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Samizdata quote of the day – We’re against easing the pain of paying tax Yes, yes, we know, paying tax is the price of partaking in civilisation. But that’s still a price, a cost. We think that people should see, up close and personal, the cost of that civilisation being built on their money. We are therefore against this:
Income tax will be automatically deducted from state pensions for millions of retirees under plans being considered by Labour, The Telegraph understands.
Not because the state pension should, or should not, be taxed. But because this is easy taxation. Some to many will not really even note it. Tax should be painful so that proper consideration be given to how much is being demanded.
– Tim Worstall
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The whole system of PAYE insulates the vast majority of the population against how far into their pockets government have got their hands. If everybody had to fill out a self-assessment form they would be horrified how much money is being sucked out of them – as I am every year when I do mine.
You see this evident when people are up in arms at council tax bills – because they get an actual BILL demanding money – yet are completely oblivious to the magnitude more money secretely being drained from their wages before they ever see them.
In the US, of course the biggest (at least partly) hidden tax is made through payroll deductions. There, at least, the numbers are laid out if one cares to look.
I sometimes hear European visitors snarking about “not knowing the price” on retail purchases until checkout, because sales taxes (which are multiple and local) are explicitly added at that time. I like this.
In California, a major energy supplier once broke out all the taxes and fees on their retail billing statements, in an attempt to show that they were not the sole cause of high prices. The state made them stop. (This case is a bit more perverse, because the state’s Public Utilities Commission also regulates the notional “price” the supplier may charge.)
Personally, I think you should have to pay tax in cash. Actually take paper money into the tax office. Taxes should hurt very visibly.
The real reason for PAYE and the American equivalent, withholding, is that if people had to write a check for their taxes they would not have enough money to pay, and our jails aren’t that big.
In the USA everyone files their taxes every year and the system is set up in a way that most people get a “tax refund” because they have “paid too much tax”, whatever that means. People just love this, they celebrate their tax refund, businesses organize sales around it. It is a truly bizarre thing when you understand that a tax refund is “the government kept too much of my money and earned interest on it.” If you pay late you have to pay interest and penalties, however, if you pay too much too early those same interest and penalties are not done in reverse.
I run a business, I actually write checks for the taxes of both me and my employees. Every month. And then file gob loads of paperwork every quarter. I use a service for most of it but the checks/checques themselves I personally write and send in the mail. I don’t want to loose touch with just how oppressive it is. And you have no idea how many different taxes I pay: federal income tax, state income tax, social security tax, both employer and employee, medicare tax both employer and employee, FUTA tax, SUTA, S-Corp franchise tax, property tax, state and local sales tax, not to mention special taxes on everything from beer to automobiles, electricity to plumbing.
FWIW, the government agency I hate the most is the IRS. Bad enough they gather such a ridiculous amount of money (that the rest of the government pisses away on crap) but they do it in such a way as to intrude into every area of your life, stripping you of all privacy and decency, co-opting every bank, financial institution, employer and school as their agents of espionage, and expect you to comply with a tax code so complex that something in the order 0f 60% of answers given by the IRS tax help line are wrong, which is to say the IRS doesn’t even understand the tax code. And they have these little administrative courts where the IRS is prosecutor, judge and jury. They corrupt every institution in the country and abroad, spreading like a metastasizing cancer. It is a deeply evil organization, it is the very epitome of Hannah Arendt’s “Banality of evil.”
Can’t get past the paywall so I don’t know the context, but I agree with the ones “against easing the pain of paying tax”.
Make it as painful as possible and maybe people will get tired of paying it and will demand more efficient government, less bureaucracy and lower taxes.
If people had to explicitly pay that bill every month, instead of it being take out of their pay automatically, I’d bet they’d be demanding a bit more frugality from their governments.
“Yes, yes, we know, paying tax is the price of partaking in civilisation.”
Really? So if I opt out of civilization I can avoid paying taxes? Civilization is built by people, not governments. Government has three jobs: Ensure everyone plays by the same rules (laws and law enforcement), defend against outside invaders (military) and provide infrastructure for public use (roads, bridges, reservoirs, etc) that would be difficult or impossible to be done privately.
That’s it.
If the government is doing anything other than that, they’re wasting our money and if it was more painful to pay those taxes, perhaps we’d demand they stop.
“The real reason for PAYE and the American equivalent, withholding, is that if people had to write a check for their taxes they would not have enough money to pay, and our jails aren’t that big.”
Precisely. Back in the 90s the UK did an experiment in demanding every single person take part in actively paying taxes each month, called the Poll Tax, and it went about as well as could be expected. The responsible paid it, the irresponsible forgot or refused. And the amount of the latter was large enough that the system of enforcement largely collapsed. And of course in subsequent years the cost of that revenue shortfall was heaped onto the responsible, thus ensuring even more joined the ranks of the irresponsible, until the Tory government who had enacted it was forced to abolish it and return to a property based local taxation system, as its far easier to tax houses (which don’t disappear, and someone is the registered owner thereof) than people (who do disappear, and finding them is hard for a State bureaucracy to do).
Libertarian types are about as sensible as socialists when it comes judging human behaviour, and thinking that making everyone pay taxes in annual amounts is in any way feasible could only come from someone whose head is so far up their own arse that they can’t see reality.
@Jim
Libertarian types are about as sensible as socialists when it comes judging human behaviour, and thinking that making everyone pay taxes in annual amounts is in any way feasible could only come from someone whose head is so far up their own arse that they can’t see reality.
Libertarian types like me may well have our heads up our arse, but we are not in favor of the scheme you suggest here. On the contrary, libertarians are almost entirely opposed to an income tax of any kind at all. What libertarians advocate for a tax system vary, but for me, at the federal level, I’d either advocate for a national retail sales tax of 10% or perhaps an indirect tax where we allow the government to print exactly 4% more money each year (which is effectively a tax on wealth) and use that new printed money to pay for their operations. To be successful, both those numbers 10% and 4% would have to be hard coded into a constitutional amendment, otherwise it’d be 150% before you could say “Welfare benefits”. Of course to tax at that level taxes are small enough that nobody even cares, but it also means that the government needs to spend dramatically less money.
Of course it’ll never happen, but that is more like a libertarian’s idea of a reasonable tax system.
jgh – if you think PAYE is bad, consider employer’s National Insurance. Most of the population never see that, but it currently stands at 15%
No.
Paying a tax is not the price of partaking in civilization – for example the people of the island of Heligoland (just off the coast of Germany) paid no taxes under Danish rule – and the continued to pay no taxes under British rule, the British tried to introduce taxation but the islanders said “no” – the British then built a casino complex to fund “necessary government services” in spite of the fact that these “government services” had never been “necessary” before. The islanders had been perfectly “civilized” without such “services” – just as the Hobbits of Tolkien’s shire are civilized without taxation and government spending.
The islanders were betrayed by Lord Salisbury – who gave the island to Germany in return for large areas of Africa.
Lord Salisbury thought he had been very clever in that he got vastly more land than he gave up – he failed to see that the land in Africa was of no strategic value in a European conflict, whereas British control of Heligoland would make it difficult for Germany to go to war with Britain.
Various other small, but civilized, communities were much the same – for example Andorra had no budget before the 1950s, and no Social Security taxes till the 1960s.
As for larger scale examples.
France and America had some taxes – but no income tax till 1913-1914, and no Social Security (Poor Law) tax either.
Honduras had no income tax or social security taxes till the 1950s, and Paraguay (millions of people) had no income tax till 2012.
Los Angeles was a vastly more civilized place in 1913 than it is now – yet its taxation (Federal, State and local) was very little – and now it is crippling.
One used to be able to get about American cities without owning a car – there were privately owned trolly cars and other forms of privately owned mass transit.
And a person could go from one American town or city to another by (privately owned) rail – and in comfort, and at very modest cost.
And there were attractive buildings (sadly mostly gone now), and the people were well dressed, as they were in Britain and other nations. And, mostly, looked healthy.
So it is not just a question of “how would I get about” it is also “why would I want to go to see places where most of the good buildings have been torn down and the population also looks as if it has seen better days” – and I am not being snobbish, after all I dress badly myself, so I fit in with modern decay.
Overall the idea that taxation is necessary for civilization is false – although it may be necessary for the defense of civilization, the funding of a professional military (although some of the Founding Fathers of the United States were against that).
Certainly, and I think Tim Worstall would AGREE with this, the idea that higher taxes mean a more civilized life is false – indeed absurd.
Income tax is especially heinous as it requires that the state no every detail of the economic lives of people – and gives great opportunity for IRS style persecution of people the government does not like – as others have pointed out in their comments above.
John Bright (the 19th century Member of Parliament I admire most) campaigned for the end to the Corn Laws, the tax on imported food. But he was then horrified to find that “Free Trade” was used as an excuse to bring-back-Income-Tax.
However, a tax – is a tax – is a tax.
There are no “good” taxes (certainly not the “Wealth Taxes” and “Land Value Tax” the British so-called “Libertarian Alliance” now supports – as if Frank Fetter and the other great economists had ever written a word).
High taxes on land in Ireland in the late 1840s (high tax “for the good of the poor”) crippled the Irish economy – including areas that were NOT dependent on the potato, and about a quarter of the Irish population either died or fled the country.
All the while Sir Charles Trevelyan and Prime Minister Lord Russell kept saying the land tax (Russell had introduced the Poor Law Tax as a minister back in 1838, he had already pushed through a government school system in Ireland in 1831 – and Trevelyan insisted that areas of Ireland that were not bankrupt in the late 1840s, should pay for areas that were – thus dragging down all of Ireland with his insane taxation) would “only hurt the rich” – as if all taxes are not passed on.
As for Income Tax and “National Insurance” – the British way, or “just Income Tax” – the Danish way.
Well at least the Danish way is simpler – one tax rather than two different taxes, and it destroys the illusion (the lie) that government benefits (including pensions) are somehow “an insurance scheme” or “an investment”.
There are still Americans who believe that, at one time, Social Security was a “trust fund” which made “investments”.
In reality it has always been what the Supreme Court in the 1930s said it was – a welfare scheme.
There are no investments – just government IOUs.
The same is true of Britain and other Western nations.
There are no investments – it is all a scam, a “Ponzi” scheme, a Chain Letter.
Thinking of Los Angeles and when it was at its most civilized.
I think the city was at its most civilized when George Alexander was Mayor – which he was up to July the first 1913.
No income tax (it had been passed by Congress – but was not, in think, in effect yet) no prohibition. No insane road system.
A civilized city by the ocean – it would have been very nice to visit it then.
Still civilization can advance even with the government growing (although NOT because government is growing).
For example, life was a lot nicer (people were a lot better off) here in Kettering in 1960 than it had been in 1913 – even though taxation was much higher, the decline of civilized standards did not even really start till the late 1960s.
Technology and capital investment can improve standards of life in spite of (not because of) the growth of government.
So even in Los Angeles Real Wages were a lot higher in say 1963 than they had been in 1913. And there had been no great decline in the standards of civilized life – that decline came later.
The first sign of cracks in civilization in the city came in 1965 – with the Watts riot, not just the riot itself – but the reaction to it.
The reaction was (basically) “we must have been horribly racist to provoke these people into rioting – we must give them more welfare benefits and public services, and impose more regulations”.
A civilization that thinks like that, is in decline – it may take a very long time indeed to die, but it is clearly a declining culture, a declining civilization.
Los Angeles was quite a big place – well over 300 thousand people, but (thankfully) not the vast sprawl it is today – which has eaten most of the Los Angeles County (once a very nice place).
The biggest American city back then was (as today) was New York City – which, up to 1898, was several different cities – which engaged in tax competition to attract enterprising people.
The “unification” of 1898 was a blunder (as “unifications” normally are – see the German and Italian “unifications” with their higher taxes, conscription in areas that had not had it before, and both language and religious persecution – that most 19th century liberals supported these “unifications” is astonishing.) – but the people of the five boroughs were told that each borough would have a veto on tax increases.
The (intellectually corrupt) courts got rid of that, and all the other supposed safeguards. But held that Staten Island could not secede – even though the basic terms of the 1898 agreement had been violated.
I suspect it was always intended to be an unlimited government – witness the vast Municipal Building that was built in the early 1900s.
Almost one million square feet of office space (in addition to the existing government buildings) – something like that was never intended to be the base of a limited government.
It is not a bad looking building – although it does dwarf human beings (and is intended to make ordinary people feel small – and in awe of government bureaucracy).
It was the favourite modern building of “Stalin” – he (and his architect) based the University of Moscow building (completed in the early 1950s) on the New York Municipal building.