Jamie White
speaker
57 appearances
2 recordings
1 series
first heard Dec 2010
last heard Apr 2011
Jamie White’s voice in public audio — every appearance, attributed to the second.
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Appearances
Now, it was odd that you suggested that people who have high incomes are fortunate.
This, I suspect, is the idea lies behind high taxes being fair.
It's not really a matter of fortune.
People who win the lottery are fortunate and, interestingly, don't have to pay any tax, whereas people who earn very high incomes are almost never fortunate.
It's usually a combination of skill and application.
They may be fortunate to be intelligent, but that's a different issue.
And, in fact, that leads on to my second argument for why progressive taxation is a bad thing, which is that, and this has nothing to do with fairness, it has to do with economics, as people's income increases, the marginal value of each new pound or dollar, as I'll say, reduces, so a declining marginal value of money.
To put it simply, £1,000 is worth less to a millionaire than to a pauper.
Now, there is in that fact quite an argument in favor of redistribution of wealth.
So if I transfer that $1,000 from the wealthy person to the pauper, the loss to the wealthy person is less than the gain to the pauper.
However, offsetting that is the fact that my incentives to work reduces as I earn more.
Each extra dollar is worth less to me.
I'm less inclined to go through whatever pain is involved in getting it.
The natural response to that, if you want people to keep being productive, is to reduce the tax burden rather than to increase it.
Whereas, in fact, we do the complete opposite and exacerbate the problem by making the tax rate higher as people earn more.
The effect of this is that we disincentivise the most productive people in society to work while trying to encourage the least productive to work by giving them lower rates of tax.
That's not strictly how it comes out in the end because actually marginal tax rates are very high for low-income people because of benefits and so on.
But take that away, and a progressive tax system basically encourages the least productive to work and discourages the most productive, which seems insane.
The fundamental cause of the crisis is the system of guarantees offered to bank creditors, so people who lend money to banks, guaranteed effectively by the government.
Now, this is explicit in the case of so-called retail depositors.
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