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A matter of class

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14th Sep 2011
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When it comes to taxation issues and tax reform, the arguments always comes back to politics and ideology, says Simon Sweetman.

We have to realise that the positions we take on tax are always political, or at least ideological. It was Bertrand Russell who said, “Advocates of capitalism are very apt to appeal to the sacred principles of liberty, which are embodied in one maxim: The fortunate must not be restrained in the exercise of tyranny over the unfortunate.” It is a quotation that seems particularly apt at the moment.

In response to a piece I wrote recently, somebody answered: “Only trade union officials who are communists or socialists, and lecturers from minor polytechnics, still see things in terms of class.”

My first thought, of course, was that this must have come from someone living in the 1970s when there might indeed have been communist trade union officials and polytechnics, but my second was how you can possibly analyse the UK’s current political situation without some theory of class?

One could of course quote Warren Buffett, who as far as I know has never been a trade union official or a polytechnic lecturer. He said: “There’s class warfare all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

The evidence for that, of course, is that in the USA the real wages for ordinary workers have not risen for 30 years and all the gains from economic expansion have gone to the wealthy. It started later here, but over the last ten years the same is true in this country. Now, according to the IFS, the current policies will lead to a 10% fall in living standards for most people.

Buffett has also said, “If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further. But I think that people at the high end - people like myself - should be paying a lot more in taxes. We have it better than we've ever had it.”

In recent weeks we have heard similar sentiments from members of the super-rich in France and Germany. What we have not heard is any whisper from this country. And please don’t try to tell me that we are more heavily taxed than the French or the Germans, because it isn’t true. So, why not?

Indeed we have a letter from 20 “economists”urging the abolition of the 50% tax rate, the evidence for this being…er, they don’t like it and they are all in line to pay it themselves. This grotesque piece of special pleading is then presented by the media as if it were a serious contribution to debate. The projection is that it will raise a not inconsiderable £12.6bn over five years, but, much more importantly, it asks for a contribution from the rich.

As Oliver Wendell Holmes said, “Taxes are the price we pay for a civilised society.” The alternative is the rich living on gated and guarded estates and the poor, excluded from the benefits of society, becoming increasingly lawless. That couldn’t happen here, could it?

Replies (14)

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By Owain_Glyndwr
14th Sep 2011 16:11

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" And please don’t try to tell me that we are more heavily taxed than the French or the Germans, because it isn’t true."

 

 

Are you sure? 

Take into account all indirect taxes as well as direct taxes, and you might see a very different picture.

 

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Replying to Kent accountant:
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By Discountants
15th Sep 2011 12:15

Yes, the French and Germans are more highly taxed overall

Owain_Glyndwr wrote:

" And please don’t try to tell me that we are more heavily taxed than the French or the Germans, because it isn’t true."

 

 

Are you sure? 

Take into account all indirect taxes as well as direct taxes, and you might see a very different picture.

 

I'm sure:

Total government revenue as % of GDP:

UK: 41.4%

Germany: 43.2%

France: 49.7%

(source: OECD economic outlook no 89)

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By Mike Bassy
15th Sep 2011 02:15

Simple envy.

It is clear from hs writing that Simon Sweetman is confusing class with simple envy. 

Many rich people in Britain today have come from humble backgrounds. Instead of being criticised they should be applauded for creating wealth, jobs and enterprise. Most have started and own their own companies. Comparatively few are bankers and City types.

However, Simon's argument impies that they have become wealthy by dubious means, and as such, should be stripped of that wealth by punitive taxation.

Alas, I suspect there is another motive for his argument. 

Many people in Britain find difficulty in accepting the success of others, because to do so implies that they themselves are comparative failures. They cannot bear to think that some people are more intelligent, work harder and have better business acumen, and so deserve to be rich. It's a harsh fact and they don't want to confront it. After all, who wants to think of themselves as a dope ?

Instead, they conjure up reasons to assume that every rich person is really a cruel, unfeeling, exploitative swine who has acquied wealth at the expense of others. Sometimes this may be true, buit more often it isn't.

However, if Simon wants to examine the effects of class on the British tax system, may I suggest that he encompasses all sections of society in his study ?

For instance, as well as calling for the rich to pay even more, when can we expect to hear him complain about the burgeoning millions at the bottom of the ladder who pay no income tax, no council tax, no NI, have no educational skills, no social responsibility, nor any desire to help themselves - yet expect the rest of us to pay the bill ?  What effect do they have upon taxation ?   

              

 

 

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Replying to Flying Scotsman:
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By chatman
19th Sep 2011 13:59

Opinions with no support offered

Mike Bassy wrote:

It is clear from hs writing that Simon Sweetman is confusing class with simple envy. 

Many rich people in Britain today have come from humble backgrounds. Instead of being criticised they should be applauded for creating wealth, jobs and enterprise. Most have started and own their own companies. Comparatively few are bankers and City types.

However, Simon's argument impies that they have become wealthy by dubious means, and as such, should be stripped of that wealth by punitive taxation.

Alas, I suspect there is another motive for his argument. 

Many people in Britain find difficulty in accepting the success of others, because to do so implies that they themselves are comparative failures. They cannot bear to think that some people are more intelligent, work harder and have better business acumen, and so deserve to be rich. It's a harsh fact and they don't want to confront it. After all, who wants to think of themselves as a dope ?

Instead, they conjure up reasons to assume that every rich person is really a cruel, unfeeling, exploitative swine who has acquied wealth at the expense of others. Sometimes this may be true, buit more often it isn't.

However, if Simon wants to examine the effects of class on the British tax system, may I suggest that he encompasses all sections of society in his study ?

For instance, as well as calling for the rich to pay even more, when can we expect to hear him complain about the burgeoning millions at the bottom of the ladder who pay no income tax, no council tax, no NI, have no educational skills, no social responsibility, nor any desire to help themselves - yet expect the rest of us to pay the bill ?  What effect do they have upon taxation ?   

Is there any support for these claims in the way of facts or reasoned argument?

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By johnjenkins
15th Sep 2011 10:37

You're not far off

Simon.

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By johnjenkins
15th Sep 2011 10:45

If you

take communism to it's ultimate you get demise - as USSR was a classic example, even China realised where it was going. If you take Capitalism to its ultimate you get stagnation - which is where we are at now, and eventually demise.

So we now need something in the middle to take us through to the next few centuries.

There is a problem the rich do not realise. With any demise there is no cushion, everyone suffers. No good having property with no-one maintaining, etc. etc. Yes the rich will always survive but at what cost ?????????

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By listerramjet
15th Sep 2011 11:38

is it really a matter of class

the problem with much of the argument is in the definitions.  Start with rich.  Do you mean income or wealth?  And at what point do you become rich?  And is taxation about 'bleeding them dry' or 'fairness'? 

And I do think you fell into that classic trap of equating success with wealth/high income.

Whatever, I think that most normal people have a similar view of taxation, and those that collect and spend it, and it has very little to do with class.

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Teignmouth
By Paul Scholes
16th Sep 2011 09:41

Of course we have classes

In any society where there is a distinct and widespread strata be it in terms of wealth, earnings or power in general (or by generals!) you will have class distinctions and I don't need to quote statistics to say that in the UK this systems, better known as inequality, is thriving.

Whilst taxation was intended originally to raise money to pay for the overheads, when you have this wide discrepency in payers the opportunity will be taken (intentionally or not) to redistribute the money from top to bottom.  It's a blunt tool and, as we have seen in the 50p debate on this site, causes more hot air than understanding.

Better to become a grown up society and encourage people not to keep taking and growing far beyond what they need and leave more in the kitty for others who, given the opportunity, may be just as (or more) sucessful or influencial.  Some of the world's greatest leaders and thinkers came from humble unmonied backgrounds but such people are stifled in the western system.

As for envy, that's an easy out and I can see the speaker looking down his or her nose at the unworthy peasants below.  Yes, there is bound to be some envy but far more is a sense of unfairness that money breeds money and whilst a chunk of wealth is in the value of business, I would imagine that the biggest part of this is in the hands of investors, not business managers, who swap their ownership in a fraction of a second.  The balance of the wealth is in private ownership, which is of little use to society at present.

In the early and middle stages of capitalism and the class system in general, there was a lack of understanding and a blanket over hope which kept people in their place (as was so well examined in the TV sketch from which the image comes) but, as we witnessed after the 2 world wars and have just witnessed in the Arab Spring, things are changing.  Let's just hope that this change takes place in a grown up fashion.

 

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Teignmouth
By Paul Scholes
19th Sep 2011 14:24

@chatman

Up to you but some people deliberately post antagonistic comments or live on another planet or in a different time zone.  Whichever is the case you're usually better off ignoring them.

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By chatman
19th Sep 2011 14:55

@Paul Scholes

Thanks for the good advice Paul. I sometimes think, though, that people are less likely to continue making such posts if they realise that people cannot take them seriously. In addition, you never know - he/she might come up with some excellent support for their argument that converts me to their way of thinking.

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Teignmouth
By Paul Scholes
19th Sep 2011 15:25

We live in hope chatman

I admire your faith and tolerance, trouble is, as we saw (see) with "he whose name we dare not speak" (frrom Wales) if the poster has no respect for another's view, showing him/her that you can not take their viwes seriously, is exactly what they expect and just adds fuel.

I agree with you over the possibility of being swayed by evidence (I've lost count) but the moment he sways me as to the validity of the comments in his last paragraph (ie we shouldn't have a welfare state) it's time for me to pack up & vanish....on a second look, copy that for paras 2, 5 & 6.

 

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By chatman
19th Sep 2011 18:48

Time to pack up and vanish

Fair point. A hate-filled world doesn't sound very attractive to stick around in.

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By johnjenkins
20th Sep 2011 10:22

Whenever

there are dramatic changes the world does not appear as it should.

The world is undergoing one of the biggest upheavals since the industrial revolution (not withstanding 2 world wars). There are probably many uneducated children in remote parts of the world that are completely up to date with the latest technology but aren't in a position apply it. Yet there are some, with no understanding, just applying HI-tech willy-nilly on the sayso of so-called experts who know the business but not how the technology should be applied.

Put that together with severe climate changes, the collapse of communism and capitalism and little wonder all is not a bed of roses.

However with dramatic change comes a period of much activity and prosperity, followed by consolidation.

We, in Europe will see much change over the next few years (the balance is being restored) so stick around and be a part of what is going to be one of the most exciting periods of history.

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By david5541
20th Sep 2011 12:22

the super rich

its about time the uk taxed investment income of the super rich just like the USA(with the help of warren buffet) has.

forget abolition of the 50% band george osborne.

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