Sing if you like high taxes

It’s refreshing to see how ecclesiastical and secular lefties agree on most things, these days even including the nonexistence of God. And they talk nonsense on most things, most emphatically including the economy.

Starting with ecclesiastical drivel, last month the Archbishop of Canterbury established an ironclad link between taxes and happiness: the higher the former, the greater the latter.

In his previous life in the oil industry, His Grace must have met multitudes who tossed and turned through the night because their taxes were too low.

My experience is rather different. In fact, I’ve never met anyone who desperately wanted to pay more tax, while I wished I had a tenner for each person I’ve known who moaned about taxation.

But we aren’t talking empirical evidence here. We’re talking ideology, and neither facts nor economic theory applies.

Trying to elucidate the issue, His Grace only succeeded in obfuscating it: “Prosperity depends on the security and quality of work, and the balance of work and life, the quality of our relationships, and not just about the amount of income we receive… .”

One would expect our prelates to phrase more precisely. Prosperity is indeed all about money, that’s what the word signifies. What Welby means is quality of life, which indeed isn’t all about prosperity.

But let’s not be pedantic: the man is speaking from the heart, so his semantics gets blurred. But how would higher taxes contribute to a better quality of life and hence happiness?

Funny you should ask: “Public safety and security, clean air and beautiful natural environments, public parks and spaces, arts and culture, the sense of belonging to a community – these are all important contributors to individual wellbeing…?”

Amazing what things the state can achieve by extorting even more money from people. I’m particularly interested in how high taxes would improve arts and culture.

Looking at the kind of art the government finances through the good offices of the Arts Council, one gets the distinct impression that the arts would benefit tremendously if all state funding were withdrawn – especially since most of it promotes things like rap, ‘conceptual’ art and multi-culti effluvia.

Then again, the people who contribute most to the Exchequer are already robbed of over half of their income. What proportion would satisfy the Archbishop’s quest for happiness? Eighty per cent? A hundred?

Here he gets hit by the Laffer Curve that shows that higher tax rates don’t necessarily produce higher tax revenues. If our eudemonic government raised the marginal rate to the 100 per cent His Grace apparently prays for, it would derive the same income as with a zero per cent rate: zilch.

Anyway, re-enacting the Sodom story, could His Grace produce one righteous man who’s desperate to see his taxes going galactic, as opposed to merely stratospheric? If he can, I may spare Lambeth Palace sulphuric destruction.

Now as far as I know, Oliver Kamm hasn’t yet been ordained. That doesn’t prevent him from writing gibberish with the same air of ex cathedra authority.

There’s good news and bad news about Ollie. The good news is that he has stopped writing about grammar, which puts a smile on the face of those who take English seriously. The bad news is that he’s now writing about business instead, which puts a scowl on the face of those who take economics seriously.

This time Kamm spies with his little eye that the housing market has slowed down, which means that “far from assisting an efficient economy, the British housing market is an impediment”.

If a 3.3 per cent annual growth is seen as an impediment to an efficient economy, our whole economy is an impediment to itself because it hardly ever grows at that rate.

However, Kamm’s beef is about the plight of young professionals who can no longer afford houses because housing prices outstrip incomes. That confuses me no end.

Why is he then upset about the slower growth in the housing market? The slower it grows, the faster young people’s salaries will catch up. There, problem sorted. And negative growth would be best, wouldn’t it, Ollie?

If he’s at sea over the problem, he hits the rocks at full speed over the solution. That, according to Kamm, would be to charge a capital gains tax on the sale of the primary residence.

This measure would cure the economy of all its ills because it would promote “intergenerational equity”. Translating it into the language even I can understand, the wrinklies have it too easy.

They buy their two-up-two-downs dirt cheap, then sell in their dotage 50 years later and roll in clover on the huge proceeds. Hit them with, say, a 20 per cent CGT, and young people will no longer be priced out of the market.

My confusion deepens. A CGT would make selling a house less lucrative, wouldn’t it? If my understanding of human nature is correct, some crumblies who would otherwise want to sell would then refrain from doing so.

That means fewer, rather than more, houses will go on the market. Since Ollie hasn’t yet repealed the law of supply-demand, housing prices will then go up, making them even less affordable for the struggling Yuppies.

I wonder if Ollie has ever wondered why property inflation has outstripped money inflation by a factor of 10 over the past 70 years or so. It does pay to look at historical trends if one seeks understanding.

Logic suggests that people have more trust in property than in money as a guarantor of their future.

That hasn’t always been the case: money used to be quite reliable. A baby born in 1850 with a solid middle-class income of £500 a year, could live his whole life in reasonable comfort even if he never made a penny of his own.

That’s because £100 in 1850 equalled £110 in 1900, a negligible inflation of 10 per cent over half a century.

Conversely, £100 in 1950 equalled £2,000 in 2000 – a wealth-busting inflation of 2,000 per cent. To take another currency as an example, in the last 100 years the US dollar has lost 95 per cent of its value, a marginally better, though still abysmal, performance.

That means that most baby-boomers had to invest their earnings aggressively, not to see them turn to dust. Hence the huge demand for bricks and mortar, with a concomitant rise in prices. It’s that law of supply-demand again that Ollie still hasn’t got around to repealing.

So money inflation promotes property inflation. But what promotes money inflation?

In his book The Time of Turbulence, Alan Greenspan put it succinctly: “[Prof. Arthur Burns of Columbia University]… went around the room asking, ‘What causes inflation?’ None of us could give him an answer. Prof. Burns… declared, ‘Excess government spending causes inflation!’.”

This is actually axiomatic. But where does the government get the wherewithal for its excess spending? Three sources: printing, borrowing – and taxation, all of them inflationary.

Hence the higher taxation that Welby desires and Kamm proposes will achieve exactly the opposite purposes to those they claim to yearn for. Seems incongruous, doesn’t it?

Well, yes. But only if we forget that, when the lefties demand higher taxation, their purposes aren’t ameliorative but punitive. They want to punish those who seek greater independence from the state’s tender mercies.

Whether they wear cassocks or suits is immaterial. They’re all cut from the same cloth.