Reply to: A million tax pounds

[DodgyAgent]

I don't know why there's been such a fuss about Gary Barlow.

Whatever he said, whatever he did, he didn't mean it.

[TheFaQQer]

I don't know why there's been such a fuss about Gary Barlow.

Whatever he said, whatever he did, he didn't mean it.

[doodab]

But you've already said (I think) that you want a tax free allowance, so you have a tiered system, which you don't want.

It wouldn't be tiered. The tax free allowance would be the same for everyone. I also think people should be allowed to group together and combine their tax allowances e.g. as stakeholders in corporations. So they can use their tax free allowance and pay their tax on their share of an income stream at the corporate, or family, or individual level.

I think you would need a similar blind decision system to set the tax free threshold. Going back to the ideas of the system being equitable and envy free, most people in society would be better off with a tax free allowance so they would chose that over a system without it.

The main problem is that the rate of tax would need to be determined by the budgetary constraints rather than giving people a choice and it would need to be close to 40% to be revenue neutral with respect to the current system. Even though many people in the so called "squeezed middle" would be better off under such a scheme they would object to becoming 40% tax payers.

[speling bee]

Yes also taken from game theory but in the case of taxation it's rather hard to achieve in practice. The only way I can think of to implement such a blind system would be to draw tax rates by lot, and it seems intuitively obvious (I'm without proof obviously ) that a flat rate system is the logical outcome of that.

But you've already said (I think) that you want a tax free allowance, so you have a tiered system, which you don't want.

[doodab]

Another approach is to be blind to your own individual circumstances. What system would you have if you didn't know what your place was going to be within the economy.

Yes also taken from game theory but in the case of taxation it's rather hard to achieve in practice. The only way I can think of to implement such a blind system would be to draw tax rates by lot, and it seems intuitively obvious (I'm without proof obviously ) that a flat rate system is the logical outcome of that.

[speling bee]

It's subjective if you only consider the point of view of one participant in the system but if you take a more mathematical view and apply a sort of "principle of relativity" to ensure that the outcome is equally acceptable (or objectionable) to all participants it can be made objective. Hence the idea (from decision theory) that a "fair" system should be

envy free - no one person would swap their tax position for someone elses
equitable - everyone feels equally hard done by, based on their own subjective measure
efficient -no one can be made better off without making someone else worse off

Taxation is basically a division problem of sorts, the main difference is that you're dividing a burden i.e. something with negative subjective value, rather than a desirable good. I don't think that affects the maths though. Try looking at

Fair division - Wikipedia, the free encyclopedia
Chore division - Wikipedia, the free encyclopedia
Exact division - Wikipedia, the free encyclopedia

for a bit of background.

It seems that progressive taxation isn't envy free in general, hence my assertion that a flat rate is necessary to achieve that particular aim.

Another approach is to be blind to your own individual circumstances. What system would you have if you didn't know what your place was going to be within the economy.

[DodgyAgent]

It's subjective if you only consider the point of view of one participant in the system but if you take a more mathematical view and apply a sort of "principle of relativity" to ensure that the outcome is equally acceptable (or objectionable) to all participants it can be made objective. Hence the idea (from decision theory) that a "fair" system should be

envy free - no one person would swap their tax position for someone elses
equitable - everyone feels equally hard done by, based on their own subjective measure
efficient -no one can be made better off without making someone else worse off

Taxation is basically a division problem of sorts, the main difference is that you're dividing a burden i.e. something with negative subjective value, rather than a desirable good. I don't think that affects the maths though. Try looking at

Fair division - Wikipedia, the free encyclopedia
Chore division - Wikipedia, the free encyclopedia
Exact division - Wikipedia, the free encyclopedia

for a bit of background.

It seems that progressive taxation isn't envy free in general, hence my assertion that a flat rate is necessary to achieve that particular aim.

Eloquently put summary of how tax "should be" raised and spent.

[doodab]

Fairness has to be defined as it is an entirely subjective concept.

It's subjective if you only consider the point of view of one participant in the system but if you take a more mathematical view and apply a sort of "principle of relativity" to ensure that the outcome is equally acceptable (or objectionable) to all participants it can be made objective. Hence the idea (from decision theory) that a "fair" system should be

envy free - no one person would swap their tax position for someone elses
equitable - everyone feels equally hard done by, based on their own subjective measure
efficient -no one can be made better off without making someone else worse off

Taxation is basically a division problem of sorts, the main difference is that you're dividing a burden i.e. something with negative subjective value, rather than a desirable good. I don't think that affects the maths though. Try looking at

Fair division - Wikipedia, the free encyclopedia
Chore division - Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Exact_division

for a bit of background.

It seems that progressive taxation isn't envy free in general, hence my assertion that a flat rate is necessary to achieve that particular aim.

[doodab]

If Gary Barlow, Amazon and your average contractor are minimising their tax liabilities it means that government does not have a blank cheque to squander. These governments have to be made to realise that they have to earn the right to tax and spend on our behalf. As soon as they do then they will have the right to argue a moral case for raising tax.

I don't think you need a moral case for taxation per se. It's a fairly obvious fact of life that no other system of social organisation works as well, and that's probably truer if you're rich than if you are poor. After all, it was the rich, or at least the powerful, who invented taxation in the first place, and traditionally it's always been the rich and powerful who taxed the poor.

[speling bee]

Fairness has to be defined as it is an entirely subjective concept.

It's not entirely subjective.

[DodgyAgent]

Taxation shouldn't involve moral questions at all. That's where the sense that it's a punishment comes from. It should follow a similar definition of fair as fair division problems do i.e. be equitable and envy free. As far as I can see a flat rate with a reasonable tax free threshold is the only way to acheive that.

Fairness has to be defined as it is an entirely subjective concept.

[DodgyAgent]

So do you think that taxation should only be used to pay for essential public services?

Public services should be delivered in the most efficient way possible. If that means tax and or insurance then so be it. A dogma exists that tax equals delivery of service and that without tax there is no service. The unfortunate way in which this dogma is used is that it ignores quality and efficiency and even removes choice from the equation.

If Gary Barlow, Amazon and your average contractor are minimising their tax liabilities it means that government does not have a blank cheque to squander. These governments have to be made to realise that they have to earn the right to tax and spend on our behalf. As soon as they do then they will have the right to argue a moral case for raising tax.

[vetran]

Problem is there you have quoted two seperate things and made out that they are joined.

1) The government used taxpayers money to bail out banks - Correct

2) The government allows cheap labour in from overseas - True ish...

But the two cannot be made into 1 sentence implying they are in some way joined

They are joined both being authorised by the Government and to the detriment of the majority of the populace.

[doodab]

If there were any morality about taxation then maybe there is an issue. Most people however look upon tax a s a means to punish people for daring to be wealthy. I would further argue that gary barlow et al are better spenders of their own wealth than UK government.

Taxation shouldn't involve moral questions at all. That's where the sense that it's a punishment comes from. It should follow a similar definition of fair as fair division problems do i.e. be equitable and envy free. As far as I can see a flat rate with a reasonable tax free threshold is the only way to acheive that.

[BrilloPad]

Problem is there you have quoted two seperate things and made out that they are joined.

1) The government used taxpayers money to bail out banks - Correct

2) The government allows cheap labour in from overseas - True ish...

But the two cannot be made into 1 sentence implying they are in some way joined

The issue was on jealousy to the rich. I have given 2 reasons why people should be jealous. I agree - they are not joined.