by Dan McCurry
I’ve completely changed my mind, thanks to Peter Watt. I used to agree with Peter’s position, that taxation is a necessary evil, not a automatic right of the state. Then I read his piece, on tax, Labour must remember: “it’s not our money stupid, it’s theirs”, and I’ve since reversed my position completely.
This is part of a wider debate about whether the state creates private business, that began with a gaffe from Obama. “If you’ve got a business, you didn’t build that. Somebody else made that happen.”
It was a gaffe, but the rest of the quote made sense of what he meant. “There was a great teacher somewhere in your life. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that.”
The debate re-emerged in this country during the party conference season. Miliband had described a Tory tax-cut with the visual image of David Cameron writing out £40k cheques to his mates. At the Tory conference Cameron responded, “When people earn money, it’s their money. Not the government’s money: their money. Then, the government takes some of it away in tax”.
Previously I was very much in agreement with David Cameron on this one, but reading Peter’s article got me thinking. If it were the case that the state acts as a hindrance to wealth creation, then why do millions of enterprising and ambitious young people, from the developing world, risk their lives to enter the western world every year? Surely if our top heavy state was standing in the way of business, why don’t they stay in their own country and make their fortune there?
As Obama pointed out, we have an infrastructure allowing fast and smooth transportation, as well as an advanced rule of law. We have an educated and healthy population who are available both as workers and as consumers. The state provides conditions that allow enterprise to flourish.
Let’s say you wanted to open a shop and you looked around for a retail outlet. In Oxford street the rent is £1m per year. While in Bethnal Green road the rent for the same sized outlet is £30k. Why is there a difference in rent for the same sized shop? The reason is that Oxford street has a massive amount of pedestrian traffic with lots of money to spend.
The rent reflects the likely turnover of a business located there. John Nash created that street and his descendants were lucky enough to have the state install tube stations all the way along that street. If you rent out that retail unit, you owe him the rent before you’ve sold anything.
If you wanted to start a business making widgets and you have a choice of starting that business in England, Somalia, or Columbia, which country would you choose? It might be much more expensive to start in England, but it’s worth it, because in Somalia there is no state, so there is no security, while in Columbia, the state is weak. Tax in the western world is good value. If it wasn’t good value then businesses would move overseas.
So the relationship between the state and industry is rather like the historic landowner and his tenant farmers. The farmers pay their rent and the land is provided, the roads are kept up and the landowner is also the magistrate casting judgement of matters of law.
In the modern day the landowner has been replaced by professional politicians to decide the tax rate and the allocation of resources. So in this metaphor, the state is the landowner and we citizens are tenant farmers. The difference is that we elect the landowner every five years.
This is the deal that allows our economy to reach such an advanced stage. It’s not true to describe tax as some acceptable form of theft. Tax is the investment that allows industry to be successful. If the tax didn’t exist, then the economy would disappear with it. The state is not taking a person’s money, the state is taking her rightful share.
Dan McCurry is a Labour activist whose photographic and film blog is here.
Tags: Dan McCurry, fair share, Peter Watt, tax
why do millions of enterprising and ambitious young people, from the developing world, risk their lives to enter the western world every year?
And why when they are here are so many on benefits? Somewhere you’ve made an assumption that’s wrong.
If you wanted to start a business making widgets and you have a choice of starting that business in England, Somalia, or Columbia, which country would you choose? It might be much more expensive to start in England, but it’s worth it, because in Somalia there is no state, so there is no security, while in Columbia, the state is weak.
Or Belgium, which had no government for 2 years. According to your theory, it must be a cesspit of corruption.
Let me spell out the theft.
Tax is for services. If tax isn’t going on services then it is theft.
If the government model produces less value than the alternatives for people, then its theft.
If the money is going on Dennis McShane, then its theft, just as much as when it goes on stuffed snakes.
So here are some hard numbers. You’ve take 430,000 pounds from a median wage earner when it comes to their pension. It’s been redistributed, taxed, charged, produced no compound interest. That’s made them poor.
When the end result is impoverishing someone who can’t be described as rich, its theft. Depriving people of money making them poorer is theft.
Stop trying to justify stealing money.
The real reason why you’ve moving to the slave master and slave situation is the dire state of government.
It justifies even more theft.
It’s very simple. None of the pensions debts are on the government books, because it is then transparent, people are victims of government theft, their pensions have been looted.
Now, if only you could book people as being owned by the state, then you can book them as assets, and try and balance the books,
After all, the state runs its stud book for horses, cattle and people. Not much of a jump to say the state owns everyone.
“We all owe the state for the lives we lead and tax is how we pay our fair share”
Is this a joke?
You do know that we had fast and smooth transportation and an advanced rule of law over a century ago, well before 99% of the population were obliged to pay any tax?
EVERY rail line in this country was built using private money, including the tube lines. It used to be the case that the only contact a person had with government was registering birth, marriage and death, and the postman. The sun never set on the Empire comprised of such people. An Empire run by a civil service numbered in the low thousands. Now for some reason 70% of the population will be net takers from the government and we are an insignificant little island. The some reason being the nationalisation of responsibility. For everything.
RichardH, back in those ‘golden times’ we also had unbelievable poverty and squalor, children working in mills and up chimneys, and no healthcare. Why would you be so desperate to go back to that? Unless we suddenly get a minimum (and maximum!) wage imposed, the only fair way to look after everybody is through tax and national insurance administered by the state. Alternatively, we could just go back to letting poor people and those unable to look after themselves die in filthy hovels…
Nick: “And why when they are here are so many on benefits? Somewhere you’ve made an assumption that’s wrong.”
I believe it’s actually the case that immigrants are *less* likely to be living on benefits than the British-born population. They’re net contributors to the economy; without them, we’d be in a bigger hole than we are now.
As for the article, I agree entirely and wish this argument was made more often. Obama’s comment, though poorly phrased, was entirely right: successful businesspeople rely on the implicit support of the state. They don’t found their companies in anarchic countries, they do so in places with good government and reliable infrastructure, and as such should pay for it in taxes.
I only wish you’d spelled Colombia right. There’s no country called ‘Columbia’; there’s only the District of Columbia in the United States, where the state probably makes up a larger share of GDP than anywhere else on Earth…
People come to te UK because it has far better Rule of Law than the place they are coming from.
Rule of Law – habeas corpus, property rights, equality before the law, due process, trial by jury of one’s peers, transparency – has nothing to do with a massive, interfering, nationalising, regulating, “redistributing” State.
Redistribution is an economic necessity. It can be done the easy way, via taxes, or it can be done the hard way via bloodshed, revolution & war. I’d rather pay taxes.
@Alasdair, Colombia, I stand corrected.
@Roger, Yes, rule of law, provided by taxation. Other stuff as well.
Wrong. Its not even ‘their money’ but ‘our money’. Which means that it is collecively the money of all of us. People forget that each citizen has an unwritten and implied duty to the State, and you can’t opt out of it. You can’t any longer be a free and independent spirit, because what you do impinges on all of us. Its called a social contract. The State is your Guardian and Protector and Provider. And each citizen has a duty to contribute, in theory.
I have never read such illogical twaddle before (I’m being polite here folks). Following this logic, if I made my wife pregnant the baby would belong to the state as they built the NHS hospital in which the baby was born ?
The scriblings above show that Labour have no real clue about how a successful economy works and every poll taken shows the public recognise this. Having a union puppet in charge and a so called shadow chancellor who denied he denied we had a structural deficit under the Brown government when all the economic figures show we did, is one of the reasons I gave up on Labour after 25 years.
“Tax in the western world is good value. If it wasn’t good value then businesses would move overseas.”
Where have you been for the last 15 years ? Businesses have moved overseas and wont return until such time as coporate tax rates are lowered. The BRIC’s nations are getting the major investment from all sections of commerce and industry.
” If the tax didn’t exist, then the economy would disappear with it”
I suggest a quick economic history lesson. Economies have existed for millenia, way before the introduction of tax.
Cameron is right and the Red Ed’s and the Labout left are wrong. Unless someone wakes up to this, I suspect the clear lead in the polls will begin to disapate – and its already stared according to some recent polling.
As for the author, I suggest Dan you stick to “activist” duties like filling envelops and putting up slogans in your garden.
So far as I can see the biggest beneficiary of state handouts has been this much vaunted ‘Big Business’ who have been provided with a numberate, literate. healthy workforce with good transport connections, good communications and a rule of Law and a legal framework to provide them with a secure environment. Of course there is always the police, the firebrigade and the army to call on in emergency. All paid for by Taxation. The government has NO money except that gathered through taxation. Of course we all pay in to that dont we?
@ Chris Bergin
Chris, the point is that tax should be kept to a minimum and unfortunately some politicians and parties generally (I’m saying Labour and LibDems here) see taxation as “their money” to take as much as they want. Everyone agrees that we should pay for public services and I’ve no problem with that but when labour lets the Benefit budget spiral out of control (even in the so called good times) and then comes back to me for more tax to support this and other political follies then that becomes an issue to me and many other millions who are working hard to survive.