Anyone who’s paid attention to the trend of my ravingly revolutionary political tendencies lately might be surprised to learn that I find this more frustrating than heartening.
Despite having very little to do with the dreaded spectre of socialism in particular, this idea of the super-rich being hit with correspondingly super-high tax rates is anathema to most capitalists, and the right-wing objections are predictable and well understood. It discourages the “job creators” from going about their job-creating business. It punishes success. It drives successfully industrious people out of the country. It decreases tax revenue by damaging motivation and pushing down productivity. It hurts the economy.
As to whether this is empirically true, I’ve seen arguments backed up by data and graphs that go both ways, and I’m not going to ferret out the complex truth of it here. What interests me is the way the common leftist response misses an important point.
The focus on low- and middle-income households, who are being far more troublingly squeezed even by the lower tax rates than those millionaires and billionaires, is appropriate and important. But even if the financial “hardships” of the 1% don’t exactly tug on many heart-strings, neither am I in this for retribution. If we’re going to increase the tax rate above a certain income level, it shouldn’t be because we want to punish anyone; it should be because it makes economic sense.
If these high tax rates really do demotivate the super-rich to stay in the country and/or keep doing any useful work (which many of them seem to claim is the case), this probably isn’t just down to simple petulance which needs to be beaten out of them. The salaries earned by the richest executives at the biggest companies really are obscenely huge, and it’s bizarre to think that these are jobs which nobody competent would ever be willing to do for any sum so paltry as, say, a mere £1 million a year. But it’s not just about earning a perfectly reasonable living wage. Having what seems like money that’s rightfully yours be taxed away like that, hurts.
It’s a very different experience (I imagine) to be paid £1 million for doing a job, than to be paid £4 million and then have to give £3 million away to the government. We’re a loss-averse species, for one thing, and it’s a very human trait to let the immensity of our windfall be swamped by the fact that it’s only a quarter of what we really should have had. Never mind that we’re being offered orders of magnitude more financial security than most people on the planet will ever have a chance at. We’re predictably irrational.
So it’s really not at all sociopathic for the super-rich to be a bit miffed by this idea. They earned their millions and billions of dollars legitimately, through their hard work and valuable contribution to the economy, after all. The government wasn’t involved in that, so why should all this money be forcibly taken away from them now to help people who haven’t bothered to be so entrepreneurial?
This, of course – the idea that profits are what the market does, and taxes are how government unrelatedly interferes – is where everyone is completely insane.
The idea that taxation is the point at which the government abruptly steps in and sticks its nose into what had been purely private business between free marketeers up to that point is absurd. The government is essential in supporting a framework of laws which make a massive agglomeration of wealth and capital and power possible in the first place. And you can bet it’s going to be a capitalist-friendly framework, given who’s got the assets to lobby and offer donations to politicians in order to sway their opinions. A framework including all sorts of clever off-shore schemes and work-arounds not easily available to the masses. To pick one of the more obviously egregious examples, when Vodafone owed up to £7 billion in taxes, HMRC simply decided to let them off.
More commonly, though, the problem isn’t that small pockets of businessmen aren’t handing over sufficiently huge sums of their money to the state, but that they’ve seized hold of so much in the first place. Any income that socialists might want to redistribute has already been distributed in some way they presumably deem unjust – but then why was it distributed that way in the first place?
That’s where we should be looking to change things. The system which allows some individuals to go so far above and beyond the reasonable limits of success, that they get to claim dictatorship over land and capital and just keep getting richer off the labour of others. The system which goes so far beyond simply rewarding hard work and innovation, that making 100 million dollars into 110 million is inevitable.
If the majority of the British public got their way, our government would continue enforcing a system of rules by which some individuals and small groups accrue immense wealth… and then take most of it away from them.
Who would get rich from this particular policy? The government.
Do you like the government and want to see them get richer and more powerful, majority of the British public?
I thought not.