Real tax reform: a love letter to Ken Henry

That might be one cause of our current economic problems, might it not, Ken?

I think the real problem is low profit rates, not aggregate demand, but I am trying to adopt Kevin’s logic and apply it rationally and thoroughly, rather than piecemeal and episodically.

In summary, all gains are income and should be taxed accordingly.

All tax expenditures and benefits will be paid not through the tax system but through a separate grant agency with rigorous scrutiny of the proposal and then the money given out to see if it meets its objectives.

There would be a light tax (or no tax) on salary and wages up to double the average wage.

All other gains would be taxed at higher rates such as a mild 50 per cent to start off with.

Couple that with an inheritance tax and some environmental tax (such as an excise on carbon) and I am sure you can begin to see the shape of a new society based on satisfying human need, not human greed.

Please don’t give me nonsense about capital creating wealth, Ken.

That just won’t do. How does a machine produce wealth?

Adam Smith and David Ricardo struggled with this, only to have Marx fill in the dots. Labour produces wealth, Ken, not capital.

If the imposition of increased rates of tax on capital starts to produce a capital strike and the flight of capital, then our Labor Government should respond by nationalising industry under workers’ control and freezing capital flows out of the country.

Then we can begin the process of abolishing the madness of capital accumulation and begin producing to satisfy human need.

I look forward to further developing my ideas with you, Ken. My consultancy fees are quite reasonable.