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.”