Taxing wealth rather than productivity

Taxation is one of those things that everyone hates but accepts under what is perhaps the most ridiculous use of the shibboleth ‘its just how it is’.

In a response to one of my blogs I wrote a few years ago, a student suggested that taxation was a ‘voluntary’ process. I replied that the reason people paid their taxes without any apparent friction, was because it is the law for them to pay tax and to do sonot because it’s a voluntarily act.

At a deeper level, the student was arguably right. Because the fact that we don’t question the ridiculously extensive nature of the UK Tax Codes does indeed mean that in a counterintuitive way, we have voluntarily accepted the complexity and therefore the unfairness of the system that we have got.

Of course, it is the complexity, and the sheer volume of the UK Tax Code which stands at over seventeen thousand pages (17,000) and over a million words in length, demonstrates perhaps uniquely well how the more detail you have in legislation, the more holes you create for an entire industry of highly paid accountants to get their wealthy clients through.

The fairest way to pay tax, is for everyone to be treated exactly the same, and that means that everyone pays in the same way – which will always be the simplest way.

We occasionally hear talk of a ‘flat tax’, that is known to be a topic that our politicians avoid like the plague. They avoid it because of the upset it would cause the people who currently have so much influence over them and do so well from finding their way through those complexities that we have just discussed.

But a flat tax – which would mean everyone, and everything is taxed at the same rate, will not in itself go anywhere near enough to achieve the outcome of Levelling Level itself.

For reasons – which yes, once again, only benefit the rich and those with considerable wealth – the whole direction of Taxation in the UK today, is skewed towards productivity and output, rather than what anyone owns, manages or has sat idle in some form that is stashed away.

Taxing work and effort is a foolish thing to do, that contributes greatly to the difficulties and challenges that those on lower levels of pay face. It also works against social mobility, as it restricts the money available for people to ‘better themselves’ – perhaps by investing or starting a business – that would allow them to achieve and realise the aims they have – which should then be the focus of a much fairer and balanced system of tax.

Because the UK doesn’t currently tax land and resources that are held in private hands but provide the raw materials that are essential to daily life, those few that ‘own’ them suffer no discouragement from charging exactly what they like – and making no proportional payment back into the community pot as they do.

Equally, as public investment in infrastructure such as roads, railways, airports bring business to new areas and adds value to premises those private interests own, there is currently no system in place to tax the benefit to the company or the individual that they have gained for no reason other than it being the right time and the right place.

The argument that taxes are too complicated to overhaul holds no water. Like everything else, the only reason for arguing against change or for our politicians refusing to do so when they understand, is because there are powerful vested interests that benefit from not being taxed on capital and land, and an entire industry or profession exists that was created and developed to make the tax burden less and less painful, depending proportionately upon how much you are able to pay.

This must change.

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