Why do we hate taxes so much?
An argument why taxes shouldn’t be an assault on your liberty, but a willing social responsibility to build a better future.
The famous idiom goes ‘Nothing is certain in life other than death and taxes’. For a majority of us, those two events seem as bleak and horrible as each other. Taxes are the subject of much distain and disgust and have been for centuries. From the biblical story of Zacchaeus, to the inheritance tax being named the ‘Death Tax’, taxes seem to get everyones back up and are met with fist-waving aggression. It’s understandable. Nobody likes things being taken away from them. Especially since taxes often feel like they’re going onto a rocket and being blasted into space.
One of his first acts as PM, Boris Johnson™ raised the top threshold of tax from £50,000 to £80,000. Tax cuts are often met with praise, even by those whom they don’t benefit. We’ve come to associate tax as ‘stolen money’ that has no economic or social benefit to us at all.
According to a IPSOS poll, 2 in 3 people in the UK would like more spending on public services. The creation of a welfare state is one of the biggest victories for civilised society in the 20th century. William Beveridge is hailed as a radical hero, even by those on the Tory right. Yet, we have such a disdain for the main source of funding for this spending. Why? This scene from the hilarious Always Sunny in Philadelphia sums up this paradox perfectly.
Partly it’s because of propaganda. The people who have the biggest influence on policy are usually the people who benefit most from a lower tax economy. They also happen to be those with considerable media influence. Their views will obviously trickle down through the narratives that are written into the fabric of society and thus, influencing us all. Consumer capitalism itself has fogged a lot of class-based thinking that was ripe in the 19th and 20th centuries. We’ve bought in massively to the aspiration narrative, the ‘American Dream’. Yet, statistically, the idea of ‘rags to riches’ is so negligible its barely worth mentioning.
Yet, taxes are, whichever way you look at it, a constraint on your freedom. In all major societies, tax isn’t optional. It is also forced through coercion. If you don’t pay, they take you away. So it’s logical to assume anyone who values ‘freedom’ should at least disagree with the idea of taxes. This is what I believe underlines both the low-tax, capitalist propaganda and our individual problem with paying taxes. Why should I have my money taken away? Why should I have my rights infringed? It’s a completely understandable argument.
However, I think this is a very limited and negative view of the value of ‘freedom’. Firstly, the entire nature of society requires you to give up some level of ‘absolute freedom’. Think about prisons. Whichever way you slice it, it’s an infringement on your freedom, albeit a just one. Many people would also argue that society should provide some stability such as roads, law and order, education etc. This benefits us all. Thomas Hobbes famously said that in a ‘state of nature’, living with absolute freedom, ‘human life would be nasty, brutish and short’. One of our key abilities of survival as a species has been our ability to cooperate and live collectively. This is the foundation of what is known as the ‘Social Contract’. The idea that any sane human would allow some infringement on their freedoms for the benefit of a civilised society.
As well as being beneficial, this idea of freedom only focuses on what you can control. It doesn’t address the idea of ‘capacity’. The freedom to choose. For example, If I am sick and I will need a doctor. There may be no law or coercion against me having healthcare but I cannot afford one because of lack of cash then I cannot have healthcare regardless. This is an external force that is, arguably, outside my control. Freedom does not exist in a vacuum, neither does it truly mean anything without a level of justice. The basis of true liberty isn’t just ‘freedom from’ but also the ‘freedom to’.
The problem is, some argue, that my taxes are too high. ‘I know you have to pay tax, but why should I pay so much?’ Good question. This doesn’t invalidate the argument that paying taxes should be a positive thing however. We’re just arguing over price. If 2 in 3 people want more spending on public services, then logically we must raise that revenue somewhere. Mathematically speaking, we have to go where the biggest amount is. However, tax in the UK isn’t as burdensome as it seems and higher taxes are actually necessary.
First let’s get some perspective. Due to changes in tax thresholds in recent years, almost half of people don’t pay any income tax. Our top marginal tax rate is 30% lower than it was in the 60s and wealthy homeowners escape paying almost any council tax. OECD figures show that we are far below average on tax revenue and well bellow similar economies like Belgium (44%), France (45%) and Denmark (46%).
Higher tax revenue leads to increased public spending. This funds vital public services, which we say we want. It also stimulates growth and redistributes wealth, closing the gap on wealth inequality. According to the IFS, The UK is 14% poorer than it would have been if the financial crash didn’t happen. The economy is almost 2% smaller because of the Brexit vote. Britains business investment has reached ‘near zero’ and the UK economy has actually started to shrink. Inequality has never been higher and earnings are still below pre-crash levels. Two thirds of FTSE 100 companies don’t pay a ‘living wage’ and 4 million people are trapped in poverty. We are still dealing with the fallout of a huge economic crisis, and with the uncertainty of a no-deal Brexit, it could get worse.
After the destruction of the Second World War, the country and economy was in shambles. Marginal tax rates peaked at around 99.25% during the war, due to the cost of the war effort. We continued a similar high-tax, high-spending economic policy to rebuild a damaged and unstable economy. This is what we call the ‘post-war boom’. In a 1957 speech, the prime minister Harold MacMillian said ‘People have never had it so good.’ This was reiterated in the data where the amount of Britains saying they were ‘very happy’ was at 52%. Conversely, in 2005, it was 36%.
We face a similar crisis now. Not one of wartime destruction but one of a damaged economic system and a dying planet. Our economy is going to have to be radically changed. The growing burden of healthcare, rising inequality and ecological crisis will require dramatic shifts and huge amounts of money. Someones got to pay. To keep society just, with liberty for all, we’re all going have to rethink our attitudes towards public finances and by association, taxes.
That doesn’t change the fact that taxes suck. There is no pretending that they don’t. But they suck in the way having to eat healthy sucks. Or having to recycle sucks. It’s a chore. But chores are responsibilities we have to achieve a a better future. It’s an investment. You pay now, to benefit later. We need to change our thinking of taxes from ‘The government is stealing my money’ to ‘This a social duty to pay for the kind of society I want’.
When surveyed, 60% of citizens said they would ‘pay more tax’ to fund the NHS. When our tax burden is illustrated in a cost-benefit scenario like that — it’s easy to see the investment for us. But, we need to change our thinking. We need to change the way we talk about taxes. Only then can we decide on what we value enough to spend that money on. Then maybe that sting on our pay checks might actually feel like a step towards a brighter future.
