxation. Still, that idea’s out there and so there will be people who argue for it.
It’s The Guardian that brings us the lovely news about it. Quite wonderful stuff in fact:
Any politician who looks at this dire situation and starts by wondering how one of the richest societies in human history, with its own sovereign currency, will be able to pay for it is asking the wrong question. We need first to minimise the damage and then worry about the bill, a process that may well take us into the second half of this decade. But at some point Westminster will start debating how to reduce the national debt, and against that backdrop the report from the Wealth Tax Commission makes stimulating reading.
Entirely correct, right now is really the wrong time to be raising taxes upon anything. This is true whether you use a Keynesian, MMT or even – spit – neoliberal analysis of the economy. Recessions just aren’t the time to be increasing taxation.
This means we have some time to discuss that future tax rise of course. My own response would be let’s kill the quangos and pay for everything from their rotting corpses. A minority view to be sure but one that would both work and also gain at least some support.
But we do need to examine this wealth tax idea as well. At which point The Guardian gives us the really good news. We don’t have to argue in the abstract. By the time any decision needs to be made we’ll have empirical evidence:
A funny thing happened in Buenos Aires last Friday: parliamentarians there voted by a chunky majority to slap super-rich Argentines with a tax to pay for the economic damage done by Covid. Anyone sitting on wealth of over 200m Argentinian pesos (£1.8m) will have to pay a one-off levy that the government hopes will raise billions to buy medical equipment, support small business, and help poor neighbourhoods. The so-called “millionaire’s tax” was a remarkable move that has been noted around the world, along with the justification provided by one senator: “We must find points of connection between those who have the most to contribute and those who need it.”
OK, the details are:
Argentina has passed a new tax on its wealthiest people to pay for medical supplies and relief measures amid the ongoing coronavirus pandemic.
Senators passed the one-off levy – dubbed the “millionaire’s tax” – by 42 votes to 26 on Friday.
Those with assets worth more than 200 million pesos ($2.5m; £1.8m) – some 12,000 people – will have to pay.
Those affected will pay a progressive rate of up to 3.5% on wealth in Argentina and up to 5.25% on that outside the country.
That’s a fairly chunky wealth tax. It’s also a little smaller than the UK suggestion:
Authored by a team of tax experts, it demonstrates that a one-off 1% wealth tax levied on millionaire households would raise up to £260bn
Err, no, it’s 1% a year for 5 years.
So, someone else is doing this. Doing it some years before we even have to make a decision. We should thus study the success, or not, of this before we make our decision, no?
My best guess is that it’ll be a complete Mongolian Clusterfuck. Little revenue raised, economic growth badly hit, investment falling through the floor. But then what do I know, only a little economics after all.
But it is good news, isn’t it? Someone else is making the mistake and we can observe before we do.