Tax

A couple of times on this board I have mentioned that I like tax. I realise that this is not what I am supposed to think and that it is rather taken as a given in the UK that any politician who argues in favour of tax will render himself unelectable. I find that really odd and so I thought it was worth making a thread about this

At present many people appear to dislike tax, and I am not sure why that is. One reason may be that they cannot see a link between what they pay and what they get for the money. There is no direct hypothecation and it is no accident that the right have sought to make a conflict between "the hard working taxpayer" and the government. They started with the obvious fact that tax is the only source of revenue a government has: there is no dispute about that. But that somehow was taken to imply that the money is not the government's money: it belongs to the taxpayer. And that is arrant nonsense.

A democratic government is elected to do things. What it is elected to do is govern in the interests of all the citizens, and to do that it needs money. It is an intrinsic part of living in a civilised society that you pay tax so that can be done. There is nothing odd about this and nothing to resent. If you do not like how government spends its money you have a recourse: don't vote for them. That is how the system works and to pretend that the money you pay in tax still belongs to you is not different from pretending the money you pay a shop keeper still belongs to you. You cannot say what the shop will stock on the basis you spend money there: you cannot say how many people will work there: you cannot determine the opening hours. Spending your money gives you none of these rights (though the mantra of consumer sovereignty might lead you to think otherwise if you happen to be asleep). So why do people seem to think differently about tax?

Perhaps one reason is that the goods you get from a shop are handed over then and there. But that cannot be the whole story because you do not think the money you pay in insurance premiums still belongs to you: and those services may never be handed over (hopefully they won't for most insured things). The case of insurance is interesting however, because just as we seem to have become confused about what tax is for, I see the same trend in insurance, and for the same spurious reasons. Insurance works by pooling risk because the hazard it covers is high, but the risk is low. Some insurance companies are now marketing their product on the basis of reduced risk for all by imposing criteria on whom they will insure. In the past the premium paid reflected the risk to some extent: but that is not so true now and I see adverts for companies which refuse the business of what they perceive to be higher risk people altogether. This is generally done on the basis of statistics and it can mean that some people cannot get insurance at all: if your house is built on a flood plain, for example. In short those who need it most can't get insurance sometimes: and that is crazy.

A government cannot make such arbitrary decisions because it is responsible to the whole people. Thus the services government provides must be universal. Think about postal services, for example. The post office was nationalised in this country, and in terms of coverage and efficiency that led to a huge improvement over the private services which had gone before. There is no doubt about that. Whether you lived in central london or the wilds of orkney you paid the same to send a letter and you got the same service (within very practical constraints of time to physically move a letter). To do that "profitable" areas were used to subsidise those areas where the distance was great and the population small. The same was true of rail travel and of buses, as discussed in another thread. And if there was not sufficient money to cross subsidise directly the shortfall was made up through general taxation. This does not happen when services are run by private companies. They just do not provide service where there is no profit. It also applies to schools and health care and almost anything else you care to mention.

What services a person needs is a matter of politics and our judgements. What we cannot do, as a society, is deny that there are such essentials. So anything you consider to be necessary to your own basic well being is, perforce, necessary to every other citizen. You have no right to deny others what you demand for yourself. And that is true whether you choose to pay for that service privately or not. So it does not help to say, for example, that you will pay for your own health care, and use that to justify a refusal to pay tax for someone else's health care. Anything you cannot do without is a necessity for everyone else as well.

Our income/wealth comprises both money and services. We get money in exchange for work or through capital accretion of varous kinds. But money has no intrinsic worth. What we actually get is current or future goods and services. So remuneration is really a combination of those goods and services we can command. And that is not equal. Many would argue it should not be: that is for another thread. But what is obvious is that some people get most of their remuneration in the form of money: and some get a greater proportion in the form of universalist services (you could say it is in kind). It is all remuneration. So a rich person gets food+ water+shelter+ health care+ schools + roads + defence + planning laws which protect their nice wee villages+ and + and +. And a poor person gets exactly the same list. After that the rich person has remuneration left over and the poor person doesn't. So the rich person can add some of their wealth to get better or different things on top of the basic list.

One consequence of that way of looking at it is that it allows us to compare policy on equal terms. We, as a society, have a certain amount of goods and services we produce. They are produced for the benefit of the whole society and they are distributed amongst the population according to the values we hold. This is done partly through private sector remuneration and partly through taxation. In civilised countries it is recognised that all of the people have a right to a share of those goods and services which allows a decent life, in whatever terms we conceive that. And since we know for sure that the private sector will not deliver that, we agree to pay tax so that distribution can happen. Once those needs are met for everyone you can do what you like with what is left over, if anything. Even rich people can meet with disaster: it is surprisingly expensive to suffer a chronic illness between treatment costs and loss of income: and such things can indeed happen to anyone. But the rich have the same safety net as the rest of us, whatever that may be.

I have asserted that "we know for sure that the private sector will not deliver that". It is of course not beyond dispute: neoliberals will tell you that the private sector is in fact the only (or the best) way to ensure it. I am not going to let that detain me, because it is obvious nonsense. If anyone wishes to make that case I will address it: but since it rests on the notion that a person who is starving, but has no money, does not "demand" food, I do not think the case is sustainable. It is only through misuse of language that we can entertain that for a moment.

There is however a more serious counter and it comes in the form of "what makes Sammy run?". That is to say that there are those who argue that we need insecurity to make us work. According to that conception of human nature we are intrinsically lazy and if there is no threat of starvation (or at least real discomfort) we will all lie back and let the state take care of us: we will contribute nothing and we will be parasites. It is interesting to note that those who argue that do not think it applies to themselves: only those "others". Since nobody is an "other" to themselves I think that is a complete answer to that position. With a well functioning social sector people do not stop working (though they do demand a balance between hours of work and hours of leisure, which seems to me a wholly good thing) and again a glance around the world seems to me to demonstrate that is true. From social democratic states which seem to manage to produce stuff, to rich folk who do not retire after they make their first billion, there are examples all round us showing this argument is based on a false premise.

Taxation is inherently redistributive: but there is nothing at all wrong with that. We can argue at the margins about how much redistribution is reasonable. But the principle of redistribution is ethical and it is civilised and it leads to good outcomes for us all. I argue that we all contribute to the wealth of our society and we all have a claim on that wealth. Our remuneration is a mix of goods and services and our contribution is that too. We are misled by the focus on money, and it is helpful to me to think about this in terms of a wider conception of contribution and benefits. I say hurrah for tax!!