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Adam Smith Institute Blog:

Taxing times

By Dr Madsen Pirie in: Tax & Economy •

I had a piece in the Telegraph business section on Wednesday, comparing Gordon Brown's tax policy with the maxims set down by his illustrious fellow-countryman, Adam Smith. Smith had said that people should pay taxes in proportion to income, that they should be certain rather than arbitrary, that they should fall due when they could conveniently be paid, and that they shouldn't cost too much to administer. I suggested that few would give the Chancellor four marks out of four, given his stealth taxes and his steady tax increases.

Much of my article was of steps which could be taken to simplify taxes in Britain, starting with the harmonization of income tax and national insurance. I also suggested that capital taxes could be harmonized, and put in line with income tax as well as with each other, absorbing the much-disliked death tax. The complex system of tax credits put in place by the Chancellor could and perhaps should be replaced by a simpler negative income tax. Out could go all the tax exemptions, allowances and tax credits accumulated over the years like junk in a store-room.

Yes, Smith himself had harsh words for taxes on labour (income taxes et al):

"In all cases, a direct tax upon the wages of labour must, in the long run, occasion both a greater reduction in the rent of land, and a greater rise in the price of manufactured goods, than would have followed from a proper assessment of a sum equal to the produce of the tax, [levied] partly upon the rent of land, and partly upon consumable comodities."

And similarly on capital taxes and profits. Yet he did favour one form of taxation more highly than any other:

"Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them."

So why does the Adam Smith Institute continue to suggest tinkering with income and capital taxes to make them a little more fair, a little easier to collect, a little simpler to understand? Why not embrace Smith's idea, as developed by Henry George, in the "single tax". Get rid of most of these other taxes apart from perhaps behavioural taxes where there is a popular mandate to tinker with certain aspects of peoples' behaviour and instead insist that the only revenue a government can call on is the value of land within its borders.

It is simple, difficult to avoid - it doesn't matter whether you are domiciled here or not - if you own land you'll pay your tax or lose the land eventually - economically non-distorting, penalises a monopoly (anathema to the free markets AS and ASI espouse) and can set an absolute and market driven limit to the size of the state. A body like the Adam Smith Institute (seen as it is in many circles as a rabid right wing think tank) is in the ideal position to push the "Overton Window" on tax policy. So why is it so pedestrian and unimaginative on this, where their eponymous hero appeared much more certain? At least their counterpart in Australia is bolder (be prepared to turn your computer's sound down - the background music grates!)

Technorati Tags: Henry George, Adam Smith Institute, land value tax

This reported in today's Oxford Mail:

Life Ban For Leys Thug (from thisisoxfordshire)



A violent thug has been banned from setting foot in Blackbird Leys for the rest of his life.

Magistrates slapped an anti-social behaviour order (Asbo) on David Reid, 37, after hearing about 26 convictions for offences including theft, burglary and assault in the past 22 years.

Reid is banned from ever entering Blackbird Leys the first life-time ban for an area of Oxfordshire and will eventually be barred from entering Greater Leys, where he currently lives.

Now, I am sure that this chap has caused a huge amount of misery to other people in his time. And he clearly deserves some kind of punishment and management. But an ASBO? Banishing him from his home area, where his family still lives, for the rest of his life? It's positively mediaeval. What's next for the New Labour Big Brother? Public floggings? Using the perfectly good vegetables thrown out by Tesco for throwing at the prisoner in the local stocks? I appreciate he did not contest the order - though that's probably a reflection of the assistance available to people faced with this non-criminal sanction - but one does wonder whether he'll even understand it.

Even more importantly, does anyone in their right mind believe that the trouble this chap has created will stop because he leaves Greater Leys? No, it will no doubt go with him. That might help Greater Leys, but it's not going to help other areas to have him moved around. So, does he get another ASBO when he causes "sub-criminal" trouble in Northway? Then again in Barton, or wherever he finds himself next? He clearly can't help himself, but whether a series of threats like this is helping him, and therefore those who might have to come into contact with him in future, is extremely doubtful.

So what are the answers? Well, for a start, it was reported also that the magistrate heard that over that 22 year period Reid had picked up convictions carrying 20 years' worth of jail sentences. Has he served them all, in full? It's in cases like this that one is sorely tempted by the Californian idea of "three strikes and you're out" - in other words on the third offense you get life. I don't personally agree with that though, because it has ended up in some very petty criminals incarcerated for life little more than being "naughty boys".

But we have a system of license here. If you do not serve your entire sentence behind bars, which we presume this chap hasn't since he's had time in between sentences to run up 26 convictions, and you're allowed out on "license" it means you can go straight back inside to serve the rest of your original sentence as well as any new sentence for not keeping your nose out of trouble.

So why is a civil order being used here where serving his sentences out might be more appropriate? It is clear he has not been rehabilitated or reformed by his sentences yet, though I do as a good (sic!) Catholic firmly believe in the ability of every individual to be rehabilitated, to show genuine contrition. And this sort of thing clearly diminishes the threat of a civil order intended to curb anti-social but not quite criminal behaviour, or where a criminal conviction would be hard to obtain.

I've long wanted to rail against ASBOs, particularly in Oxford where they are clearly being used as a political tool. Labour's local election leaflets even proudly proclaim that "they" have doled out more ASBOs than any other town in the Thames Valley, as if it's some kind of league table to be proud of. And to hand down the same potential five year sentence to a 37 year old with a twenty year history of criminal offences against which convictions were secured and a bored teenager not getting enough attention at home, at school, not on the correct diet or whatever is just mad.

And I am particularly sad that my good friend, Mick McAndrews, standing for Labour (this time around) in Barton, has allowed his name to go on a leaflet promoting ASBOs, when he himself has realised they are not what is needed in many of the cases he has dealt with. There are some parts of town is which the most decent citizen might be hard pressed not to become terminally depressed and in some cases anti-social as a result. Depressing areas with housing that will never be "decent" except in the fairy tale world of John Prescott's housing team. If Labour were truly ambitious for Oxford they'd be finding ways of dealing with such endemic depression to give their residents some hope for the future. They're not depressing because of the people that are there, I hasten to add, but because homes fit for heroes are no longer even fit. And that responsibility lies firmly at the feet of housing authorities.

I forget the name of the comedienne woman on TV but with Labour in Oxford she was right: "don't abolish ASBOs, they're the only qualification some of these kids will get!" More appropriately, perhaps, "don't abolish ASBOs, it's the only league table a Labour run Oxford can top"!

"I feel frustrated. I feel the whole mode of modern British Government, Whitehall and Westminster, is in a profound way counterproductive."

So says Andrew Phillips, as he would want to be known, and we should listen. Personally, I would add anti-democratic, dysfunctional, depressing and, more than anything else, increasingly unnecessary. He goes on to say:

"We have politicians and civil servants who have done nothing outside parliament. All they are fit for is passing new sky blue laws."

In a century we have swapped one ruling class for another, plutocracy for psephocracy if you will, where careerist spinmeisters will do anything to attract a vote at the expense of ideological debate. But more ominously this puts personality ahead of principle. The winners in this battle delude themselves that they have a mandate for almost anything that pops into their little heads as if they and only they are capable of governing.

Modern British government (perhaps western government as a whole) is like a mediaeval papacy (complete with a corrupt curia and all that papal bull crap!) and we need to rekindle the political equivalent of the reformation's "priesthood of all believers" or the enlightenment's rejection of a higher power altogether for whose favours we need some intercessor to mediate. We need to foster a belief in all citizens' right to self-governance before anything else, the sovereignty of the individual over the state.

The beast that is the state is increasingly only able to sustain itself against its own people by ever more coercion. Globalization threatens to empower the individual to the detriment of the state. Individuals and voluntary associations are more than ever before able to form communities not restricted by geography, to operate in markets once only accessible through intermediaries, to choose where to live, work, play, shop and pay taxes or not, none of which need be in the same jurisdiction.

We need to deconstruct the state, slay that beast. To reconstitute government as something to which we voluntarily cede only those functions that we cannot arrange for ourselves or in our communities, geographical or otherwise. To communicate, learn from and learn respect for those other basically decent individuals and associations of individuals oppressed by a world of states that seek to aggregate power to a ruling few. An age of co-operative individualism. Individuals seem, largely, to be able to make more friends than enemies, states more enemies than friends. We no longer need those states to network on our behalf when we can do it for ourselves.

My one regret about Andrew Phillips is that, having recognized some of the problems, he finds himself too tired to stay and try to change them. But we all run out of puff some time. Those who agree with him need to carry on that fight with ever more urgency.

Thanks to James Robertson for pointing me to this site in response to a call for fresh thinking on how to fund the EU after 2008. I'll no doubt return to this in the future but for now just have a look. How we can finance the EU and get a dividend back.

Technorati Tags: EU, monetary reform

Why?

Is the internet not the twentieth century's greatest example of "voluntary co-operation"? At least the late twnetieth century anyway. Why do we need "governance". It can be a beautiful thing. Like the lack of planning policy that went into Edinburgh's New Town?

Yes, there are examples, pretty egregious ones at that, of countries where human rights are not respected anyway further attacking peoples' rights for speaking out on the internet, or restricting their access, but one of the beauties (if we exclude the gazillions of spam email messages and viruses) is that it has provided an infrastructure that has been used time and again by clever people - for good and bad - to get round attempts to limit what they can do.

But if we try to tame the internet, and to extend some kind of official governance to it, aren't we officially entrenching the idea that it's there to be governed, for governments to interfere in?

My theory is that this forum is more about our governments. They are shit scared that the potential for the internet to bring about person to person interconnectivity, allowing people to organize in groups other than the geographical territories they manage, will bring about their irrelevance.

Should we also be worried about the corporate "colonization" of the internet that has gathered pace over the past five years or so? Well, yes and no. Actually, for most traditional corporations using the internet it's not about pushing the small guy out, but competing with them like they never have had to previously in a medium in which the little guy, more flexible and quicker to change, has a head start on. Pound for pound spent on it I'm sure small businesses are "better" at the internet and getting better all the time. And the internet could be the best way of levelling the playing field, democratising capitalism.

It is surely the very fact that the internet is not governed by nation states - that it is still a "land" of pioneering sprits pushing the boundaries - of trade, of communication, of knowledge transfer - that gives it its strength. And that's what scares those who would rule us.

Leave it alone! It has more power to break those regimes that abuse us than any supranational body that's incapable of preventing some of its member governments doing just what they please anyway.