Watching the sharp, amiable Douglas McLellan and Better Nation’s very own wonderkid James Mackenzie have a fine elongated debate over the progressiveness (or otherwise) of LVT got me thinking about that word that sprang out of nowhere last year and has been used recklessly with error-strewn abandon by members of all parties. Yes, word of the year 2010 – “progressive”.
Douglas states categorically that LVT is regressive while James argues the opposite. Sidestepping the specifics of that particular policy (if possible), can something, in isolation, even be progressive or regressive?
As part of an MSc in Statistics, what feels like a lifetime ago, it was made abundantly clear from various dry professors that regression analysis could only be conducted once you have 2 points on a chart. With 2 x-axis numbers and 2 y-axis numbers you can go as daft as you like calculating all sorts of statistical formulae to ascertain whether there is a trend going up the way, down the way or no trend at all. If you have one point on that chart, you can’t even begin to put pencil to paper, finger to keyboard or, my personal favourite, thumb to statistical tables.
My point is, one cannot look at Local Income Tax, Land Value Tax or even Council Tax in isolation and judge that it is either progressive or regressive. It is only in comparing two of the policies and judging which direction one is in relation to the other can a conclusion on progressiveness be reached.
Say the Government was to charge lower rate taxpayers 10p every time they bought a carton of milk. That sounds rather regressive to me. However, what if higher rate taxpayers were charged £1 and the financial benefit was used to subsidise dairy farmers in the country meaning that milk cost, in total, 11p for lower rate taxpayers and £1.01 for higher rate taxpayers. It suddenly sounds a bit more progressive.
That other buzzword, fairness, is a tricky one too. Can a policy in isolation truly be deemed fair?
In terms of closing the equality gap between rich and poor, which is really all that ‘fairness’ and ‘progressiveness’ relate to, we are where we are; we have a point on that x-axis and a point on that y-axis based on our income taxes, our NI, our VAT rates, our Council Tax and many other factors that make up the status quo.
How progressive policies are in the upcoming election should be compared against this benchmark and compared against each other.
Douglas and James have started a debate based on facts and figures that hopefully Patrick, Tavish and Alex et al will finish.