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May 19, 2017

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David

Obvious.... but not to those with an envious nature.

Luis Enrique

see also Mirrlees: "the tax system
needs to be seen as just that—a system" and argues progressive systemic goals are sometimes best achieved with regressive elements, on efficiency grounds. .

is there any sense in sometimes looking at policies in isolation, if what we are really talking about is adding (or removing) policies without any offsetting changes?

Aaron Headly

In the U.S., we have an additional layer of faff to deal with: Congress, always avoiding anything that looks like a tax increase OR a payout of public money, supports various policies with targeted tax-cuts.

I much prefer your approach.

TickyW

"Other beers are available. But they’re not as good."

Am surprised to hear you say this Chris, given the very excellent Bishop's Farewell ale made by Oakhams, your superb local brewery.

And yes, bring back universal benefits funded by progressive taxation. That is, bring back a similar system we had before it was unpicked by Thatcher and her henchman, and thereafter by successive governments. If it ain't broke, don't fix it.

PD

We already have the highest marginal rate of income tax in the world (at 62% inc NI). Other taxes should be used.

TickyW

@PD

The top marginal rate of tax on income is 47%, made up of the 45% rate of income tax and the 2% National Insurance contribution.

Even if the top rate of National Insurance was equalised at 12%, the top rate of tax on income would be 57%, which is below the 62% you have quoted. But of course, top incomes only pay 2% NICs, whereas plebs pay 12%.

Tut tut

AG

"The pub was charging everybody the same price for beer, regardless of their income"

That's why many pubs used to have a public bar and a saloon bar with different prices, isn't it?

PaulS

There is a more "efficient" way to sort people by income, which the airline industry has infamously deployed to the tune of numerous headlines about the side-effects. Supply the plebs with awful swill at a low price, and supply halfway-decent beer (costing maybe 20% more to supply, on the airline model) at two or three or five or ten times the price.

To rake in even more while (falsely) advertising a low price, add a myriad of semi-concealed surcharges. Charge for the glass, for a napkin, for use of the table, for use of the barstool, for use of the door handle to enter and leave, for use of the floor to walk on, for use of AG's saloon bar, and for who knows what else. A computer kiosk of the sort now found in some fast-food places could handle that "efficiently", and anybody whose time was worth anything at all would probably default expensively rather than tap and tap and tap through the whole mess.

Voila!

Patrick Kirk

Is the notion that you can tax people more and then give them the same money back in the form of social care reasonable? You have to pay 2 sets of admin costs that way. You also are intruding on the choice of what care people can buy with the money you give back to them. Surely the idea that only those who can't afford care get help is a more sensible way to do things?

Leon

Isn't there a solid behavioral econ reason for winter fuel payments? If we take it as a given that hard up pensioners dying of hypothermia is bad then a nudge to spend money on heating makes sense.

D

Tiger?

reason

YES! And strangely (looked at now) Milton Friedman said exactly the same thing.

gastro george

Nothing has been sadder than the sight of New Labour types complaining that universalist policies are a "subsidy to the rich". Is that how far it has gone.

efcdons

@gastro george

The same here has happened with the Democratic party here in the US. Clinton was saying we shouldn't have tuition free college because then trump's kids might be able to go to college for free!

botogol

@tickyw you have neglected the withdrawal of personal allowance that kicks in at £100,000 making the effective marginal rate over 60%
https://www.gov.uk/income-tax-rates/income-over-100000

Tony Holmes

@tickyw @botogol Presumably it's also just about possible that you could be paying another 3% to repay student loans ?

TickyW

@botogol

No. On incomes above £130k the marginal rate of tax on income is 47% (45% income tax + 2% National Insurance).

The withdrawal rate applies to income between £100k and £126k (approx). The withdrawal of personal allowance when income reaches £100k is a total nonesense and the personal allowance should be restored.

Restoring the personal allowance would get rid of that stupid marginal rate anomaly which of course in incident only on a very narrow band of income. It makes more sense to restore the personal allowance and to increase the marginal rate to 50% for ALL incomes above a specific threshold, say £150k.

Using the anomalous marginal rate levied on that very narrow band of income to argue the top marginal rate should not be increased is not sustainable when seriously thought about.

john

It's easy to imagine a law requiring all transactors to present a "payment multiple card", which would display a factor to multiply times price, the factor based on the last tax return.

UnlearningEcon

Your point is an important one, but I want to add to something Luis said - we need to be aware of individual policies because often politics is about individual policies. Say we had 10 mildly regressive regulatory policies counterbalanced by a hugely progressive tax system - clearly that would be vulnerable to a relatively straightforward political reversal. IMO we need to combine both perspectives to have politically viable leftist policies.

Doug

There's a reason why working class people in the 1930s hated means testing. Any politicos who advocate any type of means testing, particularly ones who claim to be left wing, should be boiled in their own juices.

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