Friday, 17 October 2014

We already have a 'progressive consumption tax'...


Bill Gates has responded to the Thomas Piketty wealth tax proposal by moaning that it's not fair. By which he means not fair on entrepreneurs and the like who invest their money in the betterment of the business or society:

Bill Gates frames his argument like this — if you have three wealthy people, one spending money on new businesses, one spending money on charity, and one spending money on luxury items for him or herself, the last one should be taxed more because the first two are contributing more to society.

Now I may be wrong here but Bill's idea already applies (at least in the UK where we have a value-added tax). And, even though there are fewer consumption taxes in the USA, that country gives generous tax breaks for charitable giving and exemptions for capital investment in new or existing businesses.

So, whatever we think of Piketty's policy solution (and I think it mad, bad and dangerous to know), it does have the merit of being an attempt to resolve what that economist sees as an essential challenge to our society and economy. Bill Gates proposal is one that favours 'charity' over consumption and investment over spending. And, this might be fine for very rich folk like Bill but for the rest of us it's a proposal for a tax on the pleasures of life.

So once more let's remind ourselves that we don't live to hoard resources, to invest in business or to have 'charitable' consumption put on a special pedestal. We live to consume.


No comments: