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.