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Tax and ethics

Amid all the words that will be written about the UK government’s Pre-Budget Report statement yesterday, many will no doubt focus on the utility, or otherwise, of proposed measures such as creating a new, higher 45 per cent tax band on people earning £150,000 or more. Maybe even some supply-siders will point to the destructive effects, the counter-productive consequences, and the likely exodus of entrepreneurs and wealthy citizens, if the tax hike becomes law – after the next election. And they will be right to do so, of course. Throw in the impact of cuts to tax allowances and rises in national insurance payments – a tax by any other name – and the real upper rate of tax is heading towards 50 per cent. I hope all those middle England Jeremy’s and Fionas who voted for that nice Mr Blair and who turfed out the Tories are feeling suitably chastened.

But the core of the problem with resisting such egalitarian acts of robbery is that pointing out the bad economic effects of such measures is not enough. Large swathes of the UK public do not care, or assume that they will never be very rich anyway, so why should they be worried? The current government and public sector, with state, inflation-proofed salaries, could not give a damn either. What is lacking from almost all political and media analysis of the increased steepness of the progressive tax code is a moral element.

Progressivism is a looter’s charter. There is no coherent, objective principle by which one can say that a person earning XXX should contribute say, 40 per cent of their income to the State while another person, on a higher figure, should pay 50, or 60, or even 80 per cent. It is about as scientific as plucking figures at random from a telephone directory. This is not just unwise, it is wicked.

The only reason I can think of for progressive tax is to offset the potential regressive impact of taxes on consumption such as VAT, sales taxes and the like. However, in practice the people who might benefit from any offset are not the same as those who get hit by a consumption tax in the first place. Far better, in fact, to cut through the web of complexity and introduce a flat-tax where the whole population, apart from the poor, pay the same percentage of their income, preferably at a much lower rate. Of course, the ultimate objective is not just flatter taxes, but lower, or no taxes, at all. But although this appears so much dreaming at the moment, anyone who wants to make the moral and philosophical case for lower taxes and against egalitarian thieving must do so in such moral terms and not expect that economic arguments will win the day. What Alistair Darling proposed yesterday was to clobber people for no other reasons than they happen to be well off and he knew quite well that his tax increase will garner relatively little revenue. But he does not give a brass farthing. This government is now acting out of spite.

I finish with this quote, taken from here: “The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or com pass, and there is no amount of injustice and folly you may not commit.”

21 comments to Tax and ethics

  • Johnathan, you are utterly and entirely correct.

    The only fair income tax scheme is to have a flat tax with individual tax-free allowances set to cover the basic essentials of life (for any family one supports as well as oneself).

    [And National Insurance Contributions, now a tax and nothing better, should be subsumed into income tax and treated in the same way - the employer's contribution too.]

    Any different scheme of income tax is, quite simply, buying votes with other taxpayers’ money.

    Best regards

  • criminal

    What is the real effect of these Tax changes?

    VAT down

    my understanding is this will actualy harm businesses, as they take in VAT on a daily basis but only pay it annually.

    So they will now loose the interest they make on these tax receipts.

    Income Tax up

    my understanding is this, if you earn over £150k a year you buy a good accountant and don’t pay any income tax anyway.

  • Darling even decided to clobber people in future on the basis that they might, MIGHT, be better off than they are now so he is entitled to take more of their money.

    The logic is, to put it kindly, flawed.

    http://www.lettersfromatory.com

  • Why is anyone surprised,look at the communist potty training this lot had,wolves in sheep’s clothing.Labour only played nice to win enough terms to change the country completely.Socialists do not want to cure the ills of society,but to expand them because that is Labour’s power base.
    Bankrupt Labour is even more in thrall to the Comrades of the Union movement

  • Most people simply don’t think – much of the average person’s viewpoint is informed by unexamined choices and preferences that came from they know not where.

    The other glaring point is that arguing on the enemy’s terms is an automatic fail. For some reason there’s the problem that most people will let the enemy choose the ground and terms of engagement. Switch from the centreline!

    I say taxation is theft, you say property is theft. That’s the kind of argument you can only resolve by force because you can’t have it both ways.

  • criminal

    I say taxation is theft, you say property is theft. That’s the kind of argument you can only resolve by force because you can’t have it both ways.

    You know this boy might have a point there.

  • Johnathan Pearce

    I say taxation is theft, you say property is theft. That’s the kind of argument you can only resolve by force because you can’t have it both ways.

    Well indeed, but bear in mind that in order for taxes to be levied, one needs wealth to tax in the first place, and without property rights, and the security that this affords, not much wealth gets created. Plus property rights can be seen to spring out of the requirement that Man has to survive and thrive, while taxes can at best be described as a necessary evil to maintain the basic structure of laws to enforce and protect said property rights.

    Okay, lecture over.

  • RRS

    Discussions on the modes of taxation and their impacts, whilst useful for “venting,” generally stop short of reaching the underlying issues of the nature of the social organization – and – the fundamentals of how resources (goods and services and the manner of their exchanges) are to be allocated or directed.

    Three highly generalized modes of allocations can be discerned: (i) via dominance in the use of violence [resulting in one form or another of feudalism]; (ii) political arrangements [generally in forms and related powers of representations of interests]; and (iii) pricing systems, which reflect choices [usually labeled as "capitalism," or now "market economies."]

    Taxation (or its equivalents) deployed in (i) and (ii) has functions that would differ from functions in (iii) were the latter to exist without modifications from (ii) or intrusions from (i).

    The accepted purpose of taxation in representaive governments is to provide for the functions of government. However, in condition (ii) and in conditions of a mixture of [or overlay on] (iii) with and by (ii), which is a close approximation to the current U.S. and U.K. social organizations, both the functions of governments and the functions of taxation are severly altered, even perverted (into political “rents”).

    Absent consideration of those functions of government and taxation, and consideration of how those functions have come to be determined and will be determined for the future, or forces may be set in motion to alter ongoing adverse determinations, one’s energies would be better devoted to developing adaptations to shelter and retain as much as possible of productive efforts, rather than scratch at the scabs (the modes of taxation) on the recurrent wounds from condition (ii) which drive the productive to prefer modified forms of (i) to the extremes of (ii).

  • And another thing….

    Darling has re-jiggled fuel duty and fuel VAT. Now if a business is VAT registered it could claim back the VAT. Not anymore because duty is not reclaimable.

  • Tim S

    Well said RRS. That’ll spark the revolution. Not.

  • RRS

    Tim –

    Revolutions? No! But shifts like those of 1933 in Germany; shifts in the dominance of violence, industrial feudalism, etc. – not beyond the possible.

  • criminal

    Your The ends justify the means argument although highly suspect in itself, would be fine if this post was titled “Tax and Practicalities” but sadly it does not.

    its “Tax and ETHICS” and from I’m reading you are saying Liberterianism is no more ethical than socalism.

    Well indeed, but bear in mind that in order for taxes to be levied, one needs wealth to tax in the first place, and without property rights, and the security that this affords, not much wealth gets created. Plus property rights can be seen to spring out of the requirement that Man has to survive and thrive, while taxes can at best be described as a necessary evil to maintain the basic structure of laws to enforce and protect said property rights.

  • Johnathan Pearce

    Your The ends justify the means argument although highly suspect in itself, would be fine if this post was titled “Tax and Practicalities” but sadly it does not.

    its “Tax and ETHICS” and from I’m reading you are saying Liberterianism is no more ethical than socalism.

    Criminal, what are you talking about? I thought I had made it clear that the objection to taxation is that it is a form of theft; property is not, since it can be shown that property can be acquired and created justly, without coercion, whereas tax, by its definition, can only be levied by force. It is the use of force which is wrong here.

  • criminal

    When and where did you show that?

    Can I have your house then please?

    since it can be shown that property can be acquired and created justly, without coercion

  • criminal

    and please tell us all how you ‘create’ property.

    Because last time i checked Einstein and the laws of thermodyanmics disagreed.

    Look up Conversation of Energy and E=Mc2

    You’d have a few houses to spare if your clever than them.

  • Paul Marks

    Criminal “can I have your house then please”.

    If J.P. gave you the house as a free gift it would indeed be your property – justly (no coercion).

    As it happens J.P. worked for his house – paying for a house (from someone who is willing to sell you his house at that price) is also just.

    Both by gift and by paying one can have property.

    Also one can make it – some people build the houses they live in, they pay for the materials and land and then they build a house.

    I have never owned a house myself (or much of anything for that matter), but I do not sneer at people who do, or pretend that their property is not justly theirs.

    But then I am not a troll.

  • Johanthan Pearce

    and please tell us all how you ‘create’ property.

    Ah, you are of the view that property never can be created, it just gets reshuffled from A to B. But that is wrong; until man understood how to make things like cars, there was no value in the black stuff under the ground called oil, for example. Without man’s creativity in working out how to turn the stuff of nature into something that is valued, wealth does not exist.

    You are also ignoring the homesteading argument. If a person can perceive that a piece of unowned property might be valuable, and he claims it, develops and mixes his labour with it – to quote Locke – then he has created something of value that did not exist before.

    Also, one can at a philosophical level argue that property ownership is intertwined the idea of self ownership and the basic requirements of survival, namely, the ability to retain that which one has created, exchanged or justly acquired. This is quite a complex argument but to argue that property is as much theft as tax shows you are muddying these points up (deliberatey?).

    With taxes, on the other hand, no actual act of creation, of entrpreneurial cleverness, is involved.

    If you cannot figure these things out you are either, as Paul Marks said, a troll who is not worth debating, or a bit thick.

    Oh, and stop quoting the Second Law of Thermodynamics. It is often invoked by ethical nihilists of various stripes seeking to justify “might is right”.

  • criminal

    With taxes, on the other hand, no actual act of creation, of entrpreneurial cleverness, is involved.

    This is why you will always loose, Gordon Brown and his like are Clever, very clever. Certainly more so than yourself and the democratic machine they have created has taken many years of work.

    OH as for your comments about thermodynamics, the great thing about the 2nd Law is… its the LAW! it doesn’t need to be invoked, it happens regardless of whether you decide to recognise it or otherwise.

    However, as soon as i start getting called a Troll I consider my argument as clearly Won

    Signing off.

  • Sunfish

    I’ve only heard two groups of people ever invoke the Second Law of Thermogoddamics: physicists and young-Earth creationists.

    In other words, the physicists were the only people who’ve ever mentioned it who were worth the time I spent listening.

    And you can’t claim to own computers, because the sand was already here before people figured out what to do with it.

    People can’t claim to own anything made from steel, because hematite and coal are not artificial.

    Criminal, are you this stupid in real life or just on television?

  • Johanthan Pearce

    OH as for your comments about thermodynamics, the great thing about the 2nd Law is… its the LAW! it doesn’t need to be invoked, it happens regardless of whether you decide to recognise it or otherwise.

    Well, troll or moron, I cannot make up my mind which you are. As Sunfish points out, invoking this law to settle a debate about whether the state is entitled to seize property via tax is dumb. The question is whether property rights are morally defensible. They are because as I have said, the action by a person or persons in a, mixing their labour with something in order to endow it with a value it did not otherwise possess, is a genuine creative act. In fact, taking the stuff of nature and re-ordering it into things that people value is a creative act. By allowing people to retain the fruits of that activity, we recognise the right of people to thrive and survive as only humans can. As I happen to think that ethics are part of man’s survival, I therefore can argue that property rights are inseparable from rights generally.

    Going on about the Second Law of Thermodynamics as if this can be used to ride roughshod over any notions of rights is ridiculous. It is, as I said, a form of nihilism. It is arguing that there is no need to prove the rightness or wrongness of anything because of entropy.

    If you could be bothered to actually argue your case, I would not have called you a troll. But your remarks bear trollish hallmarks. But then I may be doing you a disservice. Perhaps you are some sort of misunderstood genius or something.

  • Paul Marks

    A misunderstood genius – I confess I had not considered that possibility.

    I am impressed by your tolerance J.P.

    Sadly I am an intolerant person.