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Monday 12 March 2012

TPA – The Tax Commission Speaks

For some months, the so-called Taxpayers’ Alliance (TPA) has allocated some of its dubiously talented array of non-job holders to a project called the 2020 Tax Commission, a joint venture between themselves and the Institute Of Directors (IoD), the whole being chaired by Allister Heath of City AM, who as any fule kno, is little more than a TPA stooge.

The Comfortable of Tufton Street speak!

The final report from this supposedly august body has yet to be released, but thanks to a number of missives from non-job holder Rory Meakin, we know that the 50% Income Tax rate will be in its sights, along with the usual TPA chestnuts such as abolition of the minimum wage, and lowering the poverty line, the latter a favourite of so-called “Research Fellow” Mike Denham.

And today, following a post from the TPA’s head non-job holder Matthew Sinclair, has come the confirmation of what will be recommended: lowering marginal tax rates (that means more money for rich people, like those who bankroll the TPA), “simpler taxes”, and a system where “everyone pays a single rate on various streams of income”, which means a flat tax.

This will no doubt be held to miraculously generate more tax revenue, as all those rich folk will then flock to chip in, having unanimously agreed that the new arrangements are so much fairer. There will, indeed, be much talk of fairness. The Laffer Curve will be invoked, alongside the spirit of Secretary Mellon. The gravity-defying whole will be hailed as yet another Great Way Forward.

There is only one problem with wholesale tax cuts: the amount of revenue thus generated will not match that which went before. The citing of early 1920s USA is the archetypal false equivalence: tax revenues rose after Mellon’s tax cuts, but the economy was recovering from a severe post-war slump. Those revenues would have risen anyway. The foundation of this notion is built on sand.

Moreover, there is a flip side to the coin, and that is that a reduction in revenue means either a significant increase in Government borrowing, or an equally significant programme of spending cuts. Those who back the TPA, and are of comfortable financial disposition, would applaud the latter: this, too, will be held to be “fair”, and sold accordingly to the unsuspecting and gullible.

So you have been warned: Matthew Sinclair has confirmed that this is “the heart of the 2020 Tax Commission’s plan”, and that to do otherwise constitutes a “threat to our prosperity”. So that’s a lame appeal to authority tacked on to an existing false equivalence, then. And citing Rep. Paul Ryan, who talks small Government but backed the GM bailout, does not help the TPA cause.

Still, it was good of Matthew Sinclair to warn us. Another one for the bin.

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