“Such is our current frustration with so many aspects of our society, that it seems we are finally beginning to question the ideology of the free market… The ethical vacuum at the heart of capitalism, its inability to distinguish between what is right or wrong behaviour towards others, as long as it makes a profit, is no longer viewed with quite the same tolerance.”
Sue Gerhardt, Guardian.co.uk
Governments still rely on economists steeped in orthodox thinking for advice. If things are to change, a clearer understanding of how the economy works is needed, not just by economists and policy-makers, but also by the wider general public – a voter who votes in ignorance forges the chains that bind him. Economists have erected round their subject an intimidating barrier of jargon and maths, but this site and the books in our catalogue are intended to give the layman, the voter, a grasp of the basic principles.
Anthony Werner, Publisher
Rent Unmasked explores the new economic paradigm that policy-makers need to solve global problems in the post-2008 era. With conventional economic theories discredited, the new model must equip governments with tools to re-stabilise societies in a dangerous world. Rent Unmasked explains why one paradigm only qualifies to serve this purpose: the dynamic model that reinstates time and space in economic theorising.
ISBN 9780856835117 | Price: £19.95
BREXIT was a gift to the peoples of Europe by those in Britain who voted to leave the European Union, argue the authors of Beyond Brexit: The Blueprint. As a consequence of the referendum decision, the EU is undertaking a review of the crises facing Europe. At their meeting in Rome in March 2017, to celebrate the 60th anniversary of the Treaty of Rome, governments from 27 countries – with the UK absent – will receive a plan from Brussels on how to address the problems which, in large measure, were due to fundamental flaws in the way the European project evolved.
But the proposals for reform will not include the restructuring of taxation. VAT alone is costing Europe at least €1 trillion a year in deadweight losses – the value of wealth and welfare that would be created if Europe’s governments raised their revenue from economic rent rather than from the regressive VAT, according to emeritus professor of economics Mason Gaffney in his contribution to Beyond Brexit. Co-author Fred Harrison estimates that the UK would be producing around £500bn more, if people were not burdened by what he calls the Treadmill Taxes on wages and profits.
Treating Brexit as the historic opportunity to redefine how the UK views itself, Harrison analyses how a switch in the fiscal system would emancipate people psychologically, spiritually and materially. And by shifting taxes off earned incomes, the home market would expand by more than what would be lost if the EU imposes tariffs on British exports. According to Harrison, that would shift the negotiating power in favour of the UK, leading to a settlement with the EU that would be to the mutual advantage of everyone in Europe.
There were almost daily warnings following the shock Brexit result that Britain would be heading for a recession. Responding to this the Bank of England cut interest rates to a historic low of 0.25%. So fixated are economists on monetary policy to boost economic activity that little attention has been given to how tax reform could deliver better results. Two of our recent releases contain answers to the problem of the shrinking economy.
“One of the most important but underappreciated ideas in economics is the Henry George principle of taxing the economic rent of land”, Joseph Stiglitz argues. The essays in Honour of Professor Mason Gaffney in Rent Unmasked (ed. Fred Harrison) bring Henry George’s 19th century analysis into the mainstream of 21st century policy analysis. For further information read some of our earlier blog posts.
Long ago Adam Smith made it clear that how taxes are raised can dampen or promote prosperity. Modern economists call the damaging side-effects which stifle economic activity ‘deadweight losses’ which the Treasury reluctantly admits runs to around 30%.
In From Here to Prosperity Thomas Burgess suggests raising the income tax threshold to £32,000, lifting some 80% of employees out of PAYE. This would give the low paid an immediate pay rise, at no cost to the employer who will benefit from a reduction in the cost of collecting the tax, as would the Treasury. Other candidates for abolition are NIC, stamp duty and corporation tax, removing their deadweight loss, while boosting the economy and tax revenues.
How can the lost income be recouped? By changing the basis on which council tax and business rates are assessed to reflect the market-determined ground rent – ch7 of Rent Unmasked. This would simultaneously remove the deadweight loss of two more taxes which currently penalise property improvements.
The land-value tax produces no deadweight loss, is equitable and naturally progressive, as those with the most valuable properties benefit most from amenities provided by society – a good free school nearby can add £200,000 to the value of a property (The Times, 27/05/2016). It is infinitely gradable unlike other arbitrary tax bands which distort economic activity. It is efficient, easy to assess, inexpensive to collect and pay, and virtually unavoidable. The taxpayer benefits too, paying the market-determined price for the societal benefits he/she wishes to enjoy.
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