If people don’t grasp the basics then…..

We’re willing to be fair to Will Hutton here. That’s a difficult job but someone’s got to do it. This line comes from the Observer’s subeditor, not Hutton himself - headlines and subheads are written by subs, not journalists or columnists. It does capture, well, the argument Hutton is making but these still aren’t his direct words:

Wealth is a privilege, and with it comes the obligation of paying tax to benefit society

This is, obviously, piffle. For what is being said there is that only by paying tax does wealth benefit society. Which is, obviously, that piffle.

It’s actually true that wealth is the product of having benefitted society. As in the William Nordhaus paper about who gains from entrepreneurial activity. It’s us out here, us consumers, who gain the vast, vast proportion of it. The entrepreneurs themselves gain some 3% or so of total value created. Only 3% too.

As an example, Jeff Bezos has some $200 billion. A lorra cash, agreed. It’s also true there’s been the “Amazon Effect”. By making the retail system more efficient the simple existence of the company has knocked 0.1 to 0.2% off the inflation rate. Every year for two decades. No, not 2 to 4% off retail sales that is, but 2 to 4% off the whole cost of living for everyone. That’s a sum vastly larger than the Bezos pile - especially when we convert that annual benefit into a capital sum so as to be able to compare it with the Bezos capital sum.

It simply isn’t true, not in the slightest, that the justification for wealth is the tax paid upon it. It’s how much better off are we made by someone having made that wealth?

Tim Worstall