Wednesday Afternoon Links

Miscellaneous material for your mid-week reading.

- Polly Toynbee writes that there's no magic involved in collecting fair tax rates from the rich - only a need for the political will to fund public priorities:

Cutting the 50% top rate suggests no great enthusiasm for rigorous taxing. Last week's ONS figures revealed gigantic avoidance of the 50% top rate. It could have been collected but George Osborne needed to prove it didn't work. The Treasury estimated raising the rate to 50% should bring in £6.2bn, but the actual return was a puny £100m.

In year one, before its official start date, high earners gamed the tax by rushing to take dividends and bonuses early. They paid more into pensions, gaining undeserved higher tax relief. Or they used trusts, or took income as capital gains. (That can be stopped, by fixing capital gains, as Nigel Lawson did, at the same rate as income tax, as the Institute for Fiscal Studies advocates.) Once Osborne announced the top rate would fall to 45%, high earners gamed it again. Incomes Data Services reports a massive delay in bonuses until after 6 April, when they leapt up by 107% in the finance sector to catch the new 45% rate. That could have been forestalled.

To Osborne it proved there's no point in taxing the rich. But the IFS says Denmark successfully collects its high top rate because it has no dodges: the rich can be taxed if reliefs are blocked. But this government never worried over income being sucked up from middle to top, with the share of national income taken by the top 1% now having risen to 14%, as GDP shifts from pay to profits. Osborne redistributes taxes the wrong way. Even raising tax thresholds sees most gain go to the top half, not to low earners.
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Tax cheating should be Labour's chance to tell honest political truths: you get what you pay for, you can't have Swedish services on US tax ideology. Tax is the price we pay for civilisation. At elections, all parties promise the impossible, more with less and cuts in "bureaucracy" to pay for everything. Treating the public like children on tax does nothing for trust in politics. The door has opened for that conversation.

- Meanwhile, Miles Corak notes that we can't make any strides toward equality of opportunity without treating more equal distribution of wealth as a priority:

Relatively less upward mobility of the least advantaged is one reason why intergenerational mobility is lower in the United States than in other countries to which Americans are often compared. But it is not the only reason. Intergenerational mobility is also lower because children of top-earning parents are more likely to become top earners in their turn. An era of rising inequality is more likely to heighten these differences than to diminish them.

Inequality lowers mobility because it shapes opportunity. It heightens the income consequences of innate differences between individuals; it also changes opportunities, incentives, and institutions that form, develop, and transmit characteristics and skills valued in the labor market; and it shifts the balance of power so that some groups are in a position to structure policies or otherwise support their children’s achievement independent of talent.

Thus, those who are concerned about equality of opportunity should also care about inequality of outcomes.

- The CP reports on Canada's role in spying on allies through CSEC's electronic surveillance.

- Frances Russell comments on how both the federal ethics commissioner and the RCMP have all too willingly functioned as servants of the Harper Cons rather than the public interest.

- Finally, Sean Holman writes about the corrosive effect of excessive party discipline on Canadian democracy:

(I)t’s reasonable to assume “there’s got to be times, random chance if nothing else, that some of us disagree with what we’re voting on.”

But the fear of talking about what happens in caucus and cabinet – the private spaces where MLAs, MPPs and MPs are allowed to voice dissenting opinions about public issues – means that Canadians have little understanding of why their representatives make such compromises.

An example of that fear: during a background interview, one politician told me that, as a first-time provincial candidate, “I knew I was part of a larger franchise and I would only be able to sell drinks in the same size cup as everyone else. But I did think I would be able to at least decorate my store the way I wanted and have my own customer service approach.”

But when we sat down for what became a sweaty, two-hour on-camera interview, the politician talked about being a supporter (of) party discipline.

The politician later told me about suffering “sleepless nights” contemplating what may have been said during that interview, which I left on the cutting room floor.