Labour’s promise to reinstate the 50 per cent tax rate for people earning over £150,000 per year has been met by a predictable response from both sides of the political divide. The Right has pointed out that it will reduce government revenue and that cutting taxes will have the opposite effect. The Left, meanwhile, has laughed at the Laffer Curve, and made some empty-headed comments about the rich “paying their fair share”.
But these arguments are red herrings. Debating the optimum tax rate from a revenue perspective assumes that we want the government to raise and spend as much money as possible. When conservative pundits call for tax cuts as a means of raising revenue, they’re playing into the Left’s hands by tacitly approving of a big-spending state. They’re saying there is nothing wrong with the scope of the state’s current responsibilities, and that the only conversation to be had is about how we should find the money. Instead, they should be arguing for low taxation as an end in itself. They should be making the point that the money people earn belongs to them, and that the government should appropriate as little of it as possible to finance those services that can only be undertaken by the state.
There is a popular belief that ‘the rich’ were responsible for the recession and the bail-out of the banks, so they deserve to be punished by the taxman for their crimes. For starters, this is a simplistic analysis, which overlooks the role of the Labour government in encouraging recklessness by the banks and creating a structural weakness in the economy. But more to the point, the vast majority of people earning more than £150,000 per year had nothing whatsoever to do with the financial crash. They’re just successful people on a good income. Even the thickest Labour supporter must understand this, which tells me this has nothing to do with justice and everything to do with envy.
Our national debt is ruinous and the government needs to find a way of paying it off, but none of the major parties are taking any steps towards this. The money they raise from the public will continue to be siphoned into existing public services. Until the size of the state is radically reduced, it will continue to have gigantic financial responsibilities, requiring high levels of taxation. It’s a chicken-and-egg situation. As long as taxation is high, the government will collect enough money to justify the continued existence of services that require high taxation to finance them.
The Tories need to spell out why putting essential services in private hands will not leave the poor unable to afford them. Food, mobile phones, computers, televisions – they have all become better and cheaper thanks to free market condition. So why the love affair with piss-poor public services? The government isn’t a guarantor of service and value, and it never has been. Can you imagine if the state had a monopoly on something like computer manufacture in this country? We’d still be using ZX Spectrums and Commodore 64s, and loading software off audio cassettes. The reason that something like the NHS is so shoddy and so expensive to run is because it’s a state monopoly. With little competition, no risk of failure and no fear of public dissatisfaction, it is inefficient and profligate. There is no reason to think that if healthcare were in private hands it wouldn’t be better and more affordable than ever.
It’s an unpopular opinion in this day and age, but I reject the entire notion of progressive taxation. I see no reason why the rich should pay proportionally more than the less well-off. There’s the fact that they benefit least from government expenditure, of course, but my real beef with progressive taxation is the implication that there is something wrong with being successful: that it is a crime to be rich and that tax is the punishment.
I don’t understand how anyone can wail about poverty on the one hand, yet resent those who escape it on the other? Are they holding off from celebrating wealth until everyone can get rich at precisely the same time? If so, they’re going to have a long wait. As a country, we will never get anywhere until we learn to admire and mimic successful people, instead of ascribing their good fortune to wrong-doing for the sake of our own fragile self-esteem.