I have had a quick look at the Keir Starmer direction of the Labour Party pamphlet published today by the Fabian Society today. In his ten statements of principle for Labour he says
I admit that this was one of several of the claims that made me put my head in my hands in despair. I explain why in the following post, which first came out in 2015, when I was at the height of my very brief period of influence on Labour Party economic policy. The title summarises my view:
There is no such thing as ‘taxpayer's money'
I am aware that some, including national newspapers, are getting very exercised by the fact that I suggest that when the government spends it is not doing so using what is often referred to as 'taxpayer's money'.
It would seem that someone is spending some time reading my past blogs, writing, lectures and tweets, In doing so they came across the following piece from the Salter Lecture I gave at the Quakers' Yearly Meeting in Bath in 2014. I confirm I reiterate the view in the forthcoming 'Joy of Tax':
At its core tax justice demands that each person pay the right amount of tax at the right time, in the right place and at the right rate.
Right has a special meaning here. It means that not only do you comply with the law. Tax avoiders can claim they do that. It does not even mean that you comply with the spirit of the law — which is what HM Revenue & Customs expect. It is about putting this desire to do the right thing into action, so that what is declared for tax purposes reflects the economic reality of what the taxpayer has actually done.
That, at least, has been our usual explanation of the term ‘right' but the reality is that it reflects something broader than that. It is our belief that we are people who live in community. But that community is not made up of those immediately known to us, as neoliberalism might, at best, suppose. We think that community between people known and unknown is something that is a pre-requisite for a life well lived.
Without that community there would be a continual struggle to preserve ownership of property, to secure the means for survival, and to maintain the boundaries around communities that are necessary if it is to invest in its own identity, traditions and future, as all do, for a community does reflect a culture, even if it is one that should develop and evolve over time.
Tax provides the mechanism to achieve these aims in a non-violent way. It's not just that it pays for the process of government that defines in turn the extent of the community, the way it identifies and transfers property rights, and which protects its more vulnerable members: tax does this in a democracy with the willing consent of the members of that society. That combination of consent and tax takes away as a consequence the cause for much dispute. As a result, tax is one of the foundations of peace.
We pay a price for this: indeed American Judge Oliver Wendell Holmes, Jr. said in a speech in 1904 that ‘Taxes are the price we pay for a civilized society'. I would agree. But I would go further than that. I would suggest that we don't as such pay taxes. The funds that they represent are, I suggest, in fact the property of the state. After all, if we give the state the power to define what we can own, how we can own it and what we can do with it — and we do — then I would argue that we also give the state the right to say that some part of what we earn or own is actually its rightful property and that we have no choice but pay that tax owed as the quid pro quo of the benefit we enjoy from living in community.
This philosophy is, of course just about the polar opposite of that of the neoliberal who thinks that all taxation is, in effect, theft of the private property of the individual that the state must, by coercion and threats wrest from their possession. That notion of tax as theft is, by the way, commonplace in neoliberal thinking. Its expression in milder form gives rise to the term used by politicians of all parties in recent years when they talk about spending ‘taxpayers' money', with the clear implication that the government really does not own the funds in its possession. Well let me inform you that there is no such thing as ‘taxpayers' money': it is the government's money to do what it will with in accordance with the mandate it has been given and for which it will have to account. It is the government's money precisely because we owe it to them in accordance with the laws that we, by consent, have agreed to comply with and which underpins the society of which we are a part and in which we wish to live in reasonably peaceful harmony.
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In so saying, of course, let me make clear that there is taxpayer's money: it is the money they have the absolute right to enjoy after they have paid their tax.
It seems some don't get such things. Public discourse and understanding is all the poorer for it.
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Labour:
Stick a fork in their arse: They’re done.
Thanks Keir. Thanks for nothing. Pure Thatcherite dogma. Labour are swing voter chasing once again.
Kier Starmer – a working class boy made bad (his Mum was a nurse and his Dad was a toolmaker like mine was).
It’s embarrassing though – it really is.
Despair you say? I think it’s even worse than that Richard.
I’m going to let Labour know what I think about this and the Guardian too have been far too quiet on this issue. I’m not reading their rag anymore.
Agreed PSR.
I have just chucked in my Labour party membership. Having read his neoliberal essay and given up on PR or any progressive policies likely to come from Starmer, this is the end of Labour for me. Back to a one philosophy and effectively a one party state, the neoliberal party state.
I can only hope that a new Progressive party emerges from the ashes of Starmers Wet New Labour, preferably forged by Richard Murphy and his growing band of followers.
Goodbye Labour.
Regards P
Not in my plan, I am afraid
I went onto the Labour website and told them the same and advised them to get rid of whoever was advising Starmer and look into MMT, the real relationship between the BoE and the Government and more heterodox ideas on economics because we need something new.
And of course I told them I’m not voting for them – I don’t want a more caring version of the Tory party – I reminded them that Attlee just did it (and he did not raise income or put up taxes to create anything in order to do that) and that Labour just need to be (guess what?) more ‘courageous’.
I left them my full contact details but I do not expect to be contacted at all. Starmer is after swing voters. That’s obvious to me.
I’m dealing with the Guardian at the weekend, and boy are they going to get it – both barrels – talk about being unhelpful.
I am no apologist for Starmer, but in a world where there are quite a few professional economists who don’t acknowledge your analysis of tax it isn’t so odd that he too doesn’t get it. Particularly since it is his job to explain financing of political plans to ordinary people whose concrete personal experience is that in order to spend money you first have to have it, either by earning it or borrowing it.
I hope though that you keep plugging away, both on this blog and in your academic work. There is a real chance it will slowly but surely permeate. I get the impression that the “multiplier” is an accepted feature of mainstream economics when it must have seemed magical thinking when first described.
If I understand right, you are arguing above that we have an obligation to pay tax as our side of a contract with the government to live in a civilised society where lots of things are necessarily done collectively on all our behalf (including issuing the currency in which all those things are transacted). Elsewhere you argue that the amount we need to be taxed is related to the need to balance the economy towards an equilibrium with near full employment and an acceptable low rate of inflation. I assume the two approaches are equivalent, just looking from different angles. But in practical political terms – and in particular the need to allay the electorate’s worry about inflation – it is crucial to make a good case that the amount of tax is appropriate for the amount of government expenditure even though the consequence of decisions now may have financial implications for years or even decades. How can that case be made, given a simple equality between tax and expenditure is not the answer?
Good question
No time tonight
Seriously chase me if I forget…..you deserve an answer
Jonathon
or to put it another way
how do we wean the electorate away from the neoliberal dross of the last 40 years
i’m stuck in trying to find an alternative to ” the Govt. CREATES money “
It’s really fundamental do we tax to spend or spend to tax? I believe the latter but the problem then arises of bringing into question why a government needs to borrow at all. The basic MMT analysis is the state spends to create and taxes to destroy, no middlemen required. The real market limitations are then labour and materials, not the ethereal invention that is money.
Have I discussed this enough already, or do I need to go there again?
unfortunately i think MMT will always struggle to convince the electorate until we do find the right words to explain the origin /roots of the magic money tree
It gives me no pleasure to be right about the Great Knight Hope Sir Keir and his primary function as controlled opposition spending his time disillusioning the most radical Labour supporters since 1945.
The State is worried. The Guardian doesn’t even bother trying to pretend it is a social warrior. They are begging that Labour shouldn’t adopt PR.
https://www.theguardian.com/commentisfree/2021/sep/27/proportional-representation-labour-party-lib-dems
The bought unions too
https://www.theguardian.com/politics/2021/sep/27/unions-vote-down-local-labour-parties-call-to-axe-first-past-the-post
Meanwhile a great nation like Germany has it and shows how vibrant PR is by having to accommodate the ever changing majority. Real life. Not a undeniably undemocratic fptp that gives you the same old Punch and Judy by the same old puppet masters.