House Prices and the Great Tax Clawback Scam
The hidden flaw in the market economy and the reason why politicians cannot keep their grand promises is revealed in Ricardo’s Law.
Governments transfer money from people on the lowest incomes to asset-rich investors. This is not the official purpose of the Welfare State: ‘progressive taxes’ are supposed to equalise people’s life-chances. The clues to the truth emerge as the author traces the effect of taxes used to pay for public services.
The process has remained unrecognised because the transfer operates unseen through the ‘invisible hand’ of market forces. Harrison exposes how this works by analysing the property market. Owners of high-value homes are able to recoup what they pay in taxes through rising property prices. Thus they enjoy the tax-free use of schools and hospitals without breaking the law. Lower-income earners, and families that rent their homes, are condemned to carry the cost of infrastructure investments and public services that enhance the value of the homes of the rich.
Harrison points lawmakers, policy analysts and social reformers towards a model of public finances that is fair and would deliver prosperity to everyone.