I am getting a lot of comments suggesting that tax is just about raising revenue.
This is something I fundamentally disagree with, and have done so for some time, so this 2011 video seems worth sharing again:
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Richard – thank you!
There are flaws in this, for example “re-pricing goods and services” and “redistribute income and wealth” are basically ways to “reorganise the economy” so the ‘5 Rs’ don’t stand up logically.
Your ditty that there is “no representation without tax” is also extremely dangerous as it implies that there should be some form of minimum payment one is required to make before being ineligible to make. You will of course deny this furiously but this is undoubtedly the logical position.
a) Aiding understanding by explanation is not a logical flaw
b) All people do pay tax – I argue income tax is an important component in this
Your logic is not what you claim it to be
I believe raising revenue should also include
4) currency creation (unless you want to call it the hidden tax)
5) privatization or selling of assets like land, buildings, utilities, oil and gas fields etc
6) licenses like airwaves, fishing, driving etc
7) war
And perhaps others.
Richard,
Possibly off topic, but I found this article by a former Republic advisor fascinating
http://www.ritholtz.com/blog/2015/05/corp-purpose-maximize-profit/
Thanks for that, it was indeed facinating.
I am fascinated by the link between taxation and representation. There is a tension, however, between the redistribution effects of taxation, and the disproportionate representative power of taxpayers. To put it another way, if we tax the rich the most, will a consequence of that be that the rich have an increased influence on policy? Now, this is clearly the case anyway for other reasons such as campaign contributions, lobbying, and media ownership, but could progressive taxation make this disparity of democratic representation worse?
How do we balance the desire to make taxation systems more progressive in their burden, yet ensure that this does not result in even more political power and influence going to the rich?
If a system becomes TOO progressive, there is the increased danger that the people largely paying for the welfare state (the rich) will seek to either cut their own costs or seek a correspondingly large share of political influence (which may largely result in the same thing.)
One person should be one vote
We know it isn’t
But we must get as many to vote as possible
Taxpayers vote
The rich don’t largely pay for the welfare system. Most of Their wealth is useless to the economy as it sits unused, where as,if wealth was better distributed it would be spent back into the economy therefore the economy grows as does the tax yield. Maybe the top 1% contribute to 20% of all tax income but that leaves 80% that is paid by the rest of us.
A further related point- would you take the view that taking the lowest paid people out of income tax completely (the policy championed by the coalition and, it seems, the new Tory government), will have the side effect of de-legitimizing the views of those lower-paid people? Will the argument be- you’re not paying any income tax, you have no right to complain about the standard of government services?
Exactly
Literally – you do not count as there is no contribution you make to validate doing so
All part of the creation of a ‘class’ who can be accused of not contributing to society
Despite the VAT they pay on many goods & services!
There are plenty of retirees who have arranged their affairs so that the only taxes they pay are Council Tax and VAT. ISA investment income makes a big contribution here. They may have paid income tax for over 40 years. Try that one about “not complaining” on them.
Alexander M:
Taking people out of income tax doesn’t mean they are taken out of tax. They will still pay consumption taxes – everyone capable of purchasing something pays them. Therefore, (nearly) everyone is a taxpayer.
I think over-emphasising ‘income tax’ for purposes of legitimising an individual in a democratic society is a mistake. Lots of people don’t pay income tax for one reason or another (eg they are fully supported by a spouse or parent). I don’t think they are 2nd class citizens in a democracy because of it (does anyone think they are 2nd class??? Seems a straw man to me).
There is significant academic evidence to support my suggestion
What suggestion? That people who don’t pay income tax (and there are plenty of them) are somehow not equally part of society compared to those who do?
Stay at home mothers (and sometimes fathers) looking after young children? Students?
Really? What academic evidence supports this? Please cite.
The work of Mick Moore and others at the Institute of Development Studies has addressed this issue
Doesn’t everyone pay bundles of tax via VAT in any case. Are we arguing that income tax is a positive thing for the low paid because it means people look down on them if they don’t pay any? Surely only the most stupid citizen would think that no income tax equals no tax?
This seems a somewhat perverse reasoning to tax the lower earners. Surely we can credit our population with more intelligence.
Are you calling Cameron stupid?
He holds the view you describe as such
There is a reason for that and it is not that he does not know
He wants to divide, I think
Mitt Romney’s comment in the 2012 US presidential election about the “47%” of the population who are “takers” as opposed to “makers” was about the percentage of the population in the U.S. that does not pay any federal income tax, even though they may pay local or state income taxes and obviously pay sales tax.
This comment is indicative of what we are talking about- some people (mostly on the right, but the language is seeping in across the political spectrum) view a person’s ‘worth’ as directly related to whether they pay (or have paid in the past) income tax. We hear talk in this country of requiring immigrants to “pay into the system” before receiving “benefits”, or pensioners having paid income tax and national insurance their whole lives deserving to be shielded from benefit cuts.
What is arbitrary about this sort of language is the artificial division between income tax and other taxes (e.g. VAT). Simply by consuming (i.e. living!) a person contributes to the tax revenue in various ways. Similarly, there is an artificial division between state benefits which take the form of cash transfers (such as Jobseekers Allowance), and benefits which everyone enjoys by, again, simpling living in this country. We are all, relatively, safe from (most) crime, safe from foreign invasion, safe from (most) dangerous pollution, and enjoy the protection of our property rights, regardless of our nationality, immigration status, or taxpayer status. These are all very valuable benefits provided at great cost by the state, but which are rarely included in our thinking of what constitutes ‘state benefits’.
We either need to reform the language we use about “benefits” and “contributing to the system” or change policy to make the contributions more apparent.
For example, if VAT were eliminated, and replaced with a significant bump in income tax, and the elimination of the income tax personal allowance, the overall amount of tax paid by most individuals might not change, but our perception of who was and who was not “contributing” might change. I am not necessarily saying this would be a good policy move, but it might change perceptions of “takers” vs “makers”.
Spot on
Perhaps HMRC can get the ball rolling by returning to conceding that its “customers ” are actually taxpayers….. Except for large multinational corporations
I agree wholeheartedly with the class issue, but people who don’t pay income tax have a vote and that gives them a voice equal to any other.
though where there could be concern would be between those just above the lowest paid as they would see themselves differently thus marginalizing those who pay no income tax and this would be like putting a hand over their mouth. This is the divide. Poor against the Poorer and the Tories and the right wing press will exploit this even more than they already do.
The fact is that there is evidence that without tax they don’t vote
Participation is the issue
And it’s partly because of the reasons I have stated. They don’t vote due to policies that isolate them. There is no major party radical enough to put forward policies, credible enough to engage with the hopes and aspirations of the low paid
I agree