再Tax from scratch, November 13th 2012 P80 (税制)
゛Death, taxes and children! There's never any convenient time for any of them,゛, wrote Margaret Mitchell in ゛Gone With the Wind゛. There may also be no convenient time for radical tax reform. But the global recession, which reduced tax receipts even as it forced governments to spend unprecedented amounts to prop up their economies, has left government budgets across the rich world in tatters. Many countries will have to make some changes to their tax systems as a result. A group of economists, headed by Sir James Mirrlees, a Nobel-prize-winning founder of the modern theory of optimal taxation, this week urged governments to do more than tinker at the margins. The economists acknowledge that taxation always imposes economic costs, both both because money is needed to collect taxes and because it distorts people's consumption and work choices. But in a view of Britain's tax system from the Institute for Fiscal Studies, a think-tank, which was released on November 10th, they argued that most governments could find a way to raise the amount of money they need from the tax system while imposing much lower costs than they currently do. The economists propose a tax system with three main features. It would be progressive (that is, it would place a larger burden on richer people)；it would not discriminate between income earned in different ways；and it would be simple. Such ideals are not new, of course, but Sir James and his colleagues contrast them with Britain's current system, which they describe as being markee by ゛a jumble of tax rates, a lack of a coherent vision of the tax base, and arbitrary discrimination across different types of economic activities゛. Other rich-world countries also fall short. Most income-tax systems are already progressive, and who could disagree with a simpler system? The challenge lies in reconciling these principles. In practice progressivity has tended to imply more than one rate of tax, for instance, which is necessarily less simple than one rate of tax, for instance, which is necessarily less simple than a flat tax rate. The Mirrlees review has some useful ideas on how to square the circle：indeed, perhaps its biggest message is that thinking holistically about the tax system helps resolve some of these conflicts. It is the system as a whole that needs to be progressive, not every single tax. For example, Britain and Ireland currently justify not charging value-added tax (VAT) on a number of ゛essential゛products like children's clothing on the ground that doing so would hurt the poor, who spend more of their income on these goods. But such a system distorts people's choices. Moving to a single rate of VAT without exemptions would eliminate this distortion but it would also be regressive. No matter, argue the economists：far better to have undistorted consumption choices and to fulfil the government's redistributive aims more efficiently through the income-tax system. The report reckons that the British government could get rid of most reduced- and zero-rate VAT, compensate those welfare was hurt and still have ￡3 billion left over. As Richard Blundell of University College, London, points out, one of the more redistributive societies on earth, Denmark, does pretty much what the panel recommends. The Mirrlees review also has some interesting thoughts on progressivity itself. This is usually taken to mean that people who earn more should pay a larger share of their income as tax. But the economists argue that people whose income is temporarily low - perhaps because they have taken out to study - often borrow and therefore consume more than their immediate income would allow. Basing taxes partly on expenditure rather than just income would therefore go some way towards the ideal of progressivity over a person's lifetime. How that might be implemented is a different question entirely. The economists also worry that many tax systems, including Britain's do not provide enough incentives for people to work. Here they recommend a departure from simplicity, urging governments to use the tax system to target incentives to those who will be most responsive. This might involve making tax rates conditional on certain demographic features such as age. Mothers of school-age children, for instance, could be urged back into the workforce by changing the way child tax credits are structured, making them more generous when the child is younger than five and less generous afterwards. The authors reckon that this change could increase employment in Britain by 52,000 or 0.2%. Similarly, using the tax system to give those nearing retirement age a bigger incentive to keep working could increase employment by 157,000 and add ￡2 billion to British national income. The report also argues that the costs of generating income should not be taxed. This has some interesting implications. Since forgoing consumption in order to save money can be thought of as the ゛cost゛of future income, the report suggests that the no
