Nostalgia

The warm glow of a time that we can remember, but without inconvenient clarity, is associated with  both small and large ‘c’ conservatives. Both can be keen on grammar schools, for example, and on those hunting prints in suburban pubs aspiring to be rural.

But two conflicting kinds of nostalgia seem to be driving the United Kingdom Independence Party (UKIP). Towards the top of the party are some libertarian tax sceptics like Douglas Carswell. Tax sceptics are sometimes nostalgic for a time when charities and true grit aided the deserving poor without troubling the middle classes, while the undeserving poor could go to the dogs (assuming that the dogs were somewhere conveniently out of the way). The libertarian David Myddelton, for example, (though not, to my knowledge, a UKIP member) has written with fondness of the 1930s, when taxes were 25% of GDP: ‘If the government didn’t confiscate our money in taxes,’ he complains, ‘we ourselves would have more to spend on what we value’*.

At the bottom of the party, on the other hand, are the UKIP voters, often to be found in landscapes of decline – seaside towns, old mining areas – ‘left behind’ by social change, and angry that no one speaks for them. They, it turns out, are by no means necessarily libertarian. Many seem to be nostalgic not for the lean state of the 1930s, but for the security of the 1960s: for nationalised energy and railways, protection for wages, workplace rights and a well-funded NHS.

But where libertarians might attribute Victorian virtues like self-reliance and luxuriant facial hair to low taxes, few, if any, voters connect post-war social security (in every sense) to the benefits of high taxes. It has been said that powerful people must stop sneering at UKIP voters, and start listening to them. Listening might remind us that there were good things about the 1960s welfare state, like escaping from slum landlords to well-maintained and socially diverse council estates. But it’s hard to connect those good things to policy without talking about higher taxes. I realise that ‘make people feel good about paying more tax’ is perhaps a hard sell to a political strategist. But surely it’s not an impossible one (they’re meant to be clever, these people, and they’re certainly well paid)? Paying higher tax makes you a good citizen. It shows that you’ve done well in the world and that you’re in a position to contribute and be looked up to. That sounds like something a lot of people could be nostalgic for.

*many of the rich now seem to spend their money on things that neither they nor anyone else values very much; I don’t know if there’s a Myddleton case for the manly virtue of buying these

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Belgium: land of high tax morale

So I’ve talked about why some (very rich) people will do anything to avoid tax. No really, I have; it’s in an earlier post. Here’s a different question. Why do many people who could avoid it pay their tax anyway?

If you’re lazy, like me, the obvious answer is, ‘They can’t face the hassle’ (forms, accountants, getting it wrong and having Tax Collectors with guns and bullet proof vests raid your home).

Obvious, but wrong. Some  people – and countries – have high ‘tax morale’. And what are these people and countries like? Research suggests that they ‘trust in the legal system, government and parliament’. They have ‘national pride’ and ‘pro-democratic attitudes’.

They sound great these people. The ones in the study came from Switzerland, Spain and Belgium; maybe they could come and do some Tax Morale life coaching over here. But here’s a scary thought. What if the relationship between tax morale and trust, pride and democracy can ratchet down as well as up. Maybe people who don’t trust their government, who feel that democracy’s not working for them, are unwilling to pay more tax. Which means the government can’t do its job well. Which means people are less likely to trust the government etc etc.

If that’s so, then it would obviously be mad for a political party or government to go on about how governments are inevitably hopeless and untrustworthy. ‘Don’t be silly,’ I hear someone heckle. ‘No one would do that’.

Nonetheless, since the 1980s, right wing politicians in the UK have persistently argued that ‘you can’t trust governments with money, so we’ll cut taxes’. And to reinforce just how much they dislike government, they have characterise the voters and governments as consumers and service providers.

Market models work really well for lots of things: cars, bread, energy companies (oh, wait). But sometimes they come at a price. The philosopher Michael Sandel has argued that turning some good things – enjoying the countryside, supporting your local sports teams – into products for sale turns them into a different thing altogether. While your walk in the country is paid for by taxes, because it’s in, say, a national park, then it’s nature’s bounty, free to all. But if you buy it as a consumer, it turns into a treat that you’ve earned, something you have a right to and others don’t, something that can leave you feeling cheated if it doesn’t work out as planned.

After thirty years of undermining the idea of governments as agents for good, and turning taxes into fees for services, we need to start the virtuous circle of tax morale and trust and pride in government turning again. Lets stop talking about governments as inevitably lazy, incompetent and greedy. Change government so we’re all more involved. Pay more taxes and see what this invigorated government can do.

If you’re an egalitarian, how come you’re so rich?

‘If you’re an egalitarian, how come you’re so rich?’ is not something anyone has ever asked me. In fact it may never have been asked by anyone. Instead, it’s the title of a book by the late political philosopher Jerry Cohen (who had an unexpected sideline in comedy). Cohen’s title suggests red-faced readers, shouting at the absent professor from armchairs: ‘Hand over more of your own money! Hands off mine’. But the foundation of this complaint is accepted on all sides: at some (unspecified) point, tax stops. After that point it’s up to you if want to give money away for the greater good. You’re free to give if you want, and if you do give, you’re free to form your own vision of the greater good. You can even make this a kind of voluntary tax if you want, like the members of Giving What we Can. I hope that Giving What We Can thrives, whatever happens to income tax rates. But it’s not a substitute for tax. Giving out of choice is, quite rightly, a personal thing. Perhaps you have a relative with cancer, or a love of donkeys; your charitable giving can reflect that where your taxes can’t. Which is great. If you try to make these preferences do the work of taxes, though, you end up with more money going to animal charities than to disabled humans. People in need are often helped in proportion to their visibility and likeability; when did you last go to a  jolly coffee morning at the office for the women’s refuge movement, or victims of sexual abuse? I’m not the first person to make this point (actually I’m not the first person to make any point on this blog; I’m just relying on the power of repetition as my persuasive strategy). But Cohen makes a different point in If you’re an egalitarian. Lets say I choose to pledge x% of my post tax income to charity, but all my friends and family stick to spending that money on pies, take away coffees, rare breeds of Chihuahua etc. Next time I’m invited for a pie, a coffee or a trip to Crufts, I have to say ‘no’, because I gave all my money to ‘A representative group of charities which statistically matches the needs of the UK people’. Giving heavily to charity instead of paying higher tax doesn’t just mean I can’t buy as much stuff; it also cuts me off from the people who matter to me. If I, and all the friends and family, paid that x% as tax, I’d be none the richer in one sense (the sense that, er, I wouldn’t actually have any more money). But I’d be a lot richer in the sense of ‘free to do stuff with other people instead of stuck at home with the telly on the blink’. So those of us who want to pay more tax owe a debt of thanks to Jerry Cohen. It’s not hypocritical want higher income tax without giving more to charity than the next person. It’s practical. Once again, tax pounds work differently to normal pounds.

Harry Potter and Monaco

Imagine you were rich beyond your wildest dreams, like Aladdin, or a Russian oligarch, or Rumpelstiltskin (who possibly was not rich, but merely short; I can’t remember).

How would you deal with your tax? You could just hire an accountant to pay it and then forget all about it, like J.K. Rowling seems to. Once you have a nice house, a Chanel suit and a printer that actually works, money is tiring; it constantly needs spending or tending. Why bother, if someone else, at no cost to yourself, will take it off your hands to pay doctors, police, teachers and the people who paint the yellow lines on the roads?

Yet many of the super rich spend a big chunk of each year in some of the very dullest places in the world (Luxembourg anyone? Or cosmopolitan Monaco, with its fascinating, er, casino) with some of the very dullest people, just to avoid paying their tax.

Perhaps it’s a hoarding thing, like those people who emerge, blinking, into their back gardens while social services pick through the warren of plastic bags inside. But paying tax is not like throwing things out; governments can be inefficient, wasteful, even corrupt, but they don’t throw all the tax money in a skip.

Maybe it’s about anger. In Shakespeare’s Merchant of Venice, the moneylender Shylock is a social outcast. He insists on his right to cut off a pound of a high status debtor’s flesh, rather than take even more than the money he’s owed. Perhaps the super-rich feel that we – or the government, or anyone they think of as challenging them or having authority over them – are their enemies, in the way that Shylock feels that the Venetian elite is his enemy. Their money is like a nuclear weapon – it confers status and power even if it’s never used.

This can explain why people like Rowling and Bill Gates stand out from the tiny, super-rich herd (like a herd of some rare species) by willingly paying their tax. Neither of them seems to have wanted to money for the sake of power or status. They wanted to write great books, or succeed in business for its own sake; money was just a byproduct, or index, of success at writing, or at creating and developing a product.

People like this should be praised more often and more publicly. If you could get a knighthood or a peerage for ‘voluntary cooperation with the inland revenue’, the rest of the super rich might trade in their nuclear cash weapons for the status of tax hero (and the freedom to live among people who don’t have ‘Gucci’ running through them like a stick of rock).

And then they might inspire the rest of us not just to pay more tax, but also to see that you can get to the top in many different ways, and still be a decent human being.

Jermany and Britterland

“The Germans support manufacturing with through careful state intervention.yada yada yada…”

‘But they’re more cohesive than us’.

Would Britain have to be as cohesive as Germany (ie would all our different sub groups, from social classes to regions have to feel closer to each other) to have Germany’s higher taxes? The problem with answering this is that Real Germany, like Real Britain, is complicated: Bavaria is not, er, Mecklenburg-Vorpommern (hope Wikipedia didn’t make that one up). The east is not the west, Kraftwerk is not Opus (na, na, na, na, na – look it up).

So for the sake of argument lets compare two cartoon countries: meet socially cohesive ‘Jermany’ and socially fragmented ‘Britterland’.

Jermany – the movie

ECONOMICALLY DEPRIVED AREA: We need a rail link.

RICH AREA: Sure, that will open up a new market for us.

RICH PEOPLE: And regional inequalities are bad for society and the economy.

POORER PEOPLE: We could do with nicer houses.

WORKING POORER PEOPLE: Hah, get a job.

WORKING MIDDLE CLASS PEOPLE: Hang on, you’ll want a nicer house than theirs if you lose your job.

WORKING POORER PEOPLE: Oh, all right then.

OPERA HOUSE: We need more cash for our fabulous operas.

EVERYONE: Don’t like opera myself, but high culture is a good thing.

[Cut to CLICHED DENTISTS nod while stuffing cash in the boot and driving to Luxembourg…]

Britterland – the TV movie

ECONOMICALLY DEPRIVED AREA: Why are you all looking at us funny?

RICH AREA: Because we’re not lazy idiots like you.

RICH PEOPLE: Why don’t you all move and clean our houses?

POORER PEOPLE: Can I walk to the food bank? Can’t afford the bus.

WORKING POORER PEOPLE Scroungers! We’ve just done a 16 hour shift and no one’s offering us free food.

WORKING MIDDLE CLASS PEOPLE  You guys are so lazy.

WORKING POORER PEOPLE [enraged] But – [interrupted by….]

VOICE ON TANNOY  Poor people, your time in the public sphere is up. Go home now.

OPERA HOUSE We need more cash for our fabulous operas.

EVERYONE hahahahaha [they imitate pretentious opera directors]

ARTY PEOPLE But high culture gives life meaning!

Jermany’s taxes are accepted because Jermans have a lot of solidarity; what helps one group of Jermans helps us all. This can make them conformist; bankers don’t flaunt their wealth and poor people don’t vandalise because in case all the other Jermans tut, ‘that’s not very Jerman’. Britterlanders, on the other hand, don’t care if the rest of Britterland approves of them, so long as they can do what they want. Seems like a hopeless basis for a high tax culture.

But that respect for difference creates a respect for fair play; everyone should be treated equally, whether they’re annoying or not. Maybe if Britterlanders thought that play was not fair between Britterland’s various groups, and that higher taxes could improve that, they’d get on board. Maybe they know so little about each other that they don’t realise that this unfair play is going on:

Britterland II – the public sphere strikes back

ECONOMICALLY DEPRIVED AREA: Why are you looking at us funny?

RICH AREA: We’re wondering where you’ve gone wrong

ECONOMICALLY DEPRIVED AREA: Now we have your attention, we’ll explain how the cards are stacked against us, and how your taxes could help.

WORKING POORER PEOPLE However hard we work, we get into debt.

WORKING MIDDLE CLASS PEOPLE How come? How would higher taxes help?

OPERA HOUSE We need more cash for our fabulous operas.

EVERYONE [trying not to laugh] Why do we need opera?

OPERA HOUSE Take some free tickets and we’ll show you.

As inequality grows, and social groups grow further apart from one another, millions of people find that they have non-speaking parts in the media movie of their lives. Maybe if they had some lines we could all learn more about what tax can and cannot buy.

What did the 70s and 80s do for us?

I wasn’t really there for the 70s. Or at least I was, but I was watching Blue Peter and spooning Cremola Foam up from the tub. I had to piece the 70s together later from what the grown ups said. Phrases like ‘three day week’ (how did that work? could you do it flexitime?) and ‘winter of discontent’ and ‘the IMF’ were muttered between adults; the 70s economy sounded like an embarrassing uncle, the black sheep of the family.

I was definitely there for the 80s though. I remember an advert where a handsome man dropped off his son at boarding school. He turned to his beautiful (yet classy) wife and said, smugly, ‘We’re going it alone – Ian’s with me, John’s with me, and we’ve got the backing’, and she said, ‘Darling that’s wonderful’. I also remember sneering at street collections for the miners; did they think you could sell coal at a loss indefinitely? I’m ashamed of that now*.

So I concluded that in the 70s the unions were mad for power and the government couldn’t count. The 80s answer was: cut taxes; privatise; and shrink the state to make way for entrepeneurs.

Some of this has gone well. The heroin trade moved into some mining towns before the state had finished packing. On France’s state-owned TGV, passengers now moan, ‘Enough of this fast, affordable, extensive, punctual and reliable service. We want a selection of hot beverages and refreshments before the buffet car closes at Carlisle’.

What about tax cuts? The hope was that we work harder if we keep more of our income. This would make us more productive. So even at the new, lower tax rate, the government would get more money in.

I’ve always wondered about this. Say promotion means an extra £1000. Taxed at 40% you’ll get £600. If tax rises to 45%, do you say ‘No way am I working harder for £550! I’m going back to messing around on twitter RIGHT NOW’? I’m not the only one with doubts about the ‘cut taxes and raise revenue!’ story.

How much of the 80s medicine was the right cure for the right disease? Unions can be reformed rather than sidelined. Governments might be less likely to abuse monopoly power than companies, unless you watch the companies as though they were in detention. Poor management, low investment and lack of training might be more damaging than high taxes.

Imagine that instead of our 80s, we’d had higher taxes and support for mining towns as the pits closed; investment in education, infrastructure and new industries and businesses, keeping some of the talent which left for London and the City.

Imagine that.

*Not because I think you should dig stuff up and sell it at a loss. Because if someone is reaching for the plug on the town’s life support machine without suggesting an alternative, the only decent thing to do is protest .

£s and Tax-£s

When my husband was growing up in Poland he ‘yearned’ for Lego, but you could only buy it in Pevex, the hard currency shop. In theory, Polish money and hard currency were exchangable. In practise, there were some things – wonderful things – that you could only buy with hard currency.It’s the same with ‘pounds’ and ‘tax-pounds’.

‘Good morning, madam, welcome to What Everyone Wants*. How can I help?’

‘I’ll have some tights please, and a packet of tea bags. And also, I want a better commute to work.’

‘Certainly, madam. For the commute to work, we’d recommend a Lovely New Car.’

‘Wow, I’ll be the envy of the neighbours. Can it fly over the traffic?’

‘No. For a shorter commute you’d have to go to TaxPoundland. Anything else?’

‘I see and hear about the unemployed, and homeless people, addicts, people at food banks. It upsets me. Can you help with that?’

‘Absolutely. We can offer distraction in the form of a Treat – huge range from a chocolate bar to a foreign holiday. We can also offer Seclusion, starting at “a house in a well-off neighbourhood”, through “gated housing” and right up to “personal bodyguard and chauffeur “. Finally we can offer “Giving to Charity”.’

‘Does Giving to Charity help the ones I see?’

‘No, Giving to Charity just helps out a random selection. For something more comprehensive, you’d have to go to TaxPoundland.

…………….

‘Hello, I’d like a better commute.’

‘The budget version cuts through the traffic, but it’s a bit crowded and unreliable and the fares are high. Or you can go right up to something modern, comfortable, bang on time and cheap enough for everyone.’

‘And I want to stop feeling bad about people who are poor.’

‘Range of options available here, from ‘No One Actually Starves’, where you avoid actual corpses (bit unreliable lately), to ‘Treat People with a little Dignity’, and at the top, the full, German-style ‘Even People like you Might not have to Sell their Homes if Things go Wrong’.’

‘That last one sounds great; if I knew I wouldn’t lose my home, I could start a business. But won’t lazy people just pretend they need the money?’

‘That can happen. If it’s dealbreaker, go back to What Everyone Wants and cancel your house, travel and property insurance.’

‘Er, why?’

‘Because insurance fraud is as big a problem as fraud in TaxPoundland’s products. It’s just hidden in higher premiums.’

*There was shop called that when I was growing up in Glasgow. I never found out what they actually sold; I think it was a bit like BHS. Which may in fact be what everyone wants.