Wednesday, 15 September 2010

On "Fairness" in political discourse

"All men are created equal" so says the American declaration of independence, putting equality of opportunity front and centre while the French revoloutionary slogan "Liberty, Equality, Brotherhood" put equality of outcome at the heart of political discourse. The word "equality" means very different things depending on its context.

The same is true of "fairness". If all men are created equal, surely all citizens should pay an equal share of the burdens of state? This is the thinking behind poll taxes: a flat charge levied on all citizens. All men are equal, and are charged equally for the services to which they are entitled, surely that's fair?

But, those with the broadest shoulders should pay more? Well that's the thinking behind taxation as a percentage of income. Churches were the first to realise the potential in this idea, with the Zakat and the Tythe being set at a most-reasonable (by today's standards) 10%. As society gets richer, so does the state/church levying the taxes. Everyone pays the same proportion of their income to the state. The poor pay the least. The rich pay the most. Surely that's fair?

But then of course, this means that some people get very rich, and some very poor people still have to pay for services they might not use, and the payment is extracted at the point of a gun, is it fair to expropriate 10% of the income of someone struggling to get by? No. So the state set a rate below which it is immoral to take money by force. Let's call this the personal allowance. Above this rate, everyone pays the same share of their income to the state. Surely that's fair?

But then there are some people who are still successful and rich, and that will never do. So the broad mass of envious middle and low earners have taken the opportunity presented to them by democracy to see that someone else pays more tax. That "someone else" means, in effect "The rich" defined as "anyone earning more than I do". The people ask the politicians to see to it that "The Rich" should pay a higher rate of tax "because they can afford it". Some of that is returned to the broad mass of middle earners in paltry benefits of one form or another, to keep them quiet. Of course, in time, the state freezes rates at which the higher rate is levied and lets everyone creep into the bracket fomerly marked as "rich" which now includes almost anyone working. The politicians have managed to persuade the people that this is "fair". Within a couple of decades, everyone working is paying tax. Everyone not paying tax is kept on benefits by 90% marginal tax rates - the Tories haven't shown much interest in this demographic and the Labour party likes to keep its pets supplicant to the state's teat. Is it fair that the poor face obscene marginal rates, while someone who probably uses public services less than average pays more absolutely AND as a percentage of income than the rest of us? If so, why?

1 comment:

Anonymous said...

In the US 47% of people did not pay any Federal tax. Many who did not pay any federal tax were even "entitled" to a federal tax refund.

I actually do not have a problem with a tax code where everyone pays the same percentage of their income. Yes, the rich would pay more but percentage wise everyone would pay at the same rate. Where I go crazy is when the government starts giving all kinds of deductions and makes everything so complicated. It also allows for too many loopholes and leaves the system ripe for abuse.


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