“A proportional property tax would not raise revenue, but it would even the burden between poor and rich households. That would galvanise the economy, as the rich save and the poor spend.”
Britain’s great tax con
In his excellent piece titled “Britain’s great tax con” Harry Lambert discusses the need for tax reform in the UK. The article points out that the UK’s tax system perpetuates inequality, hampers economic growth, and benefits the wealthy at the expense of the majority.
The Labour party, poised to return to power, has been reluctant to specify its tax plans, except for a commitment not to introduce new taxes on wealth. However, the article argues that Labour will face the challenge of raising revenue to fund its government spending, and one effective way to do so is by shifting the tax burden from labour to capital, from income to wealth.
By increasing taxes on wealth, Labour could potentially reduce taxes on income. The proposed reforms detailed in the article could generate £28 billion annually, which could be used for green energy initiatives or to cut income tax rates. This shift from taxing labour to capital would align with Labour’s historical focus on supporting workers.
The article emphasizes that ignoring wealth and refusing to consider these tax reforms is a mistake for Labour. Wealth inequality in the UK has grown over the years, with the wealthiest 10 percent consistently gaining the most, while the bottom half struggles. The current tax system benefits the wealthy, including those who inherit vast estates, as only a small percentage of gifts and inheritances are taxed.
The article argues that Labour could gain popularity and redefine its identity by advocating for tax reforms on wealth, such as a proportional property tax, which could level the playing field between rich and poor households.
Furthermore, the article suggests implementing a wealth tax on the very richest individuals, which could raise substantial revenue without causing capital flight or significant evasion.
In conclusion, the article calls on the Labour party to address the flaws in the UK’s tax code, particularly regarding property tax, in order to reduce inequality, spur economic growth, and fulfill its promise of representing the interests of working people.
Click here to read the full article.