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  • Everyone depends on hospitals, roads, police and schools

  • but they're expensive

  • and governments across the world

  • are feeling the pinch.

  • So, how can we continue in the future

  • to afford good quality public services?

  • Why has pressure on public services increased?

  • Populations are aging.

  • As the number of retirees grows,

  • working people are going to have to pay more taxes

  • to support them.

  • And as healthcare technology improves,

  • the cost of health care is also going to rise.

  • But where to find the cash?

  • Basically governments can tax three things,

  • income, consumption or wealth.

  • It's not your imagination.

  • Income taxes really have been increasing

  • over the past 50 years.

  • The evidence shows that taxes on income

  • including corporation tax discourage people from working.

  • Countries with low income taxes

  • such as the UK tend to have stronger economic growth.

  • Second, consumption.

  • This is things like sales tax in America

  • or value-added tax on purchases in Europe.

  • One problem with consumption taxes

  • is that they hit poor people hardest

  • who spend more of their income on day-to-day expenses.

  • Third, we have wealth taxes.

  • This could be a better idea

  • than taxing income or consumption.

  • This is partly because it places a higher levy

  • on the things that rich people have

  • such as property, and investments.

  • Some economists advocate something called a land value tax

  • and this is basically where you tax

  • the value of plots of land

  • and this can raise a lot of money.

  • A land value tax

  • has very few unintentional bad consequences.

  • The problem is that taxing wealth

  • is not politically easy.

  • Homeowners, for instance, are gonna be furious

  • if they're asked to pay higher property taxes

  • but if people want good government services,

  • it's gonna need money.

  • Taxes on wealth are always unpopular

  • but sooner or later, governments

  • are going to have to bite the bullet.

Everyone depends on hospitals, roads, police and schools

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B1 US tax income consumption wealth land property

Should we tax the rich more? | The Economist

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    Samuel posted on 2018/07/03
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