Thursday, 17 December 2009

How much should people be taxed?

I remember reading it on Charlotte Gore the first time, and Mark Wadsworth covered it too (or maybe Mark Reckons, someone called Mark), and now JuliaM is quoting it:-
From Charlotte Gore:
In other words, instead of these bonuses being taxed at 40% as they already are, they’ll be taxed at 50%… assuming, of course, that someone getting a more than £10k bonus isn’t already going to end up in the Government’s new ultra-f**k-you band of income tax. Instead of getting£4k from a £10k bonus the state will now get £5k.
As I see it there's two sides of taxing:-
  • We pay tax because the government spends money
  • We pay tax because we owe the government for what they provide for us
On the first issue, you can do a task quickly and efficiently or you can do it slowly and wastefully. The end result is pretty much the same, but the costs can vary. If we had a choice we'd rationally pick to do it quickly and efficiently.

Do you think that the government never wastes any money at all? Not even a little bit? Do you think that they are as efficient as possible or have lots and lots of very slow burocracy?

Every time I get a letter from the council/government/inland revenue, saying my housing benefit/job seeker's allowance/working tax credit has been declined, or instated, or back dated, or cancelled again, I think to myself, this letter cost about £1 in typing, printing, posting and delivering (maybe it costs more, maybe it costs less) couldn't they not just streamline things a bit, and then cut whatever tax I pay by £1.

No, no chance of a great bureaucracy making itself more efficient, it never happens. Instead, occasionally, I choose not to bother, I choose not apply or to give up applying, in the hope that I reduce the bureaucracy, the tax burden, the number of tasks that they charge us all for, by exactly one unit.

And on the second issue, paying tax to the government, the authorities, because we owe them. That's slightly more justified. Its nice that they keep an army to protect our borders from foreign invaders, and that they empty the bins, and to some degree enforce law and order and all the many varieties of support workers. But how much of my earnings, or anyone's, what percentage, should be owed to the government? And how should this change depending on how much you earn.

Back in Charlotte Gore's quote
Instead of getting £4k from a £10k bonus the state will now get £5k.
I don't get it, cos someone has put in the extra effort, or has had remarkable luck, or just used their brains to work smarter, they owe the government more money. They have to pay a bigger share for the army, the binmen and the judiciary, without necessarily using them more.

Now, I'm not advocating a poll tax, just some clearer rationale behind why we pay tax.

And then how, in the great scheme of things, as a society we can lower taxes. What personal moral decisions can we make that will ultimately result in lower taxes.

  • Should I work in one sector or another?
  • Should I take the bus or car or walk?
  • Should I go to the cinema or go to a gig?
  • Should I spend time with friends or alone?
  • Should I vote for one party or another?
  • Should I be productive or unproductive?
  • Should I be successful or fail?
Which choices will result in the government taking a smaller proportion of my hard-earned money.

Its occurred to me that there are other sides to the reason for taxing too, to make us change our behaviour, use less petrol, smoke less, drink less, spend less. Maybe that's it, the reason we are taxed is because the government want us to exist less.


  1. "I'm not advocating a poll tax"

    Good job too, because that's the worst kind of tax.

    Least bad tax is land value tax, where you can choose how much you want to pay by where you live and how big or small your garden is (or you shave it down further and live in a block of flats).

  2. I'll never forget the feeling I had when, after spending years of effort building a sports field from scratch on a bit of my land, entirely for a local team to use, not as a profit making enterprise, I received a business rates demand from the council.

    I had worked my backside off, on weekends and evenings, spent my own money financing it, and finally, just at the point when it was finished, the State turns up and demands money from me, for having had the temerity to create something.

    What had they done to deserve anything? Were they out there helping me, or providing money?
    No, just like the Mob, they show up when the works all done and demand money with menaces.

    Different name, same MO.

  3. Did you know you can shorten your long urls with AdFly and get cash from every visitor to your short links.