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Martin Wolf wrote this in an article in the FT yesterday. I have edited it lightly without changing the meaning:
The British must not get hysterical about their current tax levels. Yes, taxes are higher than in, say, the US. But British values are not those of Americans. They are in fact more European. The Netherlands, a richer country than the UK, had a tax ratio of 44 per cent in 2022 against the UK’s 39 per cent. As Oliver Wendell Holmes Jr. said: “Taxes are what we pay for a civilised society.”
On this, I agree with Martin Wolf.
I also agree with him when he said:
We should also not assume that faster economic growth will solve the dilemma. As economies become richer and wages increase, the relative costs of public services tend to rise, as does the demand for them.
This is correct – and exactly why UK public spending is rising, and needs to rise (much) more, because that is the only way to meet the demand for essential public services when for the majority of people private needs are actually being met.
This was also true:
Taxation is ultimately driven by spending. How much (and where) a country spends, and how it pays for it, is a political decision. It defines the sort of country it wants to be. That is the issue, not fantasies of cuts that pay for themselves or magically engender growth.
Wolf is right, again.
The whole point of the Taxing Wealth Report 2024 is threefold.
First, we need more tax revenue as spending is going to rise and its inflationary impact has to be eliminated.
Second, in a country with gross inequality, this means that the wealthy must pay more.
Third, there are choices to be made about this, which is why I will be offering many more ways to raise taxes than are required to fulfil this goal.
What is required is the honesty to admit that these choices will have to be made. To pretend that growth will avoid the need for these decisions is false in a world where economic growth as we have known it needs to stop. What also needs to stop is the pretence that there is no money left.
So, let’s face reality and talk about taxing wealth in 2024.
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