I’m writing a gripping history of taxation, “From Boston Tea Party to Poll Tax Riots”. It will not be a best seller.
But the history of governments imposing taxation is of great interest to a nerd (me). Taxation of the masses was invented in the 19th century. In the 20th century it went viral, as folk say. In WW II (1940) income tax was raised to 90%. The country was at war and needed every dime. In the 1960s tax was, for a privileged few, more than 100%. When Lady Thatcher was Prime Minister top rate income tax was 65%.
Today UK PLC again has high debt and needs to pay this back. In the 20th century politicians and chancellors would ram up tax for the rich. But it doesn’t work in the 21st century. What’s wrong with living in Monaco or Mauritius if there’s good connectivity? So there’s a better idea. Make the oil companies pay a retrospective tax on their profits and hand out the money (£400) to every household in the country – obviously £800 for those with two homes. It makes perfect sense; there will be an election soon and there are more voters than oil companies.
But consider, this confiscation of profit will impact investment and dividends. More, it erodes confidence and trust in the government. This time it’s oil companies next time it could be a different profitable sector – arable farmers doing well out of high grain prices? It’s an opportunistic short-term fix and will have long-term consequences for inward investment in the UK.
I should say that taxation of the classes was much more a latecomer than taxation of the masses. Earlier on, it was much more efficient to levy taxes on imports or on goods generally (salt, alcoholic beverages, windows, etc.), that is true. Saint Matthew was called was serving in an internal customs booth, wasn’t he?
Of course it is true that one can’t easily collect income taxes in an economy with few paid anything much in wages.