You’ve probably got to be a fully-qualified accountant to understand the small print of the changes in personal tax allowances unveiled by Alistair Darling – pictured - yesterday. But the political meaning of the announcement is instantly clear; here we have an on-the-hoof attempt to bail out of a mess in which a government with a cohesive centre-left ideological compass should never have found itself in the first place.
If 2007 had not seen the grotesque chaos of a Labour government – a Labour government – bringing in a budget that made over five million of Britain’s poorest taxpayers even poorer, 2008 would not have seen it reduced to this embarrassing resort to make it up as you go along fiscal policy.
Normally a chancellor that puts a windfall £120 into the pockets of the majority of British adults could at least expect some favourable headlines as a result. But the U-turn hasn’t even generated that.
The fiasco of the last few weeks should at least force reconsideration of such obvious questions as what the taxation system is all about. Much as we all groan when we open our payslips each months and look at the size of the chunk that goes to the Treasury, nobody who believes that there is such a thing as society can object to taxation on principle.
What is important is the way that the money is raised and on what it is spent. Is it socially just to make pensioners pay VAT on fuel so that Britain can have nuclear weapons it doesn’t need, for instance? And would it be wrong to claw back some of tax breaks both rich individuals and corporations have enjoyed under successive governments since 1979 in order properly to fund health, education and infrastructure?
After all, the top rate of income tax during the period of high Thatcherism 1979-88 was 63%. Under New Labour, it remains at 40%.The received wisdom is that the very suggestion that the telephone number salary brigade might part with a little more of their generous long term incentive plan-inflated remuneration is electoral suicide. In recent years, only the Lib Dems have flirted with the notion, and even they have now dropped the idea.
It’s not that all that many people really are on six figure salaries, we are repeatedly told. The thing is, lots of voter aspire to be on six figure salaries. But how realistic is this aspiration? Despite a quick Google, I haven’t been able to come up with the stats.
But I seem to remember that only around one in ten make it into the higher rate tax band, which kicks in at just over £40,000, so presumably only one or two percent of the population ever reach a wedge that has five noughts on the end of it.
It shouldn’t be politically impossible to sell a tax hike for top earners by stressing just how few people would be hit, especially if it was accompanied by tax cuts for professionals and skilled workers in unexceptional jobs who are currently being taxed at the same rate as billionaires.
Nor should highly profitable companies get off the hook. News International, for instance, has paid no net corporation tax in this country for more than a decade, despite profits topping £300m.
Big companies and their highly-paid executives do not live on another planet. It is not acceptable for them to pay little or nothing to the Treasury, leeching off the taxes paid by you and me while their representatives dish out homiletics about the scandal of Gallagher family Britain.
We build much of our society directly around the needs of business, from the education system to infrastructure spending to the state subsidies for low pay known as Working Tax Credits. So it is only right that the fortunate properly contribute to the arrangements that enable them to accumulate and hold onto their wealth.
And here’s the best bit, Alistair; they haven’t got nearly as many votes as those on the bottom of the pile. Even a reconstructed bearded Trot should know that.
Posted at 14:19, 14 May 2008
Comments (22)
The lowest paid are still going to be shafted. The higher paid have got extra whilst the lowest paid have been ignored again. Does Field think this is reparation? How is this justice? Bah
income inequality stats are here
http://www.statistics.gov.uk/cci/nugget.asp?id=334
"In 2005/06, original income (before taxes and benefits) of the top fifth of households in the UK was sixteen times greater than that for the bottom fifth (£68,700 per household per year compared with £4,200)."
There's more here
"The extent of inequality in this measure of income
can be seen by looking at the proportion of total original income received by groups of households in different parts of the income distribution. At this stage, the richest fifth of households (those in the top quintile group) receive 52 per cent of all original income (Table 2).
This compares with only 3 per cent for households in the bottom fifth."
p6
http://www.statistics.gov.uk/articles/economic_trends/effects_taxes_benefits_household_income_01-02/effects_taxes_benefits_household_income_2001-02.pdf
Bill, it's not inequality stats I need, it's figures for income. What percentage of Britons earn over £100K, for instance.
Why should the rich pay tax?
It's a bit like my landlord paying me rent.
Dave,
is this what you wanted ?
"Doctors, headmasters, anybody in the City and probably the plumber, according to MPs, who want a blockbusting 66% pay rise to bring them into line with other professions. But the six-figure salary club is smaller than backbenchers might have us believe. Forget the headline-grabbing surveys about the "mass affluent". These crop up regularly, suggesting that as many as 3 million people earn more than £100,000 a year - but what such surveys prove is that a lot of people lie about their pay.
According to Income Data Services, the most well-respected pay research group in Britain, the number of people earning more than £100,000 a year is 113,000. That's one in every 250 workers, or less than 0.2% of the population. Those figures are taken from the government's own Annual Survey of Hours and Earnings, 2005, which MPs may want to keep away from the eyes of the Senior Salaries Review Board, which decides on these matters."
http://www.guardian.co.uk/business/2006/dec/05/executivesalaries.executivepay
Obviously the situation you are discussing is a farce and does nothing to alleviate the scandalous economic behaviour of a 'Labour' government.
However, I have to take exception to the idea that "nobody who believes that there is such a thing as society can object to taxation on principle"
I think you'll find that there are plenty of people who have a strong belief in society and who disagree with taxation on the very strength of that belief. In fact, there are lots of people who argue that the very essence of taxation (syn. legitimate extortion) is at odds with a firm belief in society.
The idea that taxation is in some way a prerequisite for society seems, to me personally, a very authoritarian and cynical notion. It suggests that society needs to be imposed upon people.
In fact the kind of blundering behaviour you are describing in the article seems to support the argument that systems of taxation are so susceptible to corruption and mismanagement that their very existence is anathema to any society that wishes to be truly democratic.
I have a question and it's not rhetorical, i.e. I'm not trying to be a smart-arse. What historical precedent is there where taxation is not a result of the privilege of a ruling class? Is there one?
``In fact, there are lots of people who argue that the very essence of taxation (syn. legitimate extortion) is at odds with a firm belief in society.''
Most such folks seem to be libertarians of a capitalist persuasion, e.g., the late Robert Nozick. Whom did you have in mind, exactly, and how do their politics differ from the avowedly capitalist libertarians?
It IS electoral suicide to suggest increasing tax on the rich, or cracking down on tax avoidance by the rich.
This, however, isn't because the electorate doesn't like it (ask a Daily Mail reader and a Guardian reader what they think of 'fat cat salaries' and chances are you'll get a pretty similar answer), but because the CBI doesn't like it.
Big businessmen fund election campaigns; any party knows that if you upset big business you're less likely to get any funding. That's why Nick Clegg is so keen the Lib Dems should be seen as "the party the City can trust", despite the fact that "the City" are not a terribly popular bunch right now what with the credit crunch and everything.
right found it!
Social Trends 2007 edition
Page 61
http://www.statistics.gov.uk/downloads/theme_social/Social_Trends37/Social_Trends_37.pdf
350,000 taxpayers get over £100,000 out of a working population of 28 million.
Exactly, Bill and Mod
And of this number - 112,000 or 350,000, but in any case a small layer - I wonder what the distribution is between those earning, say, £100,000 to £150,000, the sort of money that professionals get for reaching the top of the tree, and those on millions?
Surely there are a couple of lessons to be learned:
1) The level of understanding on the Left of how taxation works is pretty awful. The fact that these proposals were around for over a year before anyone really got interested about their impact is pretty damning evidence that this is the case. Perhaps a lot of problems could have been avoided if the whole issue had been raised before the 2008 budget.
2) Playing around with taxes is not a very effective way of helping the less well off - paying out £2.7bn to compensate the 5.3m losers who lost c£0.7bn does not strike me as being particularly efficient. Using tax credits and benefits is far more effective at targeting those in need (even despite the current inefficiencies in the tax credit system). Also need to pay a lot more attention to what happens to pre-tax incomes.
Another point to note is that Tories now appear to be accepting that the tax system should not be used to disadvantage the poor (funny they never thought about that in the past when putting up VAT etc.etc.) - but their hands now really need to be held to the fire on this. They are omniously quiet on what they want to do with the tax credit system!!
The HMRC tax take tables at the link below may be of interest.
http://www.hmrc.gov.uk/stats/income_tax/table2-5.pdf
Worth noting that a 10% increase on all those earning in excess of £500,000 would raise an extra £1.2bn, before evasion and avoidance.
"100,000 to £150,000, the sort of money that professionals get for reaching the top of the tree, and those on millions?"
Dave, no woonder you left the trot left, they would have taken an unhealthy slice of your reward for "reaching the top of the tree"
Well, James Purnell has made a speech about publishing a new Welfare Reform Green Paper (Bill is being introduced in the autumn).
It is more of the same, bashing the poor. And one of the aims is to deliver "value for money to the taxpayer".
Oh and with the emphasis on "rights and responsibilities"..
I have written about it on my own blog.
Andy
You seem to be getting my salary mixed up with the salary of your party's only MP.
Perhaps I have missed the change of line, but last time I checked, 'workers' MP on a workers' wage' wasn't among the official Respect Renewal slogans.
If I ever earn anything approaching the kind of money you seem to think I am on, I will freely hand over most of it to political campaigns I approve of. Promise.
Feeder of Felines -
People with Libertarian principles certainly. As I said, the very notion that taxation is necessary is an extension of an authoritarian tendency.
Though I rather support Robert Anton Wilson's statement that "Libertarians, if they were totally consistent with their principles would be Anarchists".
Oh great, I started writing this 2 hours ago and it prompted reading so many other articles that I've no time to finish a more complete response. Oh the perils of NADD.
Any answers to my previous question at all?
On the 10p issue, I have to say i am saddened and angered that the left, etc isn't just as concerned about the real cuts in benefits that disabled people will incur in october. For some, the most disabled, ironically they could lose the most, over 400 pounds a year! Surely that is something to get aggrieved about?
You can count the amount of campaigners against these on the left on one hand, Louise, Jonathan Rutherford and moi, any more?
why is this, has the left bought the deserving/non deserving dichotomy of the neo-victorians
PCLP: ``Oh great, I started writing this 2 hours ago and it prompted reading so many other articles that I've no time to finish a more complete response.''
I threw away another paragraph or two, and just went with the question, because I wanted to avoid writing an article instead of a comment. :-)
As for the question about ruling classes and taxation, I am not quite sure what you are asking: it would seem to me that where taxation has the avowed purpose of income redistribution from the well off to the not so well off (as, at least, in Sweden, and the like, or so I would of thought) it is not clear to me that it is the privilege of the ruling classes except in so far as the welfare state enables the ruling class to rule :-) ``What does the ruling class do when it rules?'' asked Goran Therborn. The short answer was, preserve the system by which it benefits.
``Libertarians, if they were totally consistent with their principles would be Anarchists".
Anarcho-syndicalists, I assume he meant. I had an exchange with a libertarian along these lines some time ago. I observed that a libertarian who was serious about freedom, and who did care whether it was general and not confined to the haves and have mores would have to be a syndicalist. If you allow for large scale private ownership of the means of production, you will end up with serious inequalities in the distribution of income and wealth, and with it, all too many who are exploited and without the ``fair value'' of their liberties.
``Libertarians, if they were totally consistent with their principles would be Anarchists".
Anarcho-syndicalists, I assume he meant. I had an exchange with a libertarian along these lines some time ago. I observed that a libertarian who was serious about freedom, and who did care whether it was general and not confined to the haves and have mores would have to be a syndicalist. If you allow for large scale private ownership of the means of production, you will end up with serious inequalities in the distribution of income and wealth, and with it, all too many who are exploited and without the ``fair value'' of their liberties. I got a shrug of the shoulder in response, as if to say, I know the problem is there, and I don't want to deal with it.
Oops! Sorry for the double post.
FoF, I've got a bit more time now...
On RAW: I'm not sure I could confirm or deny his particular choice of anarcho-X other than what he states, in the interview I'm quoting from, about individualism (though he sympathetically mentions Kropotkin and other 'communist' anarchists (presuming he means Goldman, Berkman and the like))
The interview clip is up at:
http://www.blackcrayon.com/
On the Lib./Anarch. divide: The US stuff is easier to get to grips with. I'm more biased toward Hess' viewpoints than the stuff that has come out of the Austrian school. The Kevin Carson/Walter Block thing makes for an interesting back and forth. Do we have anything similar in the UK? I've not come across it if we do.
Thanks for the answer on the tax issue. Whilst I think that the redistribution ideal is what it has come to symbolise for many, I'm not sure that it's anything more than a delusion, as evidenced by the systems we see in practice. My personal feeling is that there needs to be a clear distinction between social systems of contribution and taxation. Systems of donation and extortion respectively. Referring back to the original post, I'm pretty certain that you can believe quite firmly in a society that rests on the first and that this belief is far less cynical (though plenty would probably claim it's naive) than the second. Hence my objection to Dave's original claim.
I'm with both Libertarian and Anarchist views that the problem lies with property rights. Though I see the traditionally 'Minarchist' ideal of capitalism pushed by many of the 'right wing' advocates only becoming a system of concentrated power just as corrupt as today's prolific state-corporate complex. I think that's what you are saying too, if I'm reading you right.
Hmmm, this is turning into a article too and I feel bad using Dave's bandwidth for it... Oh dear. Couple of years working in academia has rather turned me into a walking, talking, archetype I'm afraid (or at least a sitting, typing, one). I'll stop wittering now.
(On another, minor note, I've been out to a few community events in the Midlands the past couple of weeks. Starting to see a bit of a Wobbly revival going on. IWW hoodies spotted here and there.)