Taxing wealth or income – two separate issues or one issue?

There is some debate in political circles and the media about taxation and which one should be taxed more or less.  An earlier post looked at the question of wealth and the question of taxes.

https://www.cornwallecon.com/post/the-problem-of-wealth-to-tax-or-not-to-tax-1

 

This post will set out some of the issues and questions about wealth/assets and income and what the most appropriate approach might be.

 

Firstly, its essential to look at the two areas together rather than treat them as separate issues which is a common mistake.  Proponents of more taxes on wealth often assume that that would be fairer than looking at taxes on income.  There is an implicit assumption that earnings and wealth are not connected and yet it is obvious that the ability to accumulate wealth is for many of the affluent derived from their earnings. The exceptions here are the owners of large land holdings or large businesses who have inherited them from relatives.  

 

So its essential to explore the relationship between wealth and income  assessing how wealth is accumulated and crucially what is wealth.  Part of this process should look at how existing taxes on earnings operate and whether reform is required here.  Also we need to ask the question – what is too much wealth or for that matter too high an income.

 

Further posts will follow.