Taxing stuff

The recent conversation over the past could of days has brought out some thoughtful comment –  so to those of you who have contributed to the discussion, many thanks.

The problem that I have is that I tend to agree with both opposing viewpoints to a degree. This could just mean that I’m a little schizophrenic, or it could mean that there is no straightforward solution. I rather favour the latter explanation. The libertarian viewpoint is that tax is an evil. It is stealing someone’s money to pay for something that they might not otherwise spend the money on if left to themselves. Far better not to have it and allow people to form charities and mutual associations should they so wish. Monoi pointed us to the pre-WWII society, although more accurately, pre-welfare state. Here, again, I encounter a conundrum. On the one hand the evidence is all around us that the welfare state is delivering an unexpected consequence. On the other, I understand the thinking that led to it. I still feel that the safety net principle is the right one –  and I dispute that this means I have a negative view of people. It is realism that says that someone, somewhere will look after that, while doing nothing myself either because I don’t have the money myself or I am too preoccupied to be involved. This isn’t misanthropy, it is realism. We become wrapped up in the daily grind and isolated from the problems faced by others. Sometimes it is when you face them yourself that those problems come into sharp focus. For me, this has not only happened, but the Byzantine bureaucracy and pettifogging hurdles were something that I could only imagine beforehand.

Is my experience a case against the welfare state? Possibly. Would a mutual society have looked at my situation and taken a pragmatic, case by case view, realising that my house in France was not an immediately realisable asset and was, in fact, a cost? Maybe. If so, it strengthens the libertarian argument. But how can we be sure that such an organisation would spring spontaneously from the corpse of the welfare state? And, importantly, who pays? Will that philanthropist step forward? Maybe. But is maybe good enough? Can we rely on maybe when people fall into difficult times?

It doesn’t matter how much we may be individuals desiring individual responsibility –  and you can count me in that thinking –  there will always be collective needs. The obvious two are defence and law and order. The cornerstone of libertarian of thought is the rule of law. Again, count me in. However, for that to work we need police, judges and a system of courts. This costs money. Who is going to pay? Well, who benefits? We all do, so logically we all pay. The same applies to defence. If we wish to maintain our security, we need a standing army. Again, who benefits and who pays? If we are all to put a little into the pot for these collective needs, then there has to be a system of collection. Call it what you like, you have just invented tax –  and if someone wishes to live in your society but doesn’t want to pay for the justice system or the army, what are you going to do? Well, I suppose you could eject them. Otherwise, you have to have some sanction. Well done, you’ve just invented the HMRC.

There is much that government does that, frankly, it shouldn’t. Which is why we are taxed at around 50%. This is an obscene amount and the best way to cut it is to savagely slash government spending. I recall reading somewhere that New Zealand did something like this about twenty years ago. The public sector activities were hived off to the private sector. The people involved still did those jobs that were needed, but those who didn’t want or need the service were not obliged to pay for it through taxation –  the customer paid. For much of the activity that government now involves itself in, there is no reason why the same could not apply here.

Some activities we all want and need at some point in our lives –  and healthcare is the obvious one. I have no ideological objection to private companies providing the care and making a profit. However, a civilised society will make provision for everyone not just those who have the wherewithal to pay directly or through insurance. Making a profit concentrates the mind when it comes to efficiency. The same could be said for such activities as driver examination. We already have parallels in other fields of endeavour where private organisations deliver training and then bring in someone else to provide independent assessment. Such a system is more customer focussed and can be used to ensure that sufficient evidence of competence is demonstrated before sign-off; something that is nigh impossible with a twenty minute drive around.

These are just random thoughts about where government should relinquish its grip. However, that doesn’t mean that I feel we should have no government. A central organisation is the ideal candidate for standards setting, for the collection and distribution of funding –  because, like it or not, we will always come across situations where we all want something that benefits the collective that needs provision and money to pay for it. Call it evil if you like –  I have often enough. But I recognise, deep down, that it is a necessary evil. But like all evils it needs to be caged and tightly controlled. It is that lack of control –  or accountability that has allowed our state to balloon out of control and ooze its way into the very fabric of our lives.

2 comments for “Taxing stuff

  1. April 25, 2011 at 11:46 am

    As you say, there are two issues here. Should the government take our money with the threat of imprisonment, and what should they spend it on?

    Regarding the latter, I agree that the government currently spends far more than it should. It’s wasteful in the extreme. Valid reasons for expenditure are things like defense (if we’re under attack, we may need the ability to project force around the world, but we shouldn’t get involved in things like Iraq and Afganistan where there is little or no threat to the UK, IMO – and it can be argued that our actions in those places has only increased the threat of terrorist attacks), policing (although some places have outsourced it – I’m not sure that can be done en masse without protection rackets springing up), the courts, prisons (although they should be funded centrally, I don’t think they should be supplied centrally), etc.

    Regarding the first point, I’m not so sure. We’re agreed that the government spends too much, so is it ok that they take the first 5% from my pay, but wrong that they take the next 35% as well? I’m inclined to think that this is all wrong, and should be treated as such. There are many ways that government can be funded.

    Personally, I think they should seek to fund themselves by rental. I don’t mean strictly land (although it would be a heck of a lot easier if it was still the case that the monarch owned all of the land and rented it out – that’d give more than enough income) but also limited goods that should be controlled by the government for the greater good. I’m thinking specifically of things like radio spectrum. We can’t have anyone and everyone broadcasting at the same time, as it would simply be a case of whoever has the biggest signal being the loudest, and a lot of time and energy would be wasted squabbling over the desirable frequencies. So why not use rolling auctions – you buy a set piece of spectrum for 5 years, and at the end of that 5 years, it goes up for auction again. This could also apply to things like airport landing spots.

    I’d also like to see something done with copyright. We accept that authors have the right to have their work protected, as this encourages authors to produce work, which is good for the society as a whole. But how long? Copyright enforcement is through the courts, which costs the taxpayer money, and as we’ve recently seen the copyright holders want to extend it indefinitely – which can be seen as harmful to society (or at least as less beneficial than releasing it after a time). Because people place a premium on new content, they are willing to pay more for it. That premium is protected by government spending, so I think we should get something back from it.

    How about something like: When a new copyrighted product is released, an extra 10% tax is applied to it. This tax money is funnelled into government and in return the creator is allowed to use the courts to pursue violators of copyright. The creator can at any time either (a) declare that the copyright will come to an end in 2 years time (in which case the tax decreases to 4%) or (b) end the copyright immediately (in which case the tax drops to 0%).

    With no corporation tax or VAT, the UK would attract a lot of investment from a lot of places, and if the goods that they produced are copyrighted (as they likely would be) this would raise a lot of revenue. Probably not enough to fund the spending we currently see, but to cover the essentials detailed above? Perhaps…

    • April 25, 2011 at 12:43 pm

      Oh, and on the topic of benefits, I do think there should be a safety net. I think that what we currently have is more like a hammock, though – state assistance should be bare minimum, and any job should make you better off. Housing should be really basic, crappy little apartments with barely room to swing a cat. Benefits shouldn’t be in the form of money – instead give a small amount of primark vouchers for clothing, weekly supply of the cheapest bread and baked beans in the shops, that sort of thing.

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