Another Thing About Taxation

10 March 2008

What Place a Morality Tax?

Tax Day, New York City, by Amit GuptaWhen you start thinking about tax it’s hard to stop. Having written my weekend post on tax and governance in Hong Kong I began to think about the extent to which taxes are warranted beyond the fair maintenance of society and its institutions. In a place like Hong Kong taxation isn’t the main form of government revenue, so it’s hard to argue for more progressive tax rates. But what about as a general principle? How do we determine the scope of taxation that best suits a given society?

Daniel Hamermesh and Joel Slemrod have been working on one answer for a while: a tax on workaholism.

The pair recently published a paper entitled “The Economics of Workaholism: We Should Not Have Worked on this Paper” in the B.E. Journal of Economic Policy & Analysis. But the effort, provocative as it might seem, didn’t cause much of a stir. The paper had already been issued in 2005 as a NBER working paper, and even then made only a passing fuss (amongst others, the Ayn Rand fan club, the Atlas Society, was predictably unimpressed).

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Mo’ Money

8 March 2008

Tax Breaks and Populist Governance in Hong Kong

Tax 稅, by hochitThe greatest delights are sometimes more food for thought that you might imagine. Next year I’ll pay almost no income tax, for the second year in a row. I don’t dodge tax – I’ve just been given a break. Thank you, Hong Kong. But multiply my windfall a few thousand times and what does it mean?

First, allow me to set the scene. On Wednesday last week, Hong Kong’s Financial Secretary delivered his first budget. Not such an interesting event you might think, but this version had already been subjected to a long stretch of public debate. John Tsang had a sizable budget surplus of HK$115 billion to fling around, and everyone was looking for a piece of the action.

What finally stuck when the details hit the wall was an extension of last year’s offering – 75% reductions of income, profit and property taxation subject to HK$25,000 ceilings, and various small, once-off gestures, including a few welfare give-backs.

The Standard newspaper, in its slightly scatterbrain style, pronounced the Financial Secretary “Santa Tsang”.

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