Let’s hear it for more tax!

Ken writes:

Public commentators in Ireland, like the greatly admired Matt Cooper, in today’s Irish Sunday Times, and on the radio, like Today FM’s Sunday Business show, contend that the public sector unions are out of touch with reality, because they are protesting the imposition of a pension levy on workers in the public sector and don’t give enough acknowledgement of the job security enjoyed by the public sector, when workers in the private sector fear for their jobs. The comparison drawn by these commentators between job losses borne by the private sector and pension levy borne by the public sector suggests that the two evils counter-balance each other and that given that job losses are inevitable in the present climate, the counter-balancing is necessary to ensure everyone does their fair share towards recovery.

Wrong! This misunderstands the way job losses affect the private sector. The fear of job losses is pervasive, but only some individuals will lose their jobs. Those individuals will definitely suffer the evils of the depression. But the lucky ones in the private sector who keep their jobs, will so far have suffered nothing. Comparing private and public sectors and ensuring that the pain is spread equally between those two groups, understood as groups, ignores the fact that the pain is not shared equally within each group.

The public sector unions want to increase taxes. This would be one way to ensure the pain is spread to every individual. The people who lose their jobs, slip out of the tax net, so they suffer an evil, but don’t additionally have to contribute to the costs of recovery. The people who do not lose their jobs, don’t suffer that particular evil, but have to pay for the costs of recovery through taxation. Further, taxation is the best way to ensure that those who are most responsible for the current situation don’t avoid paying the costs of recovery. The bosses in the private sector, after all, are not in general going to be making themselves redundant, and when they are retired, it will be on very generous terms.

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3 thoughts on “Let’s hear it for more tax!

  1. Ireland had a disastrous experience when raising taxes in the 1980s. Like then, high marginal rates of taxation are likely only to exacerbate the situation – tax avoidance or evasion become more common and jobs are driven out of the country.

    The people at the top are not on hit by high PAYE rates anyway, they register themselves as companies, which are liable to corporation tax, and pay themselves modest salaries from company revenues.

    http://www.irishtimes.com/newspaper/ireland/2009/0203/1232923384357.html

  2. kenanddot

    I would like to see a financial transactions tax. This would be a tax on every electronic currency transfer such as deposits, withdrawals, payments etc. It would be set a vanishingly small amount, like a hundredth of a percent, but since zillions of transactions take place every day, it would still generate revenue. People couldn’t avoid it by deeming themselves companies, and best of all, the banks who make the most transactions would take the hardest hit. Also companies couldn’t avoid it by moving overseas, not unless they wanted to take their money with them in a big suitcase.

  3. (1) More sophisticated tax banding.

    (2) Tax The Rich. Heck, my poor mother was far from the top bracket when earning and taxed in Belgium, but still got nearly 80% of her income swallowed up. Mind you, Belgium was basically bankrupt through the 80s; corrupt as heck; partly “saved” by legalising and taxing prostitution.

    (3) Have a maximum thershhold for earnings, based around how much money people actually need to live on. Say, picking a figure out of the blue, EUR 200,000. A choice of capping earnings or of giving the surplus back. Maybe offer the further illusion of choice in the matter, by letting people choose which department to give the surplus to, ex. health vs. education.

    (4) And heavy government control of prices. This is really the big problem, as dependent on competence, honesty, responsibility, … all those things that government and administration are famous for here.

    Being good, nice, and not wanting to scare people, I won’t declare how far I would like to go with these ideas in an ideal world … but I’ve found myself increasingly prefacing statements these days with “come the Revolution.”

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