Wednesday, 15 September 2021

The joy of tax

 Since the government announced last week that it would fund its (alleged) reform of social care with an increase of 1.25% on National Insurance Contributions, (NICs) there has been much discussion in the media as to whether or not this is the most appropriate tax. 

The informed consensus seems to be that it isn't.  Today's Guardian cartoon by Ben Jennings puts it neatly: "Tax the workers to help the asset rich."

However, having got that pretty well right, why do the Guardian, and other "left-of-centre" sources persist in using the negative term "burden" when describing taxation? Recent culprits have included both Polly Toynbee (on-line 10th September) and Phillip Inman  (print edition, same day.)

Perhaps the time is not yet ripe for my own preferred description, "privilege,"  but I am jolly glad that, even in retirement, my income is sufficient to be taxed.  I'd have been overjoyed  had my income as a teacher ever been high enough to make me liable to the higher rates (though the standard rate throughout most of my working life was around 33%, something  we're persuaded to believe is beyond  the realms of possibility today)

When I lived in France for the best part of a year as part of my attempts to brush up on their language I was impressed by the quality of their public realm: beautifully-maintained  roads, lovely parks, village gardens with working fountains, a health service with spare capacity, were all very evident advantages).  Of course, they pay more in tax than we in the UK, but they get good value for money.


For current (2019) comparisons the percentages of GDP taken in tax   from selected countries are as follows:

France:        45%

Germany:    39%

OECD ave    34%

UK:                33%

US:                24%

Source:  https://ifs.org.uk/taxlab/key-questions/how-do-uk-tax-revenues-compare-internationally

You get what you pay for.

An oft-quoted dictum of Ralph Waldo Emerson, himself quoting a committee appointed by the governor of Vermont in the US in 1852, goes:

Taxation is the price which we pay for civilization, for our social, civil and political institutions, for the security of life and property, and without which, we must resort to the law of force.

 I believe we British are hoodwinked by the Tory-dominated press to view taxation as something bad, unpleasant and wasteful (much as they hoodwinked over a third of us us into regarding the EU in much the same way.)  In fact, I think that without such distorting propaganda most people are not all that worried about taxation, one way or the other.  We regard it as just one of the things that is there, like pimples in adolescence and arthritis in old age.

 I can't say I worked any less hard as a teacher becasue of taxation, and I suspect the same can be said of most other jobs.  In fact I probably worked harder, or at least longer, buy supplementing my "take home pay" with classes at night school and some examination marking.

 So why does the (moderately) left wing press do the Tories work for them and lazily adopt this negative terminology?  It they can't stomach "privilege " of "joy" surely they can adopt a more neutral terms:  just "incidence", or "tax take," would do nicely.

12 comments:

  1. Yes,you get nothing without paying for it.The privilege, or whatever word you wish to use is what you get out of paying tax.

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  2. In fact, I think that without such distorting propaganda most people are not all that worried about taxation, one way or the other. We regard it as just one of the things that is there, like pimples in adolescence and arthritis in old age.

    Only because of the geniously nefarious invention that is PAYE, which means most people never even see their money that is required of them by the exchequer: it vanishes en route from their employer. If, like the Yanks, we actually had to fill in a form and write a cheque every year, I think you’d soon see a different attitude.


    The big problem with taxation, of course, is that it presumes that the government can spend my money better than I can. It’s ‘the man in Whitehall knows best’ at its most raw. Of course some taxation is necessary to solve collective action problems and provide certain necessary goods that, because they are non-rivalrous and non-excludable, could not be provided otherwise (roads, a continuously-at-sea nuclear deterrent, and the like); but that should be kept to the bare minimum, and beyond that it should be up to each person how they wish to spend what is, after all, their own money.

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  3. I agree with your first point. On the whole, when we buy, say, petrol, we are rarely conscious of how much of what we pay is tax, how much duty, and how much the cost of the actual petrol.

    In your second paragraph you recognise that some "public goods," such as street lighting and defence, must be provided collectively, usually by the state or local authority. However, there are also "merit goods" such as health and education provision, which have a "spin-off" or, in the jargon "positive externality" over and above the private satisfaction of the individual consumer. The entire community benefits from them so the sum total of public welfare is increased if these are provided, or at least subsidised, collectively.

    R H Tawney, in his celebrated lectures on Equality (page 169 in my edition) puts it neatly:

    "It is . . . the pooling of [the community's] resources by means of taxation, and the use of the funds thus obtained to make accessible to all, irrespective of their income, occupation or social position, the condition of civilization which, in the absence of such measures, would be enjoyed only by the rich."

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    1. The entire community benefits from them so the sum total of public welfare is increased if these are provided, or at least subsidised, collectively.

      That only makes sense if (a) everyone is a utilitarian and (b) everyone has exactly the same utility valuation of things.

      You seem to be positing a Rousseauian kind of 'general will' in regards to service provision; that everyone, if they were acting rationally, would want exactly the same services to be provided to the same level; and therefore if someone disagrees, it's okay to impose those services on them by forcibly taking their money in tax to pay for them, because you're only forcing them to do what they 'really want' (or would want if they were acting rationally) to fund.

      If, on the other hand, you think Rousseau was spouting rubbish, then this is not exactly convincing. People do not all want or value the same things, and for the man in Whitehall to decide for them what they ought to want is paternalistic in the extreme, and so must be resisted with all our might.

      In other words: you may think people ought to want 'positive externalities'. But frankly it's not up to you to tell people what they want, and if someone says, 'yes, I understand that by keeping my money I am forgoing positive externalities, but I still have other things I'd rather spend my money on' then it is no business of yours and you have no right to overrule them because of what you think they ought to want.

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  4. You seem to be deliberately ignoring the more obvious benefits of positive externalities. If the government were not spending a fortune on preventative measure during the COVID crisis you and I would be at far greater danger of suffering and perhaps dying from the disease. Even if we ourselves would be happy to pay privately for the vaccinations, many couldn't afford it and many wouldn't bother, so we all benefit from this positive spin-off. Whether or not we ever reach herd immunity remains to be seen. i believe we have on measles. And we've eliminated small-pox, a big scare in my youth. There are similar benefit s form public expenditure by local authorities (inspections of restaurants, checking pollution levels in rivers.)

    And we all benefit from having a well-educated population

    As with most things we move from the clearly obvious benefits to the more dubious ones. Sir Humphrey, in one of the iconic "Yes Minister" episodes, was very keen on the subsidy to Covent Garden. I would agree with him: many wouldn't.

    Where to draw the line is the crucial question in many political decisions.

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    1. You seem to be deliberately ignoring the more obvious benefits of positive externalities

      I'm not ignoring them, I'm just pointing out that you don't get to make the decision for me whether I think the benefit is worth me spending money on them.

      Even if a benefit is 'clearly obvious' to you, I may think it is not in fact worth the cost, and who are you to tell me I'm wrong? Unless, as I say, you are prepared to declare that you (qua the man in Whitehall) know better than me what things I ought to value and what things I ought to want.

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    2. With regard to these "merit goods" we have to accept what the electorate votes for, whether we personally like it or not.

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    3. With regard to these "merit goods" we have to accept what the electorate votes for, whether we personally like it or not.

      Oh yes, we have to have some mechanism for resolving disputes, and voting sure beats having a civil war, which is the other option.

      I'm just pointing out why people might quite reasonably disagree with your ideas, so you shouldn't be surprised if you lose the vote.

      Delete
  5. Well I'm sorry to have lost it on defence via nuclear weapons, but relieved that your objections to public health expenditure have not prevailed.

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    1. relieved that your objections to public health expenditure have not prevailed

      On the contrary, isn't it my view (that public health expenditure should be maintained at about the current levels, though preferably with changes to use the money more efficiently and so improve the frankly, by global standards, shockingly bad, level of service) that had prevailed, while yours (that taxes should be whacked up and public health spending increased, possibly without limit — I don't believe you ever answered the question as to what you would consider a reasonable maximum spend on public health?) has been defeated?

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