TASC have produced a report on the Finance Act: you can download it here. It covers a mix of: (i) economic efficiency issues – is the tax system efficient?; (ii) process issues – can the process by which the Finance Act is formed and legislated be improved?; and (iii) value issues – the design of the tax system has a fundamental influence on the distribution of income and wealth, with TASC advocating a shift towards a tax system that supports greater equality of outcomes.
21 replies on “TASC on the Finance Act”
I’m sorry…I tried to read it with an open mind, but far too much of it is vacuous nonsense. There’s quite a bit of it which is a recitation of simple facts that almost everyone can agree on. But far too much of the rest is inherently and unresolvedly self contradictory.
Reading section 3 of the report is, in particular, like reading stuff that the TASC authors found buried in a damp and mouldy pile of old student union literature.
Sentences like “Part of the public interest is to encourage innovation, investment and a degree of risk-taking by entrepreneurs in the economy. Financial reward is one way this activity is encouraged. However, beyond that level of reward which serves the public interest, democratic states should progressively redistribute resources” indicate that the authors still fundamentally don’t get it.
Worst is that the authors seem to have their hearts generally in the right place and many of their aims are actually worthy, but they’re so trapped in some timewarp that it’s beyond them to come up with a single thought that isn’t copied from tired old socialist manifestos that were intellectually disgraced in the 1980s. Yes, many of the features of Ireland’s system are corrupt, protect the wealthy, hurt the weak and unconnected, etc., etc,. etc. Yes, that’s true and it’s terrible, unfair, wicked, etc., etc., etc. The system should be hugely changed. Absolutely.
Unfortunately the TASC approach would – on the whole – make life a lot worse for everyone.
The key lunacy in the whole document is one sentence “TASC argues that, in a progressive economy, the overall distribution of resources should also be broadly equal, while still rewarding work and enterprise.” Ehm, what?
I’m forced to refer to two quotes from literature. First is a quote from Alice in Wonderland about believing six impossible things before breakfast. Second is Orwell and his definition of doublethink. TASC are obviously fully capable of both doublethink and believing many impossible things before breakfast.
Lovely prose and quite true, but the clue to the thrust is in the quote under the tree logo. Too much targetted tinkering. Government knows best. Clearly, it does not. Simply abolishing the tax shelters would go a long way to addressing this. Admittedly I have yet to read the rest of the pdf., but this seems the overall message to the jaded reader?
I’m definitely not going to read it all, impotent as I am to effect any changes, but it appears very worthy. Hopelessly naif of course as it does not address the causes of the phenomenon and is therefore just another academic exercise. I am sure that it has many wothwhile recommendations, but …… !
Some degree of inequality is both inevitable and good as it is an integral part of Adam Smith’s “hidden hand” whereby the morally weak work harder to keep up withm and surpass their supposed inferiors who have somehow acquired status through wealth in the form of glass beads etc. Too much inequality is irrefutable proof of the deceptions of “democracy” and “government” and therefore dangerous to order and economic activity.
@ Hugh Sheehy
“Sentences like “Part of the public interest is to encourage innovation, investment and a degree of risk-taking by entrepreneurs in the economy. Financial reward is one way this activity is encouraged. However, beyond that level of reward which serves the public interest, democratic states should progressively redistribute resources” indicate that the authors still fundamentally don’t get it.”
Denmark seems to do alright for itself.
@ Rory There has to be some equivalent code word we can call out whenever someone mentions a Scandinavian country in defence of the sort of thinking that TASC produces. I dunno – ‘SWEDEN’ perhaps. Read Joe Lee’s book on Ireland. He mentions Sweden in it about a dozen times (admit it you could just have easily said ‘Sweden seems to do alright for itself’, couldn’t you? – all giving the impression that that country was governed by the Council of Elrond. Who know? Perhaps its the Archers-meets-Wagner – which would give us Lord of the Rings, right?
It may be that in a highly productive economy with a relatively educated work force redistribution doesn’t (seem?) to do much harm. But usually these Scandinavian places have already made their money. Even if it were true that income redistribution were more ‘civillised’ by what mysterious alchemy do you think it actually helps produce actual real wealth?
@ Paul MacDonnell
The US and Hong Kong have high Gini coefficients and high GDP. The Nordic countries have low Gini coefficients and high GDP.
Either model appears sustainable.
The point is that we have a choice as to what sort of society we want and there are always alternatives. Isn’t making choices over scarce resources what economics is all about?
You wrote: “Unfortunately the TASC approach would – on the whole – make life a lot worse for everyone.”
Is that what passes for a refutation where you come from?
Fair enough. I’ll now refute you:
Unfortunately what you advocate (whatever it is) would, on the whole, make life a lot worse for everyone.
Reading some of the posts above, you would be induced to imagine that the liberal policies of the past decade had resulted in a lasting golden age of prosperity.
It must the Alice in Wonderland breakfast side-effect.
@Fergaloh & Rory and anyone else who’s eyes are glinting in the corners…!
It’s true inequality is not ‘Good’ and is not a cause of anything in particular – afterall North Korea is very unequal between its elites and the rest. Neither is ‘equality’. If it’s a question of what ‘type of society’ ‘we’ want then my answer is that there is no ‘We’ in any meaningful sense.
The ‘liberal’ policies of recent years were nothing more than tax cuts combined with increased pubic spending (the former to pretend we were ‘liberal’ and the latter to bribe vested interests) – net result fiscal crises in Europe, USA etc..
This article in der Spiegel is a masterclass / overview of the causes and current location of the crisis. http://www.spiegel.de/international/europe/0,1518,693317,00.html
No sane person could argue with its argument. So don’t set up George Bush as the straw man argument about why ‘liberal economics’ has failed.
What we have are Sovereign debt junkies and private sector bank and citizen debt junkies. If ever I mistook some of this for the benefits of ‘liberal’ policies – and, in fact, in an unthinking way I did to some extent – then apologies. When Dr. G and I were publishing the Economic Freedom of the World Report we didn’t consider how much of the ‘growth’ of GDP was down to debt. It doesn’t change my mind about the virtues of economic freedom but the fingerprints all over this crisis are those of Sovereigns, treasuries and finance ministries.
TASC and all its doings appear to be “the other”, to be treated with thoughtless distain.
“vacuous . . . hearts generally in the right place . . . worthy, but . . . timewarp . . . Admittedly I have yet to read . . . jaded reader . . . not going to read it all . . . appears very worthy . . . sure that it has many worthwhile recommendations, but . . .”
As my old friend Mr Churchill almost put it:
“Great Empires have been overturned . . . The position of countries has been violently altered. The modes of thought of men, the whole outlook on affairs, the grouping of parties, all have encountered violent and tremendous changes in the deluge of the world. But as the deluge subsides and the waters fall short we see the dreary steeples of patronising bullshit emerging once again. The integrity of their arrogance is one of the few institutions that has been unaltered in the cataclysm which has swept the world.”
@ Peter Maquire ‘…But as the deluge subsides and the waters fall short we see the dreary steeples of patronising bullshit emerging once again. The integrity of their arrogance is one of the few institutions that has been unaltered in the cataclysm which has swept the world.”
I’m not sure if the The Irish Times and the ESRI will take this lying down.
David Brooks on the Swedes….
“It may be that in a highly productive economy with a relatively educated work force redistribution doesn’t (seem?) to do much harm. But usually these Scandinavian places have already made their money. Even if it were true that income redistribution were more ‘civillised’ by what mysterious alchemy do you think it actually helps produce actual real wealth?”
Can someone explain how this corporation is still doing OK:
@George Orwell. Well for starters it doesn’t ‘share equally’. There’s a disciplined hierarchy of how people get paid. If Wikipedia is right it they seem like fine folk – but state-socialism it ain’t.
@ Paul MacDonnell
Agreed, it is not state socialism. There is a hierarchy, but at the same time the co-operatives are owned by their worker-members and power is based on the principle of one person one vote. Does this not suggest that alternative models, based on more progressive egalitarian principles, can work in some cases? Maybe it isn’t necessarily the case that under such working conditions all inititative and motivation collapses?
Mondragon is an example of a successful co-op. Coops are wonderful things, and often quite successful. There are lots of them. Bravo! Many publically quoted companies sort of emulate the same model with stock options. Worker participation as investors in a company can be a win-win for everyone. AFAIK you have to buy your way in to the Mondragon cooperative, so the members really are owners and face potential downside as well as upside and that makes a BIG difference in discussing anything.
But, apart from that, Mondragon isn’t state imposed socialism and employees and members can opt out at any time (not possible with state imposed socialism), and it’s interesting that Mondragon (according to Wikipedia) is fine with a ratio of 9:1 for pay within companies. I doubt that anyone could describe that as “broadly equal”.
But, on principle, Mondragon should be free to go off and operate however it likes and to offer its products to its customers and win or lose in a free market. Under state imposed socialism that would not be true for companies like Mondragon, or for single traders, or artisans, or for anyone.
Again, the system that prevails in countries like Ireland where large businesses and large unions (and particularly large businesses and unions who make “contributions”) are favoured over other businesses and people is a corrupt and wicked system and should be dismantled to make way for something egalitarian, republican and democratic where Coops, joint stock companies, individual traders, etc,. could all operate freely and fairly.
TASC’s vision doesn’t hack it. Also, it depends on a world where Friedman’s mythical angels actually exist. Unfortunately, they don’t, and without them the vision of state imposed socialism falls apart completely.
wow…funky formatting! I have no idea what caused that.
@ Hugh Sheehy,
I don’t understand the idea of consumption tax as mentioned in the TASC submission.
What does it mean in practice?
On submitting your credit card at the checkout in the supermarket should one be compelled to show a salary advice slip? You then pay a VAT rate on the food that you purchase which is proportionate to your salary band?
I just don’t understand it at all.
TASC mention equality. Well if we are all going to be equal then what incentive is there to get out of bed and work hard?
Why bother at all. Are we looking at this from the wrong direction? If we want people to work, to educate themselves, to invent, then should we not have a financial reward?
Have we not learn’t anything from communist China, East Germany?
As far as I read, the consumption taxes in the TASC report are simply VAT and the like. I don’t think they have anything complex in mind.
Apparently TASC doesn’t like such taxes because they’re “regressive” and because they allow people to save and invest, which is of course a bad thing in TASC’s world.
They probably also dislike the idea that consumption taxes probably promote economic growth somewhat more than income taxes, since consumption taxes penalize work less and therefore growth often increases.
Given TASC’s fondness for expropriating the income from work anyway, that would at least be consistent…although I doubt they’ll step up to claim points for consistency on this one.
I suppose I should clarify that the above should be read as being slightly sarcastic in tone – although of course it’s also interesting to note that the Socialist government in Spain recently raised VAT in response to their fiscal problems.
@ Hugh Sheehy,
I also tried to approach the document with a open mind. However it appears very short on facts and practical solutions. In addition a serious lack of suggestions on how to implement this ideas.
It mentions equality. This country is taking in low thirties billion in taxes. But we are spending low twenties on social welfare alone.
So should we increase social welfare spending to match tax income?
At present is spending 66% of taxation on social welfare sustainable?
These are all rhetorical questions, but while there are a lot of elephants in the room nobody is mentioning the elephant that is social welfare.