If investing is down then shouldn’t we cut taxes on investing?

Say we take IPPR seriously - no, stop giggling at the back there, let us just say that we are going to do so - then what would be the implication?

Compared to Japan, the USA, Germany, France, Italy and Canada, the UK languished in last place for business investment in 2022, a spot we have now held for three years in a row. Government investment is also low, volatile, and short-termist. Without resources flowing into new investment, it’s hard to see how UK economic performance can improve.

In this briefing, we identify the policy areas that we believe parties should adopt in government with the aim of raising levels of economy-wide investment.

Well, OK.

So, the returns to having invested are profits. Which can then turn up as corporate profits, as dividends, as capital gains, as, well, as wealth in fact. So, to encourage the creation of more wealth through investment we should cut the tax rates on wealth created by having invested. This would then align the tax system with what is the claimed desire, more investment.

Amazingly, this isn’t what IPPR recommends. In fact, they recommend an increase in taxation of stock buybacks. Which are the way to move capital out of past successful investments and thereby make it available for reuse in new ones.

Ho hum, so, the giggling is appropriate then, as you were, let’s not take IPPR seriously.

We can extend this to near the entire conversation at present as well. For absolutely everyone is indeed arguing for higher taxes on wealth, on returns from investing. Which will even further decrease the incentives to invest.

Folks just aren’t being serious, are they?