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April 06, 2017

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David

Blimey...... I am in shock.

"Michael Gove supports imposing VAT on private schools."

Mr. Gove being sensible, and Mr. Corbyn too!
Will Mr. Gove ask to join the Labour Party?

Chris, your blog, and the excellent links you provide have depressed me somewhat recently. I fell upon some fake news that, although a little over obviously satirical, has cheered me up a little......

The latest offering.....
http://www.newscrasher.com/2017/04/05/brexit-not-about-xenophobia-but-lets-make-a-club-for-distant-english-speaking-countries-says-david-davis/

c

Would the right wing response not be...

1. The efficient thing would be to have people choose between paying the cost of state schools, and paying the cost of private. With VAT on both (ignoring externalities, pigou etc.)Seeing as people still have to pay taxes that fund state education, not taxing private education gets you closer to this than paying taxes.(Note: tax equality between close substitutes more important like private and state eductaion more important than between less close substitutes, eg eductatin and cars)

2. Governements always want to tax more than they should. Increasing tax in one place, doesn't mean reducing tax elsewhere. So tax breaks for good stuff like eductaion are good. But taxes for bad stuff, like sugary drinks are bad.

David

Taxes...... 3 purposes.

1) Control inflation (reduce money supply).
2) Give and take away incentives including to "work".
3) Reduce wealth inequality.

"2" is debated continuously from the left and right sides of the fence.

"3" is debated continuously from the left and right sides of the fence.

"1" doesn't seem to be understood on either side of the fence. But maybe that is wishful thinking on my part. As Colbert noted, tax contributes to a work ethic in the "middle" classes. A squeeze is always possible and can be used to great effect.
But the long term result is Deflation and, as we have seen, increasing the money supply only to the wealthy does not solve that problem.

David

PS... does not solve the deflation problem for consumer goods.
It more than solves it for high "value" assets.
A middle is being carved, and the poor can starve. The middle will just work harder to maintain their position.

ADifferentChris

@c

Please could you flesh out (2) for me? I think along social vs. individual contributions/Piketty lines, that say Governments always want to tax billionaires less than they should.

c

@adifferentchris

I think there's a good argument that taxing the rich has postive externalities. But on 2. I was just putting what a low tax right wing chap might say in response to Chris. Put another way: if you're against tax per se, it's logically consistent to be against tax on private schools even if it reduces allocative efficiency.


I think my 1. actually makes sense, though. From the narrow economic efficiency point of view that Chris is using, right wingers should want the choice between private and state schools to reflect their actual costs. And because state school cost is effectively zero from a parents perspective, not taxing private schools will get us closer to this than taxing them. (Expecting Chris to ackowedge this any time now :-))


NOte: personally, I think narropw economic efficiency is a silly way to think about private education and I'm all for taxing it.

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