Progressive Taxation vs Flat Taxation

[GameKat]

As you say, we do indeed view the Thatcher "reforms" very differently. They are the main reason I haven't lived in the country of my birth for 30 years. The "sick man of Europe" label was largely a result of poor industrial relations in that period impacting productivity. I would guess you and I would differ on the reasons for that too. But higher education was free, many who chose to could actually afford to get on the housing ladder, and for others there was plenty of council housing.

If COVID taught us anything, it's that the glue of society is not stock traders nor business executives, both of whom I regard as largely parasitical. Progressive taxation is a means to combat corporate capitalism, greed and ultimately oligarchy.

A general in the UK military earns 6x the salary of a private. I have no means of calculating if that's an appropriate multiplier, but given the extra years of experience and the added responsibility, it seems sensible. A FTSE 100 CEO earns 86x the salary of the *average* (not the lowest) paid worker in such a company. Are we really supposed to accept that these companies would somehow be less effective if their CEOs were earning 2.4million on average instead of 2.7million? How does that work? "Screw it, I'm not going to negotiate such a good deal on widgets today, I'm only getting 2.4million." Given the living conditions of many in the UK, I regard this wealth disparity as an abomination.

I've had a very interesting life, thanks to an NHS that saved my life as a child, and obtaining a doctorate despite a working class background. Had I been born 15 years later, I would still have reached adulthood, but I would never have attended university. I would never have worked for NASA, nor become a university professor. So I freely admit that for me this isn't an abstract debate, it's a very personal one.

[schocker]

Gamekat you argue for today's England as a land of opportunity and class mobility. I am glad. During my visits to the UK these last several years, I have seen a modern state with general prosperity. In the 70s it was not really that way. I remember coming home in the 70s and saying that the whole country needed painting and new plumbing. Traveling from Plymouth to London I got a ride with a government physicist in a government vehicle with a crown and all that cool stuff. In our discussions, I found out that he made a salary in US dollars at the time 6000. In the US at that time he would have been making about 18000 and had a lower cost of living. Salary equalization has been addressed to a greater degree than in the past. That is the real change in today's England. CEO pay worldwide is out of control but then Iger just came back to Disney to save it from the woke CEO that had hurt it's profit and public image. So what is he worth to Disney? A LOT. But the real change in the UK is ample opportunity freedom and the ability to attend university or pursue the vocation of your choice. It is much better now as seen by this outsider.

[GameKat]

Gamekat you argue for today's England as a land of opportunity and class mobility. I am glad. During my visits to the UK these last several years, I have seen a modern state with general prosperity. In the 70s it was not really that way. I remember coming home in the 70s and saying that the whole country needed painting and new plumbing. Traveling from Plymouth to London I got a ride with a government physicist in a government vehicle with a crown and all that cool stuff. In our discussions, I found out that he made a salary in US dollars at the time 6000. In the US at that time he would have been making about 18000 and had a lower cost of living. That is the real change in today's England. Opportunity freedom and the ability to attend university or pursue the vocation of your choice. It is much better now as seen by this outsider.

As I indicated above, I see the exact opposite. No doubt those who come from backgrounds that allow them to attend university will end up with standards of living far higher than a generation or two ago. But they are doing by virtue of the hopelessness and lack of opportunity now faced by those with less fiscally-robust backgrounds.

But returning to the tax issue, the question is really very simple. How much wealth inequality do you want to see? In both the US and UK, current levels are, IMO, obscene. But that really comes down to personal ethics, not economics.

I'm glad to hear the plumbing has improved, but that seems to have come at the cost of pumping shit into coastal and inland waterways.

[schocker]

The thing I like about a flat tax is that politicians can't pick winners and losers. We all suffer or we all celebrate. I like that as I think politicians are corrupt self-serving manipulators.

[GameKat]

The thing I like about a flat tax is that politicians can't pick winners and losers. We all suffer or we all celebrate. I like that as I think politicians are corrupt self-serving manipulators.

Then at least we agree about politicians

[Latanst1]

Flat tax, definitely. Everyone needs to have some skin in the game. One for all and all for one, etc.

Latanst1

The thing I like about a flat tax is that politicians can't pick winners and losers. We all suffer or we all celebrate. I like that as I think politicians are corrupt self-serving manipulators.

Then at least we agree about politicians

[GameKat]

Flat tax, definitely. Everyone needs to have some skin in the game. One for all and all for one, etc.

Latanst1

The thing I like about a flat tax is that politicians can't pick winners and losers. We all suffer or we all celebrate. I like that as I think politicians are corrupt self-serving manipulators.

Then at least we agree about politicians

This implies a cooperative rather than a competitive economic system; that is, not capitalism.

[schocker]

Whether it is a competitive system or not I like the flat tax as it removes the politician from the mix of picking winners and losers. We can all lose or win. Equality.

[Latanst1]

Please elaborate.

I would think that capitalism is a highly competitive capitalist system. When politicians are added to the mix, the competition becomes that much more competitive because the interests of the parties become even more complex.

Very interested to better understand the statement that 'capitalism is not a competitive economic system'.

****

[quote="GameKat"][quote="Latanst1"]Flat tax, definitely. Everyone needs to have some skin in the game. One for all and all for one, etc.

Latanst1

[quote="GameKat"][quote="schocker"]The thing I like about a flat tax is that politicians can't pick winners and losers. We all suffer or we all celebrate. I like that as I think politicians are corrupt self-serving manipulators.

Then at least we agree about politicians

This implies a cooperative rather than a competitive economic system; that is, not capitalism.

[Oxmeister]

As you say, we do indeed view the Thatcher "reforms" very differently. They are the main reason I haven't lived in the country of my birth for 30 years. The "sick man of Europe" label was largely a result of poor industrial relations in that period impacting productivity. I would guess you and I would differ on the reasons for that too. But higher education was free, many who chose to could actually afford to get on the housing ladder, and for others there was plenty of council housing.

If COVID taught us anything, it's that the glue of society is not stock traders nor business executives, both of whom I regard as largely parasitical. Progressive taxation is a means to combat corporate capitalism, greed and ultimately oligarchy.

A general in the UK military earns 6x the salary of a private. I have no means of calculating if that's an appropriate multiplier, but given the extra years of experience and the added responsibility, it seems sensible. A FTSE 100 CEO earns 86x the salary of the *average* (not the lowest) paid worker in such a company. Are we really supposed to accept that these companies would somehow be less effective if their CEOs were earning 2.4million on average instead of 2.7million? How does that work? "Screw it, I'm not going to negotiate such a good deal on widgets today, I'm only getting 2.4million." Given the living conditions of many in the UK, I regard this wealth disparity as an abomination.

I've had a very interesting life, thanks to an NHS that saved my life as a child, and obtaining a doctorate despite a working class background. Had I been born 15 years later, I would still have reached adulthood, but I would never have attended university. I would never have worked for NASA, nor become a university professor. So I freely admit that for me this isn't an abstract debate, it's a very personal one.

So you're telling me that you're a champagne socialist? ( Worry not about the Moet shortage, there are wonderful English Sparkling wines you can try, my favourite is one called South Ridge)

On a serious note I can see that you are grateful for having had opportunities in life that you would wish others to have too, which is fair enough. However, as much as I see the merits of free education at all levels, it's a difficult issue because it free access goes hand in hand with restricted access, and it's hard to see how it supports your implication that somebody from a working class background e born later (15 years, or really any amount of years) would be less likely to attend university. Indeed, since the 1970's participation in higher education has grown from about 5% to 35% , which is a huge increase. If we reasonably assume that the upper and middle classes had mostly saturated the roughly 5% who went back in your era, then the chance of working pupils going to university has probably increased a lot more , perhaps by 30 times or more? it makes sense to me because having to take a loan (which you maybe pay back) is more feasible for most than gaining very high entry grades which generally need to be purchased* well in advance.

Back to pay & taxation, I agree that the FTSE executive isn't necessarily going to work less hard for a slightly lower salary , but as per my previous post, avoidance is a bigger issue and especially at that end of the pay scale. For middle class salaries, behavioural chances are more likely. Take GP's as an example - 2/3 trainees now say that will work part time on qualifying, and in general there's a trend towards existing GPs going part time. While many factors (not least the stress of the job) are contributing to this, it's hard to see that tax isn't a factor - a GP can do 5 sessions a week and take home around £3k p/m after tax, or work themselves to death doing full time hours to end up with almost the same. I won't bore you with the detail, but higher tax, child benefit withdrawal and the fact it might entail childcare expenses (from taxed income!) can almost entirely erode the benefit of working more hours, and this is just one factor contributing to the GP shortage we have.

I think Latanst and Shocker both summarise the best reason for a flat tax though, and it's one that I missed in my original post - the fact that all are invested means that all have a reason to consider the whole picture. In the last election we had a candidate called Jeremy Corbyn who offered a vision of lots of extra social programs but said only the "top 5%" would pay for it , or , as I thought of it "lots of free stuff, somebody else will pay". It's easy to vote for social programs when you don't have to foot the bill, but when you make everybody responsible, the overall result ought to be better.

* I'm referring to students as a large group. I understand that some pupils can, through sheer intelligence and hard work achieve very highly despite having attended poor schools, endured suboptimal living conditions etc, but they are the exception to the rule. Good parents = good grades most of the time.