The Moral Case for Low Taxation?


2:04 pm - January 18th 2008

by Gracchi    


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Having read Sunny’s post below, I thought it was about time we discussed the central principles of what it is to be liberal and leftwing. I think one of those central principles is that state action can help as well as hinder people and that we should be worried about the negative effects of the market on freedom. A couple of posts on the new rightwing blog Centre Right illustrate this problem really well- and also the intellectual advantage that the left has when discussing freedom- an intellectual advantage that we should press home every time it comes up in conversation on the internet and in real life.

Lets take Alex Deane’s post about taxation this morning- he feels

outrage at the diminution of choice and freedom those families suffer at the hands of the greedy government, the frustration families must feel as their incomes are snatched from them and frittered away by inefficient and wasteful bureaucracies “for their own good”.

In Alex’s world government spending doesn’t liberate, but taxation does enslave. For him the poor we redistribute to, or the sick that we give care to, or the children that we educate, thanks to taxation aren’t aided but are told things by bureacracies ‘for their own good’. If only we could leave them alone. Well his colleague, Conor Burns disagrees and provides a wonderful account of why government spending is neccessary: he is affronted that an old lady is having her travel tokens removed from her and been given a free bus pass. Now she could use her travel tokens to pay for a taxi whereas the bus is less convenient (its also cheaper for the state to pay for which I presume is the reason why the government have withdrawn the token and replaced it with a buspass- to stop ‘frittering’ that money away). As Conor says, all the old lady wanted to do was

to maintain her independence and look after her husband.

Let me agree with him, that the old lady ought to have a travel token and that this is a bad government policy. But lets turn this round- the worst thing for her would be to have that pass withdrawn entirely- she would lose her independence completely or it would be subject to the random whim of some charitable millionaire. Furthermore this isn’t an isolated case- this is what a wide variety of benefits give, they create freedom for people.

The freedom for a disabled person say who cannot work to have a reasonably normal life, the freedom for an old person likewise, the freedom for a poor person not to worry about their health because there is the NHS and to spend their money the way they wish like the rest of us to a large extent can.

Conor is right- and that’s what people like Alex can’t understand- that despite all the frustrations its better to have a state that gives people the freedom, the independence to do what they want, than a state that doesn’t. Alex lauds Newt Gingrich’s contract with America- I don’t. I want that old lady to be independent and look after her husband and I want the state to make that possible. That’s what government spending should go on- cut away at the bureacrats as much as you like- but lets not let anyone forget that government spending helps the weakest in our society and strengthens those without strength, so that everyone can live a free and independent life as far as that’s possible.

Freedom is not simply about lower tax rates, it is also about being independent enough to shape your own life the way you want to. Alex Deane thinks he is supporting freedom by cutting taxes- actually he is supporting a new kind of servitude where the poor are slaves, depending on the philanthropy of others for their lives and livelihoods, not upon benefits guarenteed by the whole community as a due from the wealthy to the less well off.

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About the author
'Gracchi' is a regular contributor to Liberal Conspiracy. He started a blog last year which deals with culture and politics and history, where his interest lies. He is fascinated by all sorts of things including good films and books and undogmatic discussion of ideas. This seems like a good place to do the latter... Also at: Westminister Wisdom
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Reader comments


Isn’t this then a case for maintaining taxation rather than lowering it as much as possible? Don’t get me wrong, I agree of course, and I think we need to highlight this argument more because the right completely distort it. But isn’t it about maintaining existing policy?

And to that extent, one can argue the case for maintaining the taxation levels has been won temporarily because even Cameron’s govt isn’t talking about cutting public services.

2. Margin4 Error

This is an excellent piece. Well said Gracchi

There is a moral case for low taxation in that it does remove a person’s freedoms in one regard. But there is also a moral, liberal case for high taxation.

Fundementally too much human rights focus in the past has focused on the state as the oppressor – rather than looking at nature (sickness, old age, etc), commerce (employers, traders, etc) and private individuals (criminals, terrorists, etc) as just as oppressive and more so.

The state is our only protection against those other oppressions and so we perhaps need to better make that case.

Of course that then somewhat steps on the arguments made by many liberal campaigners about opposing detention without trial, asbos, etc – but as long as we all remember the state can oppress as well as liberate that need not prevent a re-writing of what human rights should be.

Doh, beat me too it! I was just finishing off my comments about the centreright article on my space when I saw this pop up. It’s absolutely spot on here, well done. The thing that gets me particularly is the complete deception over what is being talked about. Using Gringrich’s peice allows him to sound as though he’s talking about those of us hard up on money, which of course will be all of us (we all believe we don’t have enough, right?), yet any even general statistic will tell you that unless you’re in the top 20% of earners, probably even the top 10%, you’re better off with this scheme of taxation (not taking in to account duties and VAT) than you would be without it. I do wonder whether it’s intentional, but it always grates on me when people talk about upper class “problems” as if they are shared by those close to the poverty line.

4. Fawkes is right wing extremist.

Why does everyone think Guido Fawkes AKA Paul Staines is a neutral. Guido Fawkes is an extreme right winger.

His recent castigation of anti racist campaigner Mr Hain is a sign of what he hates. Hain sacrificed his security against a brutal state to fight for democracy for blacks in south Africa. Fawkes despises him for that.

He joined the Young Conservatives whilst at University.

Here is the real facts about Fawkes

Having joined the Federation of Conservative Students, he described his politics as “Thatcher on drugs”.

Staines worked as ‘foreign policy analyst’ for the extreme right wing Committee for a Free Britain, a right wing Conservative pressure group, alongside David Hart. Staines acted as editor of ‘British Briefing’ a long standing publication that sought to “smear Labour MPs and left leaning lawyers and writers”.

He does the same now but claims he is neutral. Funny how he nevers insults the tories bosses infact seems to let them of the hook. I am sure you can see he is no neutral. He is no neutral but wait the later points are even worse. .

Staines relates of his work with the Committee: in the book

(1998). Altered State: The Story of Ecstasy Culture and Acid House, 2nd edition, London: Serpent’s Tail. ISBN 1-85242-604-7. —

“I was lobbying at the Council of Europe and at Parliament; I was over in Washington, in Jo’burg, in South America. It was ‘let’s get guns for the Contras’, that sort of stuff. I was enjoying it immensely, I got to go with these guys and fire off AK-47s. I always like to go where the action is, and for that period in the Reagan/Thatcher days, it was great fun, it was all expenses paid and I got to see the world. I used to think that World Briefing was a bit funny. The only scary thing about those publications was the mailing list – people like George Bush – and the fact that Hart would talk to the head of British Intelligence for an hour. I used to think it was us having a laugh, putting some loony right-wing sell in, and that somebody somewhere was taking it seriously. You’ve got to understand that we had a sense of humor about this.”

The CFB invited Adolfo Calero, the Nicaraguan Contra leader, to visit the UK.

What kinf of sickoe works with the contras and supplies gunsot them.

In a November 1984 report the Sandinista government alleged since 1981 the Contras had assassinated 910 state officials; attacked nearly 100 civilian communities; caused the displacement of over 150,000 people from their homes and farms; and damaged or destroyed bridges, port facilities, granaries, water and oil deposits, electrical power stations, telephone lines, saw mills, health centers, schools and dams.

A Sandinista militiaman interviewed by The Guardian stated Contra rebels committed these atrocities against Sandinista prisoners after a battle at a Sandinista rural outpost:

Rosa had her breasts cut off. Then they cut into her chest and took out her heart. The men had their arms broken, their testicles cut off. They were killed by slitting their throats and pulling the tongue out through the slit. Fawkes must be so proud. So think of that when you read his blog.

What kind of sickoe thinks it is fun to support sick creeps like the contras.

The CFB launched a number of policy campaigns and initiatives during 1988. It also supported the Community Charge (Poll Tax).

In time for the October 1988 Conservative Party Conference, the CFB published a British Foreign Policy – The Case for Reform, featuring a photo on the front cover of Foreign Secretary Geoffrey Howe giving the clenched fist salute at a meeting in southern Africa. In the pamphlet’s conclusion it stated “The Foreign Office is one of the last of the great institutions to escape the refreshing breath of Thatcherism.” Howe maintained he had not been giving a black power salute.

So now we see why fawkes despises hain. Re,ber he was a foreign policy analyst.. .

This is all verified on wikipedia
http://en.wikipedia.org/wiki/Paul_Staines

Infact his buddy Mr Hart was done for a attempted coup attempt with Thatcher a few years ago.
This shows to me that the media help Mr Fawkes as he is in on the conspiracy. He is not a rebel he is in on the establishment How many rebels spend their time talking to the intelligence services. How many of them are buddies with right wing nutcaes who start fincance backed coups. He is not a rebel in any way and is an extreme right winger. He is former gun runner for contras.

Yes, very good article Gracchi.

Leaving aside, for the moment, questions of macroeconomic fiscal necessity…

Sunny, I think your question is a variant on “how long is a piece of string question”: specifically, is this piece of string long enough for the job in hand?

The answer is that, of course, depends on what the job in hand is. If we are broadly satisfied with society as it is now, then no, we don’t need higher taxes. Personally, however, I’m not satisfied.

Identifying the nature of the problem and the precise remedies is a much broader question than the morality of taxation, but I do hope that there is at least a broad consensus on this site that there is a problem that needs to be fixed. If we identify as a shared aim that we want to create a better society, then we need to confront the fact that to build a structure that can support the growth of such a society will cost money.

We urgently need to get over the neoliberal fallacy that we can get the market to do it for us on the cheap. This thinking is a product of left defeatism after the beatings we took in the 1980s. Some people may not want to face this, but part of any progressive left platform will have to involve going back over old battles that the left lost the first time round, and winning them this time. No one wants this, but it is a necessity, and anyone that doesn’t have the stomach for the fight might do well to acquire one.

We may not be able to put Humpty Dumpty back together again exactly as he was before — or even want to, for that matter — but it helps no one to pretend he is not in pieces. Except for the bastards that pushed him off the wall in the first place.

Well perhaps if this poor couple hadn’t been taxed throughout their working lives and been given access to a wider market in pensions, savings and insurance, then they could have saved and wouldn’t be beholden to the state at all right now. It would be far easier for most people to ensure their independence through personal monetary mechanisms rather than having to constantly fight and campaign to keep it through democratic structures that rarely share their interests.

Nick –

And when the floodwaters rise, they could independently take themselves to a sports a stadium to huddle freely, without water, electricity, or hope.

8. Margin4 Error

dOm

Some of what you write is fair – but you don’t define a better economy.

And that is important because some aspects, such as high employment, can be achieved in part through relatively low tax and relatively flexible markets.

Hence the UK has such high employment rates (and figures out yesterday showed the fastest growth in jobs for ten years despite other economic woes) while countries like france, which compare favourably in other ways, have such low levels.

9. Margin4 Error

I should stress – that means an argument for higher taxes has to be very well thought out – comprehensive – and based on sound principles.

It can’t be based on a simple discarding of stuff we don’t like and ignorance of economics.

That old lady almost certainly pays far more in council tax than she receives in tokens towards buses or taxis. Why not, instead of giving her a bus or taxi token, cut her council tax and then let her manage her own budget? Choose not just between buses and taxis but anything she wants.

Wouldn’t that be the most liberal option in the case you’re discussing? You could do something very similar for poor people who pay tax and then are given benefits in turn – raise the personal allowance.

Of course, positive versus negative liberty is a big issue and I don’t mean to be too glib. The debate you’re addressing is an interesting one. However, with the size of the state as it is there would be huge room for tax cuts without removing people’s freedom to afford things if they wanted them. Almost everyone is taxed. Letting them spend the money themselves is the liberal way forward.

Margin4 Error –

What constitutes sound economics changes over time and does not constitute a set of rules of which people either are or are not ignorant. There is plenty of scope for debate.

For example, the (Keynesian) neoclassical synthesis that dominated policy making in the 1950s and 1960s and gave us full employment was the result of the economic failures preceding that period. The thinking that underpinned those failures was not all that dissimilar to the neoliberal thinking that predominates today.

The theoretical basis of Keynesianism was challenged by Friedman and the Chicago school in the 1960s, but I would contend that the reason why the Monetarists came out on top in the academic arguments was that the debate was conducted in terms of the IS/LM model, which was only ever a handy tool that served as an approximation of what Keynes was arguing. The conclusion of those debates was that the cause of unemployment was inflexible labour markets caused by sticky wages. Yet Keynes himself argued that even if nominal wages were perfectly flexible, real wages would remain sticky because workers are consumers, therefore a cut in nominal wages would at the aggregate level lead to deflation. For Keynes, unemployment was the product of shortfalls in aggregate demand that were the product of fundamental uncertainty, an idea not contained in the Keynesian models that Friedman attacked in the 1960s.

Even so, it was not until the stagflation of the 1970s – caused by very particular economic circumstances – that Thatcher was empowered to put Friedmanite ideology to practice. And what was the result? Soaring unemployment in the 1980s.

Indeed, now that we are seeing a repeat of some of those particular circumstances of the 1970s – i.e. oil prices quadrupling in a short space of time – and many economists are once again predicting stagflation, might it not be time to question our assumptions of what constitutes sound economics?

In any case, I was deliberately vague about what constitutes a better society so as not to get caught in such tangents. The basic principle that I hoped to establish is that if you want change, it doesn’t come for free. If you are happy with the status quo, there is no reason to raise taxes.

Some people may not want to face this, but part of any progressive left platform will have to involve going back over old battles that the left lost the first time round, and winning them this time. No one wants this, but it is a necessity, and anyone that doesn’t have the stomach for the fight might do well to acquire one.

d0m – I somewhat disagree with this. The battles of the past remain in the past and the world has changed since then. So any new leftist thinking on the welfare state, taxation and such stuff will have to take the new world into account. This includes the acceptance that people are no longer as improvished as they were and now prefer more freedom that govt support. I think a balance has to be struck… but also international migration means the welfare state needs reforming (in my view).

Matthew:
Almost everyone is taxed. Letting them spend the money themselves is the liberal way forward.

Not necessarily. It may be more effiencient to let the government be the buyer in case of stuff like health and education, and make it cheaper for people to get basic coverage for a regular sum. You could move to Dubai if you want to pay no tax, but even the middle class people I spoke to there weren’t ecstatic about the lack of a welfare net and said they ended up paying about the same anyway, sometimes even more because they had to compete with the richer people for good services.

2 above:
There is a moral case for low taxation in that it does remove a person’s freedoms in one regard. But there is also a moral, liberal case for high taxation.

Surely the moral case is simply for taxation per se. Low and high are pretty meaningless terms without some base against which to measure.

…with the size of the state as it is there would be huge room for tax cuts without removing people’s freedom to afford things if they wanted them. Almost everyone is taxed. Letting them spend the money themselves is the liberal way forward.

The writer Colin Ward put it best I think:

In the 19th century the British working class built up from nothing a vast network of social and economic initiatives based upon self-help and mutual and. The list is endless…. How have we allowed that tradition to ossify?… I would claim that the political left in this country invested all of its fund of social inventiveness in the idea of the state so its own ideas of self-help and mutual aid were stifled…. Politically it was because of the sinister alliance of the Fabians and Marxists, both of whom believed implicitly in the state and assumed that they would be the particular elite in control of it…. History itself was re-written to suit the managerial, political and bureaucratic vision…. It’s going to be a long haul for the political left to unburden itself of all that Fabian, marxist, managerial and professional baggage and re-discover its roots in the tradition of fraternal and autonomous associations springing from below.

Matthew,

“That old lady almost certainly pays far more in council tax than she receives in tokens towards buses or taxis. Why not, instead of giving her a bus or taxi token, cut her council tax and then let her manage her own budget?”

The fundamental point is whether you redistribute wealth downwards or not. If you cut the old lady’s council tax, do you ask her to pay directly for the services that council tax bill pays for or not? If so, then you’re not actually saving her money, you’re probably costing her more money. If not, then that money has to come from somewhere, and that somewhere has to be another taxpayer. There’s no magic solution, just a decision about whether or not to redistribute downwards or not.

The exact mechanism for this redistribution is up for grabs though. Do we redistribute by providing services that are free for all, like the NHS, or do we redistribute simply by passing money from the rich to the poor directly? At the moment we have a horrifically complicated mixture of the two, and it’s not at all clear how redistributive the tax system as a whole is, although it is probably a bit redistributive on average. I think there’s a good liberal left case for simplifying this by having a citizens basic income scheme, although I’d still say keeping state health and education is probably sensible.

15. Margin4 Error

d0m

don’t mistake ludicrous and outlandish predictions by economists for economic theory. (Not least as inflation in this country has fallen in the last few months, while employment has risen at its fastest rate in ten years, at least making such predictions premature).

There are some absolute basics to economics that don’t change. Free trade for example, increases wealth. This is derived from the principle of comparative advantage which is frankly, beyond question as an economic fact.

What maters is not how you then imagine such things fit into society or ideals, but how you respond to those facts.

The UK for example has a comparative advantage in financial services and high-tech engineering.

As such it makes sense to educate our population well as those sectors require high skills. That in turn requires taxation to overcome the market failure that people can’t adequately value their own education at the time the acquire it.

I hope this illustrates why we must define what our ‘better society’ is – in that without doing so we can’t make a cogent argument for the changes needed for it.

Note as well that in arguing for 50% attendence at university – the labour government had grasped this well and made that coherrant economic argument.

16. Margin4 Error

matt

why does she almost certainly pay council tax? poor pensioners don’t pay council tax – just like poor non-pensioners.

The council tax benefit pays it for them.

Sunny –

I’m not advocating that we turn back the clock to the 1970s, but in those areas where the world has changed for the worse, the left should be trying to change it back. One example of this is the dogma that private is intrinsically more efficient than public.

[quote]Not necessarily. It may be more effiencient to let the government be the buyer in case of stuff like health and education, and make it cheaper for people to get basic coverage for a regular sum.[/quote]

It’s stuff like this that is where the grey area forms though. On the one hand you have the argument you put forward Sunny, and it’s absolutely correct, but then on the other hand you have local governments completely failing to have any power as a mediator, let alone a buyer, in local markets. Take Bristol where I live for example, public transport is as woeful as it is anywhere else in the country and expensive to boot. Nothing the council does with regards to the public transport market makes it affordable to anyone but the over 65’s (I believe Lib Dem’s managed to set that up before being ousted, otherwise over 65’s still don’t have bus travel for free here), and I’d have to question just how much the extra we’re paying through our council tax on the latest budget is really going towards sorting this problem out for us.

But, of course, the above isn’t because of bad taxation plan’s, it’s about poor implementation, it’s about bad policy and individuals not getting the job done. But people won’t sit down and think that way, the first thing that’ll spring to mind is that it’s a tax we’re not getting anything from and so it is the tax that is the problem. The tories are certainly upping the talk about taxation that is for sure so they obviously think the time is right to make this another issue of theirs, and if this government wants to weather that particular storm they have to start ironing out the various many anecdotal stories like mine from happening.

And then there is the case that perhaps Matthew is a bit more referring to and that is the examples of those in the bottom two fifths of our income earners paying tax that ultimately gets redistributed back to them after paying people to do all the admin.

19. Margin4 Error

Ian

The moral argument for higher tax is indeed simply the moral argument for tax. But if a moral argument for tax can be made then in that there can be a moral argument for higher tax.

After all – if we pay tax to secure universal healthcare because there is a moral case for universal healthcare, what happens when we then fail to secure universal healthcare?

Well in the case of waiting lists in the 1990s the moral case was made by Labour for higher taxes to pay for more doctors, nurses, hospitals, etc. And that in turn reduced waiting lists and so boosted universal healthcare.

To counter that you can’t simply spit your dummy out and spout a fatuous notion that surely things could be more efficient. You have to offer a strong argument for how it can be more efficiently achieved.

In doing that you can make a moral case for lower tax, or at least mitigate the moral case for higher tax (since if higher tax is moral because universal healthcare is moral – then by achieving universal healthcare without higher tax you undermine the moral case.

But again – that doesn’t mean a case for higher tax can’t be made.

Margin4 Error –

I don’t have time to respond to your post right now, but I shall do so later.

Sunny,

Now you’re back to a socialist argument that state planning is more efficient. I disagree (see taxpayersalliance.com or burningourmoney.blogspot.com for endless evidence) but, regardless, that isn’t relevant to this debate. It’s an efficiency argument. She is more free if she is able to choose how to spend her own money than if the state taxes and then spends it for her.

Dan,

My case is that large amounts of current taxation isn’t redistributive as someone taxes and then receives money back in benefits. I’m not getting at the heart of Gracchi’s post – which is about redistribution – and I accept that. However, I think that the taxation which isn’t redistributive is the most immoral so I wanted to suggest to Gracchi that he make an exception for it. I’m not going to start an argument for/against tax here – it seems a bit broad – but if I can get you guys to concede the illiberalism of non-redistributive tax I think that will be victory enough. 🙂

Margin4Error,

I hope someone tells this man about your council tax revelation:
http://news.bbc.co.uk/1/hi/england/2738361.stm

I found that one with a quick googling but there are similar cases all over the place.

There is no liberal case for high taxation, and no liberal case for low taxation. There is a liberal case for using resources for the common end of protecting, extending and enriching our liberties and freedoms. The case for taxation is that for much of this protection, extension and enrichment (starting with the protection of our liberties to enjoy our lives and property) we need government, and taxation is the least bad way to pay for government. The liberal case is that it is worth paying more tax if more liberties and freedoms are delivered in return.

If the tax money gets wasted through bad mangement, union obstruction, or pandering to special interests, liberals are more against the waste than are conservatives wedded to special interests. But that is about waste; not about the level of taxes.

I get immediately suspicious when anybody starts flailing about with words like moral, as though this was synonymous with ‘correct’ or ‘better’ etc.

There is taxation like there is death, so stop fearing it and start calculating it.

There are many factors involved when proposing a change in taxation levels, but what it all basically entails is that the state is intervening to counterbalance an economic power shift in society and that by doing so is reasserting its position as the ultimate powerbroker between individuals and groups who may never meet or even be aware of each other.

Whether any change is upwards or downwards there will always be some winners and some losers, the real question is whether society as a whole benefits – though whether this is ever actually measurable in any meaningful sense remains an open question in all but the rare exception of cases where changes have been implemented.

That this argument is gaining sway seems to be an indicator in itself that social inequality is becoming more noticable as policy failings are becoming more apparent.

Margin4 Error –

“don’t mistake ludicrous and outlandish predictions by economists for economic theory. (Not least as inflation in this country has fallen in the last few months, while employment has risen at its fastest rate in ten years, at least making such predictions premature).”

It is still early days. I haven’t been keeping an especially close eye on the macroeconomic indicators, but I’ve been reporting on debt markets for the last few years, and given liquidity prior to last summer, I’d be very surprised if the US subprime mortgage sector isn’t just the tip of the iceberg where bad debt is concerned.

But ultimately this is neither here nor there as my central argument wasn’t that we will see stagflation. Rather, I was trying to make the point that the theory underpinning the argument that low taxation economies have low unemployment and high taxation economies have high unemployment is dubious. You point to France, but I just don’t accept the argument that France has higher unemployment because it is more highly taxed (labour markets are more complex and there is a lot to say on this, but we’d be going off on a tangent). Don’t forget that the unemployment rate in Sweden is fairly close to that of the UK, while in Norway it is quite a bit lower. We also managed to combine much higher rates of taxation with full employment in the 1950s and 1960s, when governments ran Keynesian economic policies.

Or to put it another way, there isn’t one singularly accepted body of economic theory churning out “facts” about how the economy works …

“Free trade for example, increases wealth. This is derived from the principle of comparative advantage which is frankly, beyond question as an economic fact.”

This is just silly. What you say would be true if the world resembled a Heckscher-Ohlin model, but it doesn’t, and once you throw away your textbook, the law of comparative advantage and its relationship to free trade becomes much trickier.

For example, it used to be the case that Britain had a comparative advantage over South Korea in shipbuilding. That changed after South Korea decided that it wanted the comparative advantage and so would get good at building ships — and erected tariff barriers to do just that.

I don’t see how one can even test whether your assertion that free trade increases wealth is even true in the real world. I’m sure you could point to cross-section econometric analyses that show correlations between countries’ GDP and how much they trade. However, all these studies do is highlight the existence of a correlation. But one could equally invert your argument and say that wealth increases free trade.

This latter conclusion is actually probably more accurate. Apart from South Korea, the United States industrialised behind tariff barriers in the nineteenth century, as did Germany and pretty much every other industrialised nation, for that matter.

It seems we’ve gone off on another tangent, and I’m not actually arguing against free trade. I just object to crude reductionism being juxtaposed with the assertion that it is “beyond question an economic fact”.

So when you say …

“What maters is not how you then imagine such things fit into society or ideals, but how you respond to those facts.”

… I don’t disagree, but I do think you could benefit from reassessing whether some of your “facts”, and asking yourself whether some of are in fact just assumptions.

I accept that you are right about the need to spell out what a “better society” would look like, I just didn’t especially want to get into it here because of the danger that it would lead to more tangents.

Essentially I see it as a more social democratic society, less materialistic and with a flatter income distribution. It would be structured not around the need to compete in a global market place of free capital flows, but would be harnessed to help the people in the pursuit of happiness.

There isn’t one stop to this — raise taxes sky high, buy a social democracy for £5.99trln — and real world obstacles will have to be negotiated. The biggest complicatioin is that controlling capital flows would require international agreement and coordinated action. But what one mustn’t do is say, “there are obstacles in the way, therefore we’re not going to bother trying”.

Of course the entire tax / benefits system is so complicated that a cadre of of public employers are employed (at public expense, naturally) to administer it and explain it.

I hold an enduring power of attorney for an unmarried 95 year old woman who had worked her entire life and I spent many hours (if not days) working my way through the pension credit form. This involved making many calls to the “helpline” which was almost permanently engaged. She was eventually “rewarded” for having saved £30K; on the other hand these savings were run down to £19K (approx) to pay for the nursing home. The pension credit and state pension (her income) go entirely to pay for the nursing home.

Re, the above discussion on council tax:

“You will not be able to get any Council Tax Benefit if you have capital (savings or property) worth over £16,000. If you have capital over £6,000, you will be assumed to have some income from that capital, and this will reduce the amount of Council Tax Benefit you can get.”

Does all this produce a more “moral” society? No idea.

I’m with Matt Sinclair. When I’m an old lady, I want my money too.

margin4error

To counter that you can’t simply spit your dummy out and spout a fatuous notion that surely things could be more efficient. You have to offer a strong argument for how it can be more efficiently achieved.

I see we are in the ‘if I’m loud enough and rude enough I don’t have to think’ mode of discussion, so I will keep this simple.

No I don’t. I don’t have to offer any argument at all. It is my money and the STATE has to make the case for taking it. That case has to include what it is for and why that is more important than any use I might have in mind for the money. In other words it has to be both moral and economic. Issues of efficiency are irrelevant to making a case for taxation. It should be a given, that the state – and any other organisation using my money, whether from donations or taxation, does so as efficiently as possible. It is possible to argue of course that the state is inherently more inefficient, but that may be the price we have to pay for collective action. I’m not convinced of that, but others are probably better placed to make the analytical case than I am – I just spent 30 years working for them (unfortunately).

After all – if we pay tax to secure universal healthcare because there is a moral case for universal healthcare, what happens when we then fail to secure universal healthcare?

What happens if we make promises that we can’t keep? Just because it is funded from taxation, doesn’t mean that we can immediately meet all demands on the healthcare system. Making unrealistic claims and then assuming we can manage our way out of the mess that creates has put us where we are now. A moral case for universal healthcare is not a case for any treatment at whatever the cost. Choice always have to be made. We are not gods.

Ian, have to say, you’re spot on. There are cases to be made strongly for taxation being the moral choice, but this doesn’t mean the government doesn’t have a responsibility to ensure the people funding the nation’s “better life” understand where the money is actually going, penny by penny if needs be.

Only an idea and certainly not the total answer (or even a total argument).

I think everyone will agree that we need some taxation. The disagreement is how much.

I actually disagree with Matthew above: it’s the redistributive taxation that I find morally objectionable, not the paying for things that State must do (for there are things that only the State can do and therefore must do).

But leave that aside for a moment. All taxes have deadweight costs. A useful rule of thumb is 20% of the sum raised.

OK, so we’re going to have some redistributive taxation: one group loses so that another gains. Given the marginal utility of money (or pretty much anything else) we think that total utility will rise as a result of this transfer. That’s actually the argument in favour of it anyway so I hope everyone will agree.

Now, in those calculations we never actually do consider the costs of those deadweight costs. So, might I make a suggestion for a type of redistributive taxation which would be (or is) immoral?

One where the rise in utility from the redistribution is less than fall in utility from the deadweight costs?

No, I’ve no idea whether such a situation currently exists, will or ever has. It’s simply an unfinished thought trying to work out if there is a level of redistribution that would be immoral.

(My intitial thought would be taxing low income peopleand then offering tax credits. Nothing very much achieved except th deadweight costs themselves.)

[taxing low income peopleand then offering tax credits. Nothing very much achieved except th deadweight costs themselves.]

Many people receive more in tax credits than they pay in tax, so getting rid of tax credits and not taxing them would leave some worse off, to the point where, e.g. they would be better off not working than continuing to work. It would be hard to describe this as unequivocally ‘moral’.

31. So still don’t tax them and then give them more credits. The point isn’t that they should not be touched by the system, it’s that surely a system where they pay money that they are 100% certain to get pack as part or full amount of benefits is inefficient when it comes to the cost required just to return that money.

“In Alex’s world government spending doesn’t liberate, but taxation does enslave. For him the poor we redistribute to, or the sick that we give care to, or the children that we educate, thanks to taxation aren’t aided but are told things by bureacracies ‘for their own good’.”

Out here in the real world we think rather differently. Spending *can* liberate, of course, just as taxation can enslave. Indeed, taxation always involves a certain amoutn of enslavement, while spending *sometimes* leads to liberation, sometimes it doesn’t. Does funding the Potato Marketing Board lead to an increase in liberty? No, clearly not, but the taxation to pay for it equally clearly is enslavement (I’m using the very words you do: no, I’m not equating 1 p in the pound income tax to literal slavery).

Similarly, it is indeed possible to have a bureaucracy which does not do things for their own good: at least, not exclusively. But there will always be a certain amount of featherbedding in the operation of any such: whether public or private.

Which leads to a useful real world rule of thumb: certainly, there are things which only the State, funded by taxation, can do. Those come again in two parts: those things which must be done and those things which could be, but don’t have to be. That first group of course then have to be done by the State. That second we should consider the amount of enslavement we’re going to get for the amount of liberty that is created.

Sticking with the Potato Marketing Board: no increase in liberty, an increase in enslavement, it’s not something that has to be done and it’s not something that only the State can do. Great, a moral case for lower taxation.

Now all we need to do is go through everything the government does and make the same calculation. Me, I’d say that out of the £650 billion spent by hte State there’s perhaps £150-£200 billion that fails this simple test.


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