Sunday, 31 August 2014

What are the Politics of the CLIPH-rate tax?

I believe an argument can be made for my taxation proposals from a number of political philosophies. However, in terms of political ideologies, my proposals occupy an unusual position that does not fit neatly on the usual political compass. This means that it does not readily fall within the common political positions.

I believe this is a huge strength for my proposals: I believe it should be attractive to a large number of people who currently take positions across the political spectrum. However, while this is an advantage in the long-term, it could be a hindrance in the short-term. After all, while there is something about the proposals that most people would like there will often be another element which goes against their current thinking.

For those on the political right the proposal should be attractive as it contains strong private property rights, and encourages work and personal responsibility. Work is encouraged because the number of hours people work (as a generalisation of the scheme) is taken into account in determining tax rates: people who work longer for their income will be taxed at a lower rate. It encourages personal responsibility as the redistribution is calculated on the basis of the amount of work someone does and not the amount of wealth they have. If someone chooses to spend their income in the short term they will not be entitled to any additional resources later on as a consequence.

For those on the left the proposal should be attractive for the amount of redistribution it can provide. I believe my proposals, if applied consistently, should enable the most economically fortunate to be taxed sustainably at the highest possible rates. In parallel, it would provide the highest possible economically sustainable subsidies to workers.

I would think that on the basis of the advantages specified above the approach should be appealing to centrists, who would also approve of my liberalism and some of the related proposals I make. As the originator of the proposals I would consider myself a liberal person.

One way to put the political position of the CLIPH-rate tax is that of a superior version of the so called “third way.” This garnered attention in the 90's and which is associated in the UK with the New Labour movement, and is somewhat related to Clinton’s position in the USA. Left-wingers are now disillusioned with this approach to politics as it was ineffective at delivering economic equality; New Labour was too in thrall to the market and thereby blinded to special interests (often of the very wealthy and the finance industry).

Despite this criticism of the first iteration of the third way approach to politics, I do not think that the answer for progressives is to revert back to statist solutions. Instead, we should be developing taxation and earning subsidy policies that make use of the best of the market while assisting those who do not do as well from the market economy.

The proposals in Rethinking taxation are designed to achieve what the initial third way failed to do. Tax those who do well out of the market system and do as much as possible to support those who work hard but receive relatively little in return. 

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