We should be paying more Tax, Not Less!

On the day of 2014’s Autumn Statement, Richard Courtney, Lecturer in Employment Studies at the School, opposes the ideology of minimum taxation

I used to get excited by budget statements. Listening to and subsequently dissecting how the government’s representatives say they are ‘balancing the books’ still reminds me of why I initially became a sociologist. During the past few years, however, I’ve found myself slowly succumbing to a sense of weariness. I still believe, as I always have, that tax and spending narratives largely serve to obscure underlying economic realities. Since 2010, however, with government finances disingenuously described as if they were like individual, household, or corporate finances, I cannot help but crying foul, for anybody that cares to listen.

National economies are not at all like individual households yet they are – in a situation which Mary Mellor has called ‘handbag economics’ – regularly referred to as if they were, with clear political intent. I’m pretty much sick of it. The habitual reinforcement of this analogy largely serves to conceal alternatives to neo-liberal fiscal policy. Because the government apparently seeks to balance the books, much like you and I might seek to balance our checking accounts, the idea that the public sector must be subjected to austerity/privatisation while economic and social life must become increasingly financialised, gets naturalised. Even if the analogy did hold, which, as any serious economist will tell you, it doesn’t, it also fails on its own terms. The low tax ideology filling statements like todays demonstrably results in the removal of choice and the prevention of prosperity. How has such a perverse situation come about?

Until relatively recently, the state regularly sought to protect its members from the vagaries of the market, not out of pity or benevolence but for reasons of enlightened collective interest: better to have productive citizens than impoverished ones. These protections included: unemployment benefits, disability allowances, family tax credits, and student grants. A process which begun in the 1970s, however, saw the UK money supply become largely privatised, leading to a situation where banks played a larger role in determining the volume of money in the economy through the provision of credit, making such a protectionist position increasingly difficult to sustain.

Case in point: the March 2014 budget, deceptively billed as ‘A Budget for Hard-working People’, made concessions to drinkers and gamblers for the sake of distracting attention away from massive cuts in public provision. This process continued today. The announced £15Bn for transport infrastructure, £2bn for the NHS, and further reductions to income tax thresholds, only serves to draw attention away from an alternative way of thinking about fiscal policy: Keynesianism. Infrastructural investments used to be thought about as means of generating productive work and widening social benefits – the classic example is the New Deal in the United States, but in the UK even the Arts Council was used to keep people in employment when the economy took a downturn. Not anymore.

Concurrent with the liberalisation of the money supply, Keynesianism fell out of favour in the 1970s largely on account of macro-economic stagflation. Politically and philosophically, it also fell out of ideological favour to the extent that it was seen to excessively constrain the individual’s unimpeachable right to choice and self-determination. Individuals, this libertarian argument went, should be allowed to choose whether they personally want to borrow in order to go into higher education, or not, for example. The state should have nothing to do with this decision. Boozers and gamblers, likewise, should be set free onto their hearts desires, into the gutter if they so chose: far be it for the state to interfere. Individuals, not societies, should foot the bill for what they individually prefer, in other words. Such was the libertarian creed. Such was its promise of freedom.

It doesn’t work out this way in practice, however. Lowering the cost of alcohol and gambling, for example, only requires cuts to be made, or revenues to be raised, elsewhere. In freeing the gambler to gamble more, therefore, the government is also deciding to constrain the liberties of other citizens. So despite the rhetoric of choice, individual freedom and responsibility, there is always a social cost hidden behind tax cuts: the burden has to be moved elsewhere, usually clandestinely. Seen in this light, cuts to public goods such as education healthcare and childcare seem especially wrong-headed: nobody benefits from their withdrawal while everybody seems to lose. Surely the obligation to provide a basic standard of living outweighs the obligation to balance the books? It used to, though not any more, certainly not if what George Osborne announced today is anything to go by.

Social goods have always been expensive to provide. This means that all societies need to deliberate, democratically, as to whether the burden should fall more on the side of the individual or more on the side of the collective. This fundamental decision is made twice annually, through the systematic adjustment of the tax system. It may not often feel like it, especially during a period of austerity, but paying tax effectively amounts to a public good, however inconvenient it might often seem. Tax receipts enable the state to bulk buy the services its citizens require and deserve. Rather than being a burden on society, well-funded public services are the very basis for collective life. However counter-intuitive it might sound, tax cuts are the real burden on society. I can’t be the only one who realises how obvious this is.

Originally published at http://staffblogs.le.ac.uk/management/

Leave a Reply

Your email address will not be published. Required fields are marked *