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Tax, Council elections and payscales - Ed's journal
Tax, Council elections and payscales

Socialism and Capitalism are pretty much opposite ends of an axis of the political scale.
At one end of the scale, we have Capitalism.
Conceptually, "You get what you pay for".
If you need medical care, then that's going to cost. You get paid in accordance with 'worth'.

At the other end, we have socialism. The state provides for each, according to their needs.

The USSR seems to have demonstrated that a socialist approach doesn't really work - if you provide according to needs then there's no real 'work ethic'.

By a similar token, whilst capitalism _sort of_ works (I use America as the example here) it's also often very hard for poorer people to 'get by' - hospital treatment for example, is very expensive.

The reason I'm going off on one on this subject, is that as some of you may know, there are local council elections in the next month or so. And the discussion of 'Council tax, and alternatives' are being discussed.

There's debate as to the 'best' method.
Current proposals include:

A tax based on property value for the household.

This is the way it's done at the moment. You have a nice house, you pay more towards the common good, if you live in a cardboard box, less. Oh and you pay the same amount as a couple (there's a discount for single) as you would with a 27 person family.

A tax based on property value and number of tenants. Property price linked again, but will be a little more 'pain' for familes rather than couples. Because of problems with the poll tax, this is a politically risky option.

A 'local income tax'. The council takes a cut of your wages.

I'm a capitalist at heart really. Personally I don't have kids, so have no need for schools, I have private medical insurance, and haven't been to the public library since I moved to Coventry.
I fully accept though, that these things need to exist. They're important aspects of a community, and someday I may need to make use of them.

The problem I have though, is that our taxation systems are fundamentally unfair, and contrary to a work ethic.
I've heard the comment on several occasions that it's just not worth getting a minimum wage job for a few hours a week, because you 'do better' if you're on the dole.

In an ideal world, taxation would be a 'per person' bill, for everyone in the country. After all, there's access to all the same services for ... well pretty much everyone. OK, so the better off don't typically _use_ subsidised public transport, health service or public schools, but the facility is available to them.

In fairness to those who don't earn a living, I'd be prepared to accept a 'percentage of income' based taxation.
Call it 20% (ok, it might be nearer 30, but just for arguments sake).
Now the person earning £6000 a year, will be paying £1,200 of that to the government, to use for 'public good'.
The person earning £600,000 will be paying £120,000 to the same end.
Each according to their ability to pay right?

Of course, that's not the way it is. The tax burden falls upon those with an income, because 'well, they can afford it'.

Bollocks to that. I'm getting close to the 40% tax bracket. OK, there's still a way to go, but I think I'll make it there. It may be arrogant, but I had the same opportunities as every other fucker. Went to a 'public school' (by which I mean I had a state education). Went on to 6th form college. Went to university lived on 'a few hundred a term'. Got a part time job at Uni. Got degree. Went and got a job.

I'm still paying off the debts today, 4 years later. I hear 'well, you got lucky'. Maybe I did. Maybe I was lucky enough to have parents who taught me my outlook on life. Maybe I was lucky enough to be born 'clever' or 'ambitious'.

But if you suggest I got an easy ride through education, and into a job, then you can just sod off. I have worked to end up where I am. Some days, it seemed to not be worth it. Others, I realise that I'm doing what I enjoy at a professional level. Where I am is achievable by anyone who cares to try it. Many of the people I work with didn't do degrees, but there again a few of them did.

I'm taxed a healthy amount. This is my contribution to society. I believe that a family, bringing up children well, are also providing a contribution to society. This is why I accept that tax is a percentage rather than a flat rate - after all, children are a tax all of their own. (Perhaps we need to have a 'paid parent' system - if you have kids, then you get paid as a 'carer'. More if you're good at it.).

Someday I may have a family. I want to be in a position where I can provide for them when I do.

I would support a council tax based on property value and number of tenants. I believe everyone has a 'right' to basic services, especially those that impact upon the community as a whole. I would not support a percentage taxation based on income. Community services are important, but the money has to come from somewhere.

Oh I know full well that things are never going to change. The number of voters impacted negatively (compared to positively) by my suggestion just means it'll never happen - you vote against the person hurting your pocket, which is why this uneven tax system exists in the first place.

I suppose it's easier to take the handouts and complain about the 'fat cats' than it is to actually go and do it.

That doesn't mean I have to like it.
20 comments or Leave a comment
mavnn From: mavnn Date: May 26th, 2004 02:36 am (UTC) (Link)
Hmm... eloquent, but not sure I agree completely. Personally, if you gave me the power (the power! muwhahahaha!) I would go with a minimum wage and then flat rate income tax across the board. Simple to collect, simple to calculate. Roll council tax and income tax into one. I might even be tempted to just roll everything in - road tax, TV license, the works - but that might cause too many problems with people complaining "well I don't have a car! why am I paying road tax..." And I would kind of see their point.

I would also be tempted to assign huge fines on people who cause criminal damage to property/infrastructure and pump that money into the tax system (leave enough with the police to pay for the procedure but no more, the rest goes into the 'tax pool').

Property value always struck me as a strange way of calculating tax rates in general. Are they really related to either your ability to pay or your cost to society? Not closely, imho.
sobrique From: sobrique Date: May 26th, 2004 03:21 am (UTC) (Link)
IMHO the problem is that "I don't own a car, why am I paying road tax" is the same argument as "I don't have kids, so why is my tax money going into schools".

The answer is basically "because it's for the good of all".

Property prices as a council tax assessment are flawed, but given the choice of
"How many people live there"
"What amenities are used by the household"
"How much the people living there earn in total"
"House price (eg. value of major asset)"

I think the latter is one of the better options. - linking the 'tax' to the amount one pays for it (either rental wise or in mortgage repayments).
Actually, a 'size of household' might well be an option, on the basis of 4 people in a house using 4 times as much pavement, refuse disposal etc.

But a 'poll' tax has been tried, and was ... thoroughly rejected shall we say.
mavnn From: mavnn Date: May 26th, 2004 03:40 am (UTC) (Link)
I tend to agree with the 'good of all' argument, which is why I would tend towards simplifying taxes as much as possible.

The reason I wouldn't go on property value personally is that it seems both harder to calculate and doesn't seem an accurate indicator of either ability to pay or resources used.

Of course, an income tax is a lousy indicator of resources used (an fact, you could make an argument for it being an inverse indicator) - but it's a very accurate measure of ability to pay.
nuala From: nuala Date: May 26th, 2004 04:02 am (UTC) (Link)
I'm still in awe of the nearly 50% tax rate that you have in this country. I'd go back to my nearly 30% any day of the week if I could.
sobrique From: sobrique Date: May 26th, 2004 05:33 am (UTC) (Link)
It's not _quite_ that bad.

up to £4,615 tax free
between £4,616 - £6,535 10%
between £6,536 - £34,515 22%
over £34,515 40%

Oh and a 17.5% sales tax.

Which compares fairly favourable the rates listed

ewx From: ewx Date: May 26th, 2004 06:03 am (UTC) (Link)

Don't forget NI, which is another 11% between (roughly) £4700 and £32000, and 1% above that. Which gives a marginal rate of no more than 33% for most people, and 41% for high earners.

However I don't know if nuala was including any local equivalent in that 30%...

ewx From: ewx Date: May 26th, 2004 05:38 am (UTC) (Link)

flat rate taxes

The tax burden falls upon those with an income, because 'well, they can afford it'.

Well, duh.

This has come up before. Flat rate taxes are broken because the utility of money to someone who has almost none of it is much greater than to someone who has plenty (like you or me). IOW in terms of satisfying needs, rather than money, a flat-rate income tax is effectively graduated regressively.

(And you do need schools even if you don't have children; a poorly educated society would be much less pleasant to live in.)

sobrique From: sobrique Date: May 26th, 2004 06:35 am (UTC) (Link)

Re: flat rate taxes

And because someone could afford to buy a new car, does it make it right to steal it from them?

How about the man who has lots of children, is it reasonable to kill one or two for meat because he won't miss them?

There may be a relative difference in 'worth' if you have a hundred pounds rather than if you have a million. This is why taxation is typically a percentage rather than a flat rate.

That doesn't mean that it becomes 'cheaper' to run a school, just because the people using it are paying less tax each year. It just means that the relative few are having to subsidise the many.

I would have no problem at all with contributing 40% of my income in return for 'appropriate' quality of services. But that's only as long as everyone else is inclined to contribute a similarly 'fair' proportion of _their_ income.

That, to my mind, is a 'fair' way of running a taxation system. Some pay more, some less, but exactly in proportion with their ability to do so.

Surely penalising relative high earners is essentially a negative work ethic?
(Deleted comment)
sobrique From: sobrique Date: May 26th, 2004 08:23 am (UTC) (Link)

Re: flat rate taxes

"The problem is, high earners can contribue 40 % and still have enough to live comfortably on. Low earners can't."

I don't agree. Yes, there's a certain amount that one needs to live on. I reckon I was pretty close to that when I was a student. But I don't think that means you need to stop taxing it - that just means that wages will 're balance' to account.

Now, I could be wrong here, but you take 20% off a low earner's income, and 40% off a high earners. The high earner still has more money, so what's the problem? If you can afford to pay more, why shouldn't you? As long as everyone has enough to live on.

If I can afford to pay more, why shouldn't I? Well, why should I?. Would you, if sharing a house, pay all the rent if you were employed, and the others weren't?

How about: We take a hypothetical person who's been claiming unemployment for 3 years watching TV. Then he goes out and starts doing washing up in a hotel. Let's imagine he earns £100 a week.
Then we take another hypothetical person who went to Uni. He spent 3 years working for a degree, and came out with a first, and £15,000 of debt. And imagine that this person is able to get a job as a manager of the same hotel, dealing with day to day hassles and getting paid £1000 a week.

Now obviously it's possible to live on £100 a week - the kitchen staff are doing so. So why not tax the manager 90% on his £1000? After all, £900 will go to pay for hospitals and schools for many people.

Except that this manager has spent 3 years of his life working, unpaid, and emerged with some valuable skills. Day to day is dealing with 'challenges' and has run up a debt in doing so.

Skills are a commodity like any other. They have a value. Payscales are typically linked to that value. In general terms, that's why 'unskilled' labour is paid less than 'skilled' - to encourage people to learn the skills, go to university, gain a doctorate etc. - because it pays better.

Or could it be that a _flat rate_ of tax already means that one is paying more. Why make a stronger negative incentive?

There's the argument that charity is a virtue, but it's not charity when there's no choice.

What do you think is more important to spend money on, high performance cars, or hospitals & schools?

Oh yes, that's right, I never realised before. I'll start paying all my salary to the government straight away. I don't need to drive to work after all, and I'm sure the council will be happy to give me a cardboard box to live in.

It's not a _choice_ between the two. It's a question of how much is _fair_ to take from people in order to support their community and country.

I agree that it's worth investing in hospitals and schools.

If it ever reaches that extreme of socialism that all my wages are 'taxed' then there's no advantage to me doing a job at all. I might as well just sit around and watch my subsidised TV, claiming my dole cheque and housing benefit.

Yes, perhaps everyone could work hard and get a great, high paid job. The shitty, low paid jobs still need to be done by someone! And since no-one is ever going to pay for a job inversley to how enjoyable it is, there isn't going to be a solution to that.

Actually, they do. Bin men for example (sorry, refuse disposal operatives) get paid rather well. It's called 'economics'. If there's a shortage of skills and willingness to do a job, then the compensation increases until there is no longer a shortfall.

If we ever reach a point at which anyone could do _any_ job, then payscales indeed _would_ be in proportion to how shitty the job is.

(Deleted comment)
sobrique From: sobrique Date: May 27th, 2004 11:53 pm (UTC) (Link)

Re: flat rate taxes

Actually, could it be the uneven tax rate that's _causing_ the large differential in wages?
If you're in the 'high' tax bracket, for each 10% pay rise you get, you _see_ 6% in your pay packet. So logically, you're going to want 'more' of a raise, to cover it.

To be honest though, 30,000 for a car is expensive. Then again an 'average' new car costs in the region of 10-25k. OK, there's second hand available, but _someone_ has to pay the 'new' price...

Hmm, I wonder.
If 'unemployment' was actually a conscript workforce cover charge, would that work?
What I mean is that in return for benefits, the government can require some work out of you each week. Which in turn may lead to 'experience' and help in getting on the ladder.
ewx From: ewx Date: May 26th, 2004 08:24 am (UTC) (Link)

Re: flat rate taxes

I think your fallacy is in measuring "ability to pay" purely in numeric terms; the satisfaction of human needs and wants (which is what we have money for in the first place) just doesn't work like that. See my previous remarks about differing utility of money at different ends of the poor/rich scale.
sobrique From: sobrique Date: May 26th, 2004 09:47 am (UTC) (Link)

Re: flat rate taxes

No, I agree. It doesn't.
But how else can one make that measurement?

We assess skills in terms of a payscale. It would make sense to me if were to extend the concept.
jorune From: jorune Date: May 26th, 2004 07:57 am (UTC) (Link)
Looking at it from the crudest/harshest(?) viewpoint, it is 'social security'. The wealthy are calming the non wealthy by building and maintaining into the future housing schools hospitals and bus networks. This is the collective aspect of taxation, I agree to give you some of my money if you refuse to riot.

It is the European social contract and there are differences around the world. These contracts have been bound by the strength of time and mass political movements. However much the left or the right talk about it they never move that far from the centrist position. Europe has experienced the mass poverty of low to very low tax regimes and shows no sign of wanting to return to that model. Everyone pays and everyone takes part, from the very top to the very bottom. Therefore it is universally fair.

China and the US are two distinct opposites. Both are welfare states for the government.

Deng Xiaoping said "To get rich is glorious", fortunate for the rich with guanxi (literal translation: connections) where the rural poor are packed into the cities and suffer squalid and dangerous conditions. It's as if Communism never happened.

Across the US there have been widespread closures of hospitals, libraries, parks, playgrounds and schools to pay for the tax cuts that are a regular feature of political life. With less money something has to be cut, so cut public services. If crime rises then it's the drug problem so increase funding for the police and law enforcement and cut more taxes to make everyone feel better. Vicious spirals are the invention of Communist funded Islamic terrorists.

According to the CATO Institute, federal government spending increased 0.9% annually after inflation during the eight years of the Clinton administration. Since "conservative" Republicans took over the Senate and White House two years ago, federal spending has shot up 4.3% annually after inflation, all funded by borrowing money and looting the Social Security "trust" fund. Nearly all of it spent on the military and the companies that underpin it. Corporate welfare for boeing and mcdonell douglas, tough love for the man in the street.

You can have flat rate tax, you can scrap all forms of taxation if you are prepared to deal with the consequences.
sobrique From: sobrique Date: May 26th, 2004 09:42 am (UTC) (Link)
Hmm, social security as bribery for the oppressed masses. That seems very apt for some reason.
From: cerberic Date: May 26th, 2004 10:25 am (UTC) (Link)
"Where I am is achievable by anyone who cares to try it."

Assuming they have exactly the same teachers, upbringing, and mindset as you. Everyone is unique, everyone has been taught different things (qv. the vast differences in curriculae between different examination board areas), everyone has had different teachers (a bad teacher can put you off a subject, and thus a whole subset of jobs, very easily), and everyone has different natural abilities. I, for instance, have a knack with mental arithmetic which would be great if this were the 19th century at the start of the industrial revolution, say. But these days, with calculators and computers around, what good is it? Not much.

Also, you can be as good as anyone else for a job, but if you fluff the interview (which can be something as trivial as wearing a colour the interviewer hates), you're screwed.

Basically, what I'm saying is that *actually* not everyone has the same opportunities or abilities, and not everyone could have done what any other given person has achieved. Life is unfair. Deal with it. But don't fall into the trap of thinking "If I can do it, anyone can."

I speak from experience.

As for taxation, I'd just be happy if - whatever rules are being used - it was actually calculated properly. I've had to claim a tax rebate every year since leaving Uni, because the IR (Inland Revenue or Idiot Ravers - your choice) can't add up! Hmm, maybe there's a use for that mental arithmetic after all... I'm off to be a taxman... :)
sobrique From: sobrique Date: May 26th, 2004 03:06 pm (UTC) (Link)
No, not everyone is presented with the same sequence of events through life.

I don't believe I had a substantive difference in opportunities compared to anyone else though.

Or maybe some just don't see the chances they have in front of them. It's hard to tell.
ewx From: ewx Date: May 27th, 2004 04:26 am (UTC) (Link)

No, not everyone is presented with the same sequence of events through life.

You said you went to a public school; in this country they generally have a considerably better record at educating people than state schools do. (And there is a great deal of variation within the state sector.)
sobrique From: sobrique Date: May 27th, 2004 05:41 am (UTC) (Link)

Re: No, not everyone is presented with the same sequence of events through life.

By public school I mean a 'public' school. As oppose to a private one.

So if you like a 'state' school.
From: cerberic Date: May 27th, 2004 10:57 am (UTC) (Link)
"I don't believe I had a substantive difference in opportunities compared to anyone else though."

So, all those people fighting for equal rights are wasting their time then, because they already have the same opportunities as everyone else?

The opportunities you had in life are substantially better than a lot of people's - the blind, the deaf, the 'disabled' (hate that word) all have societal limitations placed on them. You could (theoretically) become a firefighter, I doubt anyone in the three categories I just mentioned would be allowed to do the same.

The opportunities you had in life are also unique to you, because of who you met, who your parents are, how much money your family had, and hundreds of other factors. You shouldn't really judge people based on the opportunities you had, but rather on the opportunities they had, which will be entirely different.
sobrique From: sobrique Date: May 27th, 2004 11:31 pm (UTC) (Link)
Opportunities in life may be unique, without being notably different. Every year millions are offered places at university. Each of those is 'unique'.

Yes, being relatively fit and well, I am better placed to become a fireman than someone who is wheelchair bound.

Of those, only blindness is really a handycap to the job I do, and even then it's not insurmountable.

If you want to take a general argument, and make it specific, ok then. Yes. I have had more opportunity than a small snail in lake michigan.
I have had more opportunity than a victim of a mine in sommalia.

I would not say I had any more advantage than 99% of the people with which I went to school, 6th form or university.

Sadly though, at the end of the day, it doesn't matter. The world doesn't care about excuses for failings, it only cares what you did with your opportunities.
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