Friday, March 23, 2018

Friday Morning Links

Assorted content to end your week.

- Owen Jones discusses the need for wealth taxes as part of any plan to meaningfully reduce economic inequality:
Much is made of income inequality, and rightly so. Labour’s 2017 manifesto, which proved the tombstone for a neoliberal political consensus that has prevailed for a generation, pledged modest rises in income tax for the top 5% and in corporation tax. Those proposals, while welcome, did not go far enough. On taxing wealth, there is a far greater lack of ambition. This may smack of a lack of gratitude: “Come back when you’ve written a manifesto that buried New Labour’s acquiescence to neoliberalism,” a Labour staffer could justifiably respond. But even if it was the most radical manifesto of my lifetime, that does not mean it was radical enough, given the multiple social crises confronting us. It was a start. Wealth inequality, after all, is about twice as great as income inequality. While wealth inequality fell in the decade following 1995, that trend has since shuffled into reverse. And, according to the Resolution Foundation, while wealth has more than doubled as a percentage of the economy since the 1980s, we still raise only 4% of our tax from it.
So what are the solutions? The first is a radical overhaul of property tax. When a mass movement of civil disobedience and protest in the early 1990s succeeded in defeating the poll tax – in which all households paid the same amount regardless of their economic circumstances – a new council tax came into force. Not only is council tax calculated on valuations that are now more than a quarter of a century out of date, but it is also profoundly regressive. According to the Resolution Foundation, in some areas it has become almost a flat rate, like the despised poll tax. Labour did, in fairness, pledge to review council tax and business rates and to consider a land value tax, but with no firmer commitment than that. The party needs to commit to either a land value tax or at least to an overhauled property tax – one levied as a percentage of current property values, for instance.

Then there’s inheritance tax. The inheritance tax paradox is that it is the most progressive and fair tax of all – arguably it is a tax on the class system – and yet is the most reviled, probably because it is hard to separate from the loss of a loved one. One suggestion floated by the Green party is to replace it with a levy on the recipient, rather than the deceased donor – that would make it harder to caricature the charge as a “death tax”. Portes goes further: why not replace inheritance tax with a principle that any money received from any source is treated as income unless it can be proven otherwise, whether it’s a £10,000 gift from a grandfather or £10,000 left in his will.

And then there’s capital gains tax: Labour promised to reverse Conservative cuts to it, but why not go even further? The IPPR’s commission floats other possible game changers, such as establishing a British sovereign wealth fund, much like Norway’s. One of the many tragedies of Thatcherism was the shameful waste of North Sea oil revenues as it built a fractured society, in contrast to the more prosperous and equal social-democratic Norway, where the state owns nearly 60% of wealth and 76% of non-household wealth. There’s also the proposal to give workers stronger shares in the ownership of companies, and the creation of workers’ ownership funds – as well as a monthly pay cheque employees would also get an annual dividend. We should go even further: why not an annual wealth tax on the top 2% or 5% of households?
...(I)f Labour wishes to enact a truly transformative programme it may have to raise wealth taxes on, say, the most affluent quarter of society. This is certainly fraught with political risk. Yet consider the challenges: a struggling NHS, public services under strain, an ageing population, a national housing crisis, creaking infrastructure. If a new Britain is to be built, Labour will surely have to be more ambitious.
- And Marc Lee argues that British Columbia's new tax on empty homes represents at least a step in the right direction. 

- Meanwhile, Emily Stewart examines how the Republicans' tax scam has served only to make inequality worse in the U.S.

- Meagan Day points out how a few private operators are making a killing abusing the needs of health care systems - including by exploiting their own supply failures to raise prices. And CBC reports that misguided attempts by past Alberta PC governments to outsource operations to Carillion have resulted in the province having to funnel money into a failed corporate entity to maintain basic infrastructure.

- Finally, Noah Smith highlights how non-compete agreements not only damage the bargaining power of the workers bound by them, but also undermine economic development generally. And Terry Gerstein rightly criticizes Donald Trump's plan to make sure that employers who get caught stealing wages  are no worse off for taking money out of the hands of their workers.

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