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LAWCOMM 403 long notes.docx
LAWCOMM_403_long_notes.docx
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LAWCOMM 403 long notes.docx-CONTENTS Tips ...........
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 18
If the tax system is changed too oſten, even if the changes are trivial, the fact that the changes
happen will likely deter investment (especially foreign investment)
o
Countercyclical / macroeconomic effect (John Maynard Keynes)
This is the idea that the tax system can be used by the government as a means of exercising a degree
of control over the economy
In a capitalist society (market driven society), there tends to be a business cycle of booms and busts
(growths and recessions) – the government can use the tax system and programs of public spending
to smooth out the effects of the business cycle (e.g. the government uses tax to pay wage subsidies
for those who lost their jobs during the pandemic)
KARL MARX
COMMUNISM
Karl Marx was a communist
o
Marx did not say much about tax, but his way of thinking had a big influence on how tax systems in the world
developed
o
Communism means “From each according to his ability, to each according to his needs.”
The basic idea is that the means of producon (economic assets) should be owned collecvely
We might all individually own our personal possessions (and perhaps our homes), but economic
assets (e.g. farms, factories, commercial buildings, business machinery) would all be owned
collecvely – they would be owned by the state on behalf of us all, or by collecves of workers
So you could think of communism as a sort of total taxaon
According to Marx, the history of the world is the history of class struggle:
o
Ancient world: slaveowners versus slaves.
o
Feudal world: landowning aristocracy versus peasants or serfs.
o
Capitalism: bourgeoisie (capitalist owners of the means of producon) versus proletariat (workers).
Nineteenth-century capitalism was extremely grim for the workers, but at least, according to Marx, it
had rescued them from “
the idiocy of rural life
”.
o
The next stage would be communist utopia: victory of the proletariat; classless society; no more class struggle.
MARX’S IDEA OF THE ECONOMY
Marx made a number of predicons, including the following:
o
Society will become more and more polarised
The gap between the rich and the poor will get wider and wider
A small number of the middle class will join the ranks of the bourgeoisie (the capitalist owners of the
means of producon), but most middle-class people will be driven downwards into the ranks of the
proletariat or the lumpenproletariat (unemployed beggars, criminals, prostutes, etc.)
o
Capital will become increasingly concentrated
Firms will get larger and larger
Smaller firms will either fail or get taken over by larger ones
o
Communism is inevitable
According to Adam Smith, capitalism is stable – prices adjust unl everything for sale is sold; wages
adjust unl everyone who wants a job has one; and everyone lives happily ever aſter
According to Marx, Adam Smith was wrong; capitalism is not stable. On the contrary, capitalist
economies will lurch from one crisis to another, and these crises will get progressively worse, unl
eventually the whole system collapses, to be replaced by the communist utopia. Marx thought that
communism would come first to England (as it was the most advanced capitalist society at the me);
and that less developed sociees would have to pass through capitalism on their way to communism.
Aſter the revoluon, as to what would happen next, Marx was rather vague. The details, he said, would have to be
worked out by the
dictatorship of the proletariat
, aſter it had seized power
o
He did, however, offer a few suggesons:
Abolion of property in land;
Heavy progressive income tax;
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