Ilovecheese
The economist Richard Murphy has a few ideas about raising tax revenue, which he thinks is necessary, now that Rachel Reeves seems to have changed her mind about a wealth tax.
here is a quote from him
"Removing the VAT exemption from financial services could raise £8.7 billion in tax a year taxresearch.org.uk/Blog/2023/09/07/removing-the-vat-exemption-from-financial-services-could-raise-8-7-billion-in-tax-a-year/ Taxing wealth more is not just about the obvious changes. It is also about removing subsidies to wealth. Removing the VAT subsidy on financial services does that."
The question is, I think, whether the current Labour leadership wants any sort of redistribution from the super rich to the rest of the country. They don't act as if they do, they seem to be relying on economic growth and so called trickle down economics, which doesn't work.
I suppose all economic theories are just that, theories, but I can't understand why Labour is choosing a theory which has failed.
Well, to your first point. Murphy has never supported a straight 'wealth tax' because, he says, it would be extremely difficult to implement. I quote:
Wealth taxes would:
Take a long time to introduce
Create massive problems with asset valuations
Result in very large numbers of tax disputes with wealthy taxpayers
Be very expensive to collect.
Those are big problems, and I want results now.
The changes he proposes are those which can be done through the normal legislative channels. Chancellors raise and lower tax percentages and tax allowances all the time.
Your question of whether or not Labour actually want wealth redistribution is impossible to answer, but ruling out a 'wealth tax' doesn't rule out other means of taxing wealth.
As for choosing one economic theory over another, well,I think that overtly declaring that they are going to ditch the 'theory' that has prevailed since the 1970s would lay themselves open to a barrage of right wing propaganda for the next 15 months.
Simon Wren Lewis' latest blog post is interesting on the danger of doing this:
The clearest example of this for me was the 2015 UK general election. Voters generally agreed that pretty well everything was worse in 2015 than in 2010, with one exception: “the economy”. Media pundits agreed that the economy was the Conservative party’s strong card. Yet real wages had been falling every year from 2010 until 2014, and had only begun to grow during 2015. As a result, Labour attempted to raise the ‘cost of living’ as an issue. What could explain this combination of real wage falls with the feeling a majority of voters had that the government was managing the economy well?
Part of the answer is that a crucial group of voters, pensioners, were cushioned from real wage falls. But the main answer has to be that many voters, encouraged by the media, had decided that ‘managing the economy’ was all about reducing the budget deficit. The major aim of the government was to bring down the deficit. Most media bought into the idea that the budget deficit was the major economic problem the UK faced, and as a result Labour gave up on their attempts to balance this against more conventional macroeconomic goals.
It was nonsense of course, for reasons I and others have elaborated on at length, but in political terms it worked, leading the Conservatives to win that 2015 election, leading to Brexit and further economic failure. How was it possible that faced with substantially lower real wages than five years earlier, voters and the non-partisan media nevertheless could be convinced that the budget deficit was more important than living standards?
The blog is worth reading
mainlymacro.blogspot.com/