Make big companies pay tax? A joke.

[Cormac]

Cormac wrote:

The issue is that "redistribution of wealth implies a number of things, primarily:

1. That "wealth, and indeed, all property belongs to the state, (essentially a feudal concept).
2. That "the people" have a right, or vested interest in that wealth
3. That there is no right to private property
4. The state tolerates private ownership, only in limited circumstance.

None of this would have been accepted by people engaging in charitable activites in 1601, except insofar as the king/queen being the ultimate owner of all lands. (And in fact, the history of the development of democracy is one that traces the tension between the aristocracy and the monarch over such property rights and the limitation of regal power).

I don't think it necessarily implies all those things at all. Most posters in this thread have agreed that taxation is an inevitable requirement for any functioning society. In a democracy, people will use the ballot box to find a government that a majority can at least cope with, including their economic policies. The people, then, have a vested interest in what the taxation revenue is spent on. Most societies will want at least a portion of that spent on supporting people who are struggling to survive. (There will always be argy-bargy over the amounts, but that's what political compromise is all about)

This very everyday system of wealth distribution happens in the majority of western democracies without anybody blinking an eyelid, and certainly has absolutely no implication that "there is no right to private property" There may well be an implication that no one has the right to unilaterally stop paying their share of taxation, but after that, they can spend what remains on hookers or good works, the choice is theirs...

The difference is as follows:

1. Taxation by a government to whom the people have conditionally delegated authority, for the purpose of vindicating their a priori property rights and rights to health, freedom of expression, education, and so on. Taxation is something that we allow the government to do on our behalf for the purpose of vindicating the rights we declare for ourselves, and for the protection and nurturing of which we create a state apparatus and delegate authority to it. All rights are declared by the people outside the government, and the people remain sovereign.

2. Taxation by a state which is in itself sovereign, and which itself is the ultimate owner of all property, including "wealth". It has the authority to "redistribute" this wealth at its own initiative.

The former is my preferred structure, and is the kind of democratic republic in which I live. I am content to pay taxes to a certain level, so that my fellow citizens have a modicum of protection and we have good educations and welfare systems. There is a limit to that though. I expect that my next paycheque will see my taxation going from 48% of my pay to something around 52-54%. I work long hours in a very stressful job. I am away from my family a lot. I studied for many years to put myself in a position to earn more money to support my family. I am fine with so-called "progressive" taxation, but I am reaching my limit. One of two things will happen. Either I will move to an easier job that pays less, (unlikely - but where is the motivation to continue to work so hard when the state takes so much of my money), or I will move to the UK office, where my salary will increase, and I'll pay less tax. So the state will lose income tax, VAT, and so on.

The state had to get the balance right, and run a tight ship in order to sustain support and belief. Killing the golden goose is a sure fire way to lose that belief and support.

[MrJonno]

If you don't tax those at the top enough to ensure those at the bottom have at least a minimum quality of existance then they will simply shoot the rich and then no one is rich.
While tax are the price for civilisation they are in affect protection money for the mob which some people may have moral issues with I consider quite practical

Lower taxes too much and you don't get capitalist utopia you get communism

[Cormac]

... that the development of early capitalism also created a tension with the aristocracy and monarchy.

Smith clearly identified that the hereditary landowners extracting rent and the monopoly privilege of credit creation extracting interest were costs to production and not costs of production. While not an argument against private property he makes the case that such profit making were anomalies amounting to a free lunch, so much so he advocated taxing these profits away, judging they were the least harmful to free trade i.e. not a consumption or income tax affecting the cost of living.

These views were generally shared by the early economists, couple that with the ongoing poor law debates, the angle or justification is provided to make the evolutionary leap, rightly or wrongly, to get from taxing away the free lunch from the inheritors of private property to considering property as belonging to the state.

There is a distinction between property held by the landed aristocracy, and property that was earned in the modern world. It seems valid to me that the individual owes something to the state that creates a stable environment in which he or she can convert effort or ingenuity into something fungible, anduse that to acquire other forms of property.

The former was, more often than not the result of a literal theft, for example, in Britain and Ireland, the confiscation of land from the incumbent and the granting of that land by the monarch to a dependent aristocrat. In such cases very very few actually owned their land outright, but held it at the sufferance of the monarch. Nonetheless, such lands were invariably acquired as the spoil of some conflict or other - i.e. theft.

It was, to an extent justifiable to make arrangements to ameliorate the negative impacts of monarchic and aristocratic property. However, in my view, the state delegitimises itself when it assumes ownership of property, precisely because the state had always previously been the owner. It was and is a shelter against despotic power that the state is limited in its range of action in relation to private property.

An interesting manifestation of this is in the contrast between English and Irish law nd how arrangements are made fo compulsory purchase of property.

In England "Crown Prerogative" still exists, but has been reserved to the state. This power effectively means that the state can forcibly confiscate your property and cannot be limited in this action by the judiciary.

In Ireland, the government was shocked to discover that it did not inherit "Crown Prerogative" and is in fact subject to.review and control of th judiciary. They proceed by way of compulsory purchase order, which is a tightly controlled process subject to citizen oversight.

[Cormac]

If you don't tax those at the top enough to ensure those at the bottom have at least a minimum quality of existance then they will simply shoot the rich and then no one is rich.
While tax are the price for civilisation they are in affect protection money for the mob which some people may have moral issues with I consider quite practical

Lower taxes too much and you don't get capitalist utopia you get communism

But what is a "minimum quality of existence". Poverty in the Western World is now defined by relativity, and not by reference to a default "minimum quality of existence".

Taxes are necessary. The problem is, quite often those who call for a "wealth tax" or for a government to "tax the rich" it is out of envy and spite- the dog in the manger. There is the feeling that the "if I can't have it, you can't have it" seems prevalent.

Tax the "so-called" rich too much and they will either stop working or leave the state.

[pErvinalia]

The problem is, quite often those who call for a "wealth tax" or for a government to "tax the rich" it is out of envy and spite- the dog in the manger. There is the feeling that the "if I can't have it, you can't have it" seems prevalent.

Evidence for this?

[Cormac]

The problem is, quite often those who call for a "wealth tax" or for a government to "tax the rich" it is out of envy and spite- the dog in the manger. There is the feeling that the "if I can't have it, you can't have it" seems prevalent.

Evidence for this?

It is a constant refrain in Ireland at the moment, and incidentally, "the rich" is now identified as any household with a gross income in excess of €100k.

[Cormac]

The problem is, quite often those who call for a "wealth tax" or for a government to "tax the rich" it is out of envy and spite- the dog in the manger. There is the feeling that the "if I can't have it, you can't have it" seems prevalent.

Evidence for this?

...and the result of this is bad taxation policies that are ultimately self-defeating.

It is sensible to levy tax.

But there is nothing morally wrong with being rich, prosperous, or for that matter, middle class.

[pErvinalia]

I think the question of morals comes in when being rich etc is concurrent with growing numbers of poor. I.e. the widening of the equality gap and the reduction of the middle class to the lower class. Then I think it is a fair question. Is it right that some people should have so much excess to their needs when so many are increasingly finding it hard to simply survive?

[Cormac]

I think the question of morals comes in when being rich etc is concurrent with growing numbers of poor. I.e. the widening of the equality gap and the reduction of the middle class to the lower class. Then I think it is a fair question. Is it right that some people should have so much excess to their needs when so many are increasingly finding it hard to simply survive?

It depends how they are generating their wealth.

But what is "poor"? The definition in the West these days is relativistic. If "poor" is always defined as being a proportion of average income, then no matter what quality of life a person has under welfare, they will always be declared to be poor, even where they have two foreign holidays per year. (This is not an exaggeration - I know of several families in this circumstance.

[MrJonno]

But what is a "minimum quality of existence". Poverty in the Western World is now defined by relativity, and not by reference to a default "minimum quality of existence".

Whatever it takes to avoid revolution ie decided by the people (not the individual) in a democracy

[Cormac]

But what is a "minimum quality of existence". Poverty in the Western World is now defined by relativity, and not by reference to a default "minimum quality of existence".

Whatever it takes to avoid revolution ie decided by the people (not the individual) in a democracy

Well, the logical result of that is that everyone is forced onto a flat standard wage. Which in turn would precipitate another revolution.

It is never a good idea to pander to the mob. It is a very dangerous thing.

[MrJonno]

But what is a "minimum quality of existence". Poverty in the Western World is now defined by relativity, and not by reference to a default "minimum quality of existence".

Whatever it takes to avoid revolution ie decided by the people (not the individual) in a democracy

Well, the logical result of that is that everyone is forced onto a flat standard wage. Which in turn would precipitate another revolution.

It is never a good idea to pander to the mob. It is a very dangerous thing.

On the whole people don't riot if others are merely richer than them, they do riot if they are hungry, cold and worried about getting seriously ill (if they are already ill they just die in the streets causing disease).

We pander to the mob every time we have an election, one man one vote would produce very different results to one pound/dollar/euro one vote. Mob's don't stay mobs very long anyway someone always floats to the top to take charge

[Cormac]

But what is a "minimum quality of existence". Poverty in the Western World is now defined by relativity, and not by reference to a default "minimum quality of existence".

Whatever it takes to avoid revolution ie decided by the people (not the individual) in a democracy

Well, the logical result of that is that everyone is forced onto a flat standard wage. Which in turn would precipitate another revolution.

It is never a good idea to pander to the mob. It is a very dangerous thing.

On the whole people don't riot if others are merely richer than them, they do riot if they are hungry, cold and worried about getting seriously ill (if they are already ill they just die in the streets causing disease).

We pander to the mob every time we have an election, one man one vote would produce very different results to one pound/dollar/euro one vote. Mob's don't stay mobs very long anyway someone always floats to the top to take charge

Almost noone in Ireland is cold, hungry, or without shelter.

Yet there is a strong (and stupid) call to "tax the rich", and the context of that is to supertax any household earning €100k or over.

[Jason]

Here's an idea Ireland. Tax the fucking corporations that use your country for a tax shelter.

[sabell]

... that the development of early capitalism also created a tension with the aristocracy and monarchy.

Smith clearly identified that the hereditary landowners extracting rent and the monopoly privilege of credit creation extracting interest were costs to production and not costs of production. While not an argument against private property he makes the case that such profit making were anomalies amounting to a free lunch, so much so he advocated taxing these profits away, judging they were the least harmful to free trade i.e. not a consumption or income tax affecting the cost of living.

These views were generally shared by the early economists, couple that with the ongoing poor law debates, the angle or justification is provided to make the evolutionary leap, rightly or wrongly, to get from taxing away the free lunch from the inheritors of private property to considering property as belonging to the state.

There is a distinction between property held by the landed aristocracy, and property that was earned in the modern world. It seems valid to me that the individual owes something to the state that creates a stable environment in which he or she can convert effort or ingenuity into something fungible, anduse that to acquire other forms of property.

The former was, more often than not the result of a literal theft, for example, in Britain and Ireland, the confiscation of land from the incumbent and the granting of that land by the monarch to a dependent aristocrat. In such cases very very few actually owned their land outright, but held it at the sufferance of the monarch. Nonetheless, such lands were invariably acquired as the spoil of some conflict or other - i.e. theft.

It was, to an extent justifiable to make arrangements to ameliorate the negative impacts of monarchic and aristocratic property. However, in my view, the state delegitimises itself when it assumes ownership of property, precisely because the state had always previously been the owner. It was and is a shelter against despotic power that the state is limited in its range of action in relation to private property.

An interesting manifestation of this is in the contrast between English and Irish law nd how arrangements are made fo compulsory purchase of property.

In England "Crown Prerogative" still exists, but has been reserved to the state. This power effectively means that the state can forcibly confiscate your property and cannot be limited in this action by the judiciary.

In Ireland, the government was shocked to discover that it did not inherit "Crown Prerogative" and is in fact subject to.review and control of th judiciary. They proceed by way of compulsory purchase order, which is a tightly controlled process subject to citizen oversight.

I by and large agree with this view, where for the private individual property ownership is a reward and a result of ones own productivity.

Where I disagree with the current system and where I think it breaks down is when property is used as an investment strategy during the inflation period of a boom. The reason the property is increasing in value is directly attributable to the free lunch to be gained from the inevitable bigger fool who will purchase it (out with routine inflation or a property's perceived exclusivity or an infrastructure investment in the area).

The proof that this is a flawed system can easily be shown; if we took a property built in 2000 and assume it has been flipped a number of times making each flipper a substantial profit for no greater effort than it takes to acquire a mortgage. All of that profit and then some exists today in the form of interest bearing debt held by the person with the current mortgage for the property with a value that bears no relation to the mortgage on it.

So I recognise the difference as you describe it between feudal landowners and modern property owners but the net effect to productivity is the same and it is negative, as identified by Smith. Similarly the response should be the same as Smith's - tax away the flipping profits, today, that should be done in lock step with lower income or consumption taxes, thus directly reducing the cost of living.

Regarding compulsory purchase orders - there is a recent example of this here in Scotland, where a planned by-pass to alleviate city grid lock has been held up through the courts for 10 years with a number of understandably upset and distressed home owners faced with loosing their homes. Our Supreme Court has recently given the green light for the by-pass to go ahead and CPO's will be issued.
Much as I'd hate for it to happen to me, so long as there is a transparent due process, and local support for a much needed infrastructure improvement, on the face of it I don't have an issue with CPO's.