Sunday, 19 May 2013

Why I Support Something I Think Is Unfair

The big problem I have with taxation is that I don’t think it is intrinsically fair that the rich should be taxed at a higher rate than the poor.  But yet at the same time I think it is good for society if they are, and for that reason, I do support the State policy that the rich are taxed at a higher rate, even though I think it is unfair on rich people.  Why is it good for society if the rich are taxed at what is ostensibly an unfair rate?  First, I must explain why I think it is intrinsically unfair. 

I’ll offer a fable to show the absurdity of the assumptions that anyone should automatically assume that the rich should be taxed at a higher rate.  I didn't invent this; it's based on one of Aesop's Fables about assiduousness, but I've developed it for what is going to be a Tom, Dick and Harry consideration in relation to taxation. A long time ago, in a more primitive pre-parliamentary society, Tom, Dick and Harry find themselves washed up on an island with turbulent weather seasons.  Tom decides to be diligent and spends his time mastering tool-sharpening, carpentry and the ability to obtain and store large quantities of food.  Tom spends the first few months building himself a robust wooden house supported by skilfully crafted foundations, and works hard to collect and store plenty of food for the duration of the turbulent season   Dick and Harry, on the other hand, decide to take it easy; they laze about in the sun for weeks on end, eating only the low-hanging fruit and the berries within easy reach. 

When the turbulent season comes, Tom is safely tucked up in his robust wooden house with all the food he needs.  Dick and Harry badly need somewhere to shelter for the season, as they are going to be exposed to the storms and locked in a struggle to acquire enough food to eat.    Now here’s the rub; I don't think anyone would mind if Tom decided to be graceful and generous and offered Dick and Harry a place to stay and a share of the food.  But I don't think it would be good if Dick and Harry insisted it was their right to stay at Tom's and have some of his food - after all, at the start of play Tom, Dick and Harry each had the same opportunities - they just decided to take different paths.  The moral of the story is there is no general imperative for rich Tom to support poor Dick and Harry, but he would be kind and decent if he did so, so long as he did so without encouraging them to be workshy or parasitic.   

That's a pretty good template for society in the UK as a rule; while not everyone has the same abilities and state of health, we mostly choose our own academic and career paths, with the marketplace rewarding those who work hard to obtain high levels of learning and mental acuity, specialised skills, and durably beneficial and enriching training.  Hence, we’d expect to see exactly what we do see; a diverse society comprising of high, middle and low earners, with some on welfare, and a broad variety of talents, abilities, skills and qualifications right across the societal spectrum.  Now, although I’ve shown why I think it is not good to naturally assume the rich should pay a higher tax rate than the poor (for further analysis of this, see my Blog post here)– I can, I think, show why despite this unfairness, the system of higher tax rates for the rich is one we should support.  The key, I think, is supporting it for the right reasons. 

To make the point clearer, let’s pretend for a moment that all taxes go towards making the world a better place.  There is more than enough money and food to go around the entire world – enough to see that no one is desperately hungry, thirsty and economically impoverished.  The problem is that the vast majority of that money is sitting in rich people’s banks.  Suppose through a magic spell everyone suddenly became super decent and generous with their money, with a sudden mindfulness to help those worse off than themselves – what you’d see is a mass emptying of bank accounts so that the money supply was distributed a bit more equitably, putting an end to this great chasm of wealth, and alleviating so many of the world’s impoverishment problems.  Through compulsory taxation the Government takes a portion of what ideally, in a perfect world, we’d all give according to others’ needs.  Most people don’t do this voluntarily, so they do it involuntarily through taxation, where the rich are taxed at a higher percentage rate than the poor – except of course that the State cannot just take everything it needs from the rich to sort out the world’s problems, because it would create a mass disincentive to earners, which is why we have such a wealth gap. 

So even though I can’t find any justifiable assumption that the rich should automatically pay a higher rate of tax, I think it would be much nicer if all the higher earners were glad and happy to give money to those less fortunate – so I do support the higher rate for the rich, solely on the grounds that I think the world would be a much better place if they gave away their money voluntarily – and that it is no bad thing if the State can help engender through compulsory taxation the actions we should be doing voluntarily out of human kindness and decency. 

In the real world, not all taxes go towards making the world a better place – but some of it does go towards foreign aid, and much of it is spent on making our country a better place, with funds provided for necessary services, such as health, education, social services, welfare, and environment, planning and transportation.  So even though the tax isn’t all going towards alleviating the world’s problems, it is at least spent on some useful things – and that is why I support a higher rate of tax for the rich, despite thinking it is unfair.  The same principle as above applies here; it’s just that it is being considered on a smaller scale.  In order to provide the citizens of this country with what they need, the Government takes through compulsory taxation a portion of what ideally, in an ideal world, we’d all give according to others’ needs. 

* Photo courtesy of Slimeball Comics