Wednesday, 20 February 2013

Taxing your brains out

You learn a lot of things on social media. On Monday Iain Dale tweeted, “Am I really alone in being an unashamed believer in lower, simpler, flatter taxes? Are there others out there?” and obligingly provided a link to his always thoughtful blog: Why the right needs to spread the gospel of low taxes.

Well, Iain, you’re most certainly not alone. What constantly escapes the grasping begging bowl mentality of the left is that under a flat rate the vast majority of the tax burden would still be borne by the higher earners. Add in the fact that personal allowances significantly reduce the tax paid at the lower end of the earnings scale and that higher earners rely less on the services provided by the state and the rich contribute far more than what I would consider a fair share. No wonder then that legal tax avoidance schemes are eagerly adopted. 

My response to Iain’s question was, “Everybody should pay the same, fixed rate of tax. 20% and no more and the country should live within its means.” (I’d go farther and say that we should aim eventually for an even lower rate of no more than 10% to starve governments out of their over-arching socialist ambitions and make them the servants, not the masters of the electorate.) 

This elicited a third party interjection: “So someone with taxable income of £10k pays £2k has 8k left. £1m pays £200k has 800k left.” Correct. (He must have had private education.) But then he added, “Even Thatcher saw that's wrong.” Did she? Did the sainted Mrs T really believe it was right that somebody who paid one hundred times the tax of another, should be taxed even more simply because they would end up with more than a lower earner? 

In other words, if you manage to earn a higher income by, say, working harder for longer, perhaps to feed your family or provide a better life for them or to save for retirement or fund decent education, or to pay for your elderly parents' care, or to maintain the crumbling pile you now wished you’d never shackled yourself to, you should be penalised by being robbed more robustly than somebody who was happy enough to slouch along in a part-time burger-flipping, clock-watching existence, with ambitions extending no further than happy hour, fags and the promise of casual sex? 

Would it be fair that, in return for your diligence at school, your considered career choice, your graft to attain professional qualifications and deferred gratification while you worked all hours climbing the greasy pole should be rewarded by finding, on the adjacent pole, others had reached the same giddy heights by doing none of these things? Because that’s what he seemed to be implying. (The pejorative "Thatcher" was always a clue.) That some inherit wealth is a happy accident of their birth - somehow those who succeed by their own efforts are not unduly exercised by this.

I responded that his was the politics of envy, to be told in return “...and your response is the politics of greed.” I countered, “It isn't politics. It's fairness. Those who can should not be robbed by those who can't.”. His last sally, “You can call it envy or theft if you want I still say redistribution (backed up by force) from wealthy to poor morally justified.” nailed his colours squarely to the mast. Enforced extraction of the fruits of your labours – the more you earn the higher you are taxed – as a moral issue. 

And there, in simple terms is Socialist economics. By extending that logic you get to the ludicrous 98% effective marginal rate for some under Harold Wilson’s government. We may as well do away with earnings altogether and just make everybody work for the state until they drop, while doling out equally to all – earner or not, striver or shirker, success or failure - the same thin gruel and hovel-poor housing. I believe that's exactly what Marx intended: "From each ... to each..." blah,blah, blah...

If that sounds like hyperbole then consider this: Just how do you decide when you've done enough redistributing? When does an Alan Sugar reach an acceptable wealth equilibrium and at what point of penance has he earned his place? Does it depend on his allegiance? Should we tax more highly those people who don’t give it up willingly? 20% for Labour voters 50% for Conservatives? Or 10% for social workers, 80% for bankers? Wilson’s taxes were largely responsible for the brain drain, whereby the more able simply quit our shores for regimes happy to pay for their expertise; or rather not to penalise their success. 

While we ship in more low-skilled, low-paid, low-tax payers and then pay for the idleness of the displaced former workers by higher taxes on some nebulous ‘the rich’ (which now begins at £35,000 p.a.) it’s happening all over again. In fact, judging by the lack of rioting, we may already have taxed out of domicile those sufficiently sentient to have worked it out. 

I summed it up with one last, exasperated tweet: “Socialism, as taught to me today. Don't bother working harder; we'll tax you so you're only left with the same as everybody else.” I think we’re already there. 


  1. There is one great, in my view, good reason for flat tax. Along with it you bring in simplified tax laws.

    You earn, you pay. Better, there are no dark arts involved, no dodgy book-keeping, no losing money in dreamy havens. You know what you owe the taxman and everyone pays whatever is decided by our elected representatives. Or by Europe.

    The attraction is that if you have a flat rate and simplified system instead of a sliding scale that leads to confusion, induces frothy rhetoric that merely gets lefties having 'lazy lobs' (I can explain but you might not want to know) and allows people to avoid paying less than their share, then the gubmint knows what it has to spend and can plan accordingly.

    But the obfuscation so beloved by socialists has not helped one iota here. people get steamed up about some coffee house 'not paying their share' and neatly avoiding thinking about the fact that they do this because the law allows it.

    I don't like VAT but it is straightforward. You buy, you pay. There you go; one hundred and fifteen bicycle pumps nets 115 times twenty percent of the sale price. Ooh, that's easy... Of course, where it is iniquitous is that the retailer, etc, is the tax collector and the powers invested in the VAT man are obscene. They can go where coppers can't.

    I also don't like the fact that not everything is a 'service' but still qualifies for the 20 per cent hike. (I am faintly surprised that being taxed isn't a service that needs a 20 per cent hike)

    I also know that everything is VATable. Yes, even raw food. It just happens to be zero percent. For the time being.

    But, and this is my main point, make it simpler and make it flat. If everyone pays then HM Dept of Spendalots can see what they can afford. Or for that matter what we can afford.

  2. Oh, further thoughts. I used this as an example to some students I had. No, they hadn't thought of this so fun telling them.

    You tax person A so you can give person B more. Pure socialist wibble, inducing lazy lobs. Now let's say person A has £1000 and person B has £10. In a fit of moral correctness you redistribute that £1000 (it's only fair, after all, despite the fact that A has worked say 10 years for it in some shit job and B has never had a job nor wants one) and it's fair. They each now have £505 as both pay, or maybe as the equality lovers prefer it, only the rich pay. So it's £500 and £510.

    Oh wait, that isn't fair, so do you go back and take something off B to give it to A? Interesting idea of when you do it. Once a year? Okay, but what if B, the non worker, has bought £400 worth of girlie mags and video games -- no wonder my students liked this story -- and now A has say £550 as he went on working and poor B has only £110. Unfair, comes the cry! Tax the wealthy or the lazy will get very angry and you won't like that.

    So, redistribution time again. A goes down to a very fair £225 and B gets handed cash and now boasts £335. Wow, that's fairness for you. All B has to do is spend it and ask again, and you can bet one or two 'redistributions' won't be enough. You have to keep doing this and visiting their bank accounts often, because at no point is it equal. Person a is too busy working to have time to play video games and is far too tired at night for working his right hand. So when do you stop calling for the newer wealthy to have what the new poor have.

    Dare you, as a socialist non-thinker, call for the one with more to give it to the one who has less but who is out at work all day?

    Redistribution is theoretically fine, to a point, but no one will ever agree what that point is and probably no one will ever achieve that balance that looks so fluffy as a political shuttlecock but has no other merit.

  3. Benjamin Clarkson20 February 2013 at 21:03

    This article implies one simple misconception as truth; those who earn more have invariably worked harder, or have more valuable "skills."
    In reality, a flat 20% tax on someone who "earns" £1m against someone who is "only capable" of earning £10k is grossly unfair. It only takes a few moments thought to realise why, and I ask that you try.

    1. You are mistaken. I genuinely do not care how you come by your income, whether it is by graft or good fortune, a system which allows others to sponge off you is manifestly unjust. I would sooner see the children of unworthy, idle scum starve to death than support a system that gives them rights with no responsibilities. In fact, I'd go further and organise a cull.

      I have spent a lifetime watching what is fondly referred to as compassion create a growing sense of entitlement, greed, envy and misery. If you don't succeed you shouldn't breed. Simple. And in society, just as in science and nature, the simple solution is the most elegant and sustainable.

      So, you can fuck right off with your ridiculous notions of humanity being any more noble than any other animal.

    2. Mr Clarkson's use of the word 'unfair' betrays his leanings here. Life, some would argue, isn't fair, but neither is taking something which isn't yours or demanding something you have no right to.

      If you think, and this is Mr Clakson's misconception, that some strange construct called Society will automatically inject fairness into the process then there is failure to connect with reality. I understand reality is painful, but socialists can't go on dodging it while promising a better life for all.

      People with money do one of four things with it. They spend it, they save it, they give it away to charity or they burn/bury it. In three of the cases then society benefits; merely taking it off them through some arbitrarily unfair policy (with loopholes) and then using it to reward some government agency with better offices and swish curtains is not justice at all. Or it funds more intrusion in our lives, with more regulations, speed bumps and less freedom of choice.

      The position of many socialists is that the forced removal of money from people is fair. Though if they were to win the lottery would they call fairness if it was taken from them and their family in the name of fairness?

      Or would those socialists call for a 're-think' on their terms with perhaps some sort of loophole?

      As for 'earns' and 'only capable' it is the nature of a free society to offer a price in return for doing certain jobs. You may diagree with what constitutes 'earn' but that is the agreed or offered incentive. I may not like a banker and prefer the replacement of the b with a w but I do not think it unfair. It's how it is done is how it is done. There are some people who currently earn £10k who have it within them to earn £1m in some way.

      What you need is for them to recognise that making the effort can bring rewards. I could cite JK Rowling here; she had very little when she started writing her books but she worked at it and made good. I do not have the right to take her money away, no matter how I may struggle to write the next Harry Potter.

      The key is working at it, not demanding it is done for you in the name of a mythical 'fairness'

    3. Well said. One day people may wake up to the gross, Orwellian lie that is socialism and learn to stand on their own two feet again. Of course we should look after the sick and vulnerable, but we shouldn't tolerate a system which practically allows you to self-diagnose your own vulnerability.