COVER -> DAY ONE
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A debate --- no, let me be honest, a slanging match --- has broken out in the United Kingdom a year before the possible date for a General Election which might be instructive during the United States Presidential Election. The UK's Conservative opposition leader William Hague has, to be more generous in my paraphrase than he deserves, posited a thesis in parody of Lord Acton, that rising taxation tends to corrupt and high taxation corrupts absolutely.
It is nice of the rich to be so concerned with our morals, particularly as, if their wishes were granted, they would be relatively worse off; they would be paying for their principles with a poorer quality of life. There is no economically sophisticated society in the West with a comprehensive taxation system where the rich, the resourceful and the educated have not been net gainers; this is particularly true in taxation regimes where sales taxes are favoured over taxes on income and wealth. Poor people might pay less tax in absolute terms than rich people, they might even pay less proportionately than rich people, but they get hardly anything back. The example always cited against the poor is their receipt of state benefits but compared with the benefits middle class people pick up in kind the welfare payments are nugatory. If the case is reasonably straightforward in domestic taxation it is even more so when it comes to business. Employees and shareholders all benefit from publicly funded infrastructure such as roads. Add to this the shameless 'pork barreling' whereby the rich secure huge tranches of public money to further their private gain and you can see that, on the whole, the poor might as well be "Blessed" because they aren't going to be very much else.
I am afraid that I have to resort to something like strong language; it's my suspicion that the rich, even if they recognise how they benefit from taxation --- and I suspect that most don't --- want to go on benefiting while they pay even less tax or none at all. It is a well known and universally held precept among the rich that the poor exist to make their lives better; so it was with slavery, why should it not be so with taxation? Bless their little improving aphorisms; it wasn't agnostics, after all, who ran the plantations and it isn't agnostics who threaten to cut taxes and welfare programmes even further.
There is not, then, a serious argument against high taxation but only high taxation levied on the rich; they don't mind how much the poor pay though they do mind that they get anything in return for their payments. All this may be economically illiterate to a point. It may well be that the best way to ensure long term growth in some economies is to redistribute downwards and that is certainly an interesting aspect of South East Asian economic development. Nonetheless, we can all be over elaborate in our attempts to be even handed. The truth is, greed is a great requisitioner of intellectual as well as every other kind of property; they have the resources, intellectual and economic, to develop and market any number of plausible theories to defend their selfishness. You ask blacks in American prisons what they think about the 'trickle down' theory.
One of the key tenets of the Hague theory is that taxation blunts philanthropy but philanthropy has the unfortunate tendency to fulfill the dual purposes of patronising the recipient and gratifying the donor. Modern citizens, being perhaps a little over-sensitive, have some notion that equal concern and respect and their requirement of dignity demands that they receive help as of right in return for their contributions through payments to the state. Disabled and poor people, perhaps ungratefully, don't like their life chances to be dependent on the whims of others who might suddenly decide to divert all their resources from helping orphans to rearing bloodstock.
The rich, in any case, had their chance and refused to take it; the scope of philanthropy was always circumscribed in relation to overall needs and taxation arose simply because as a social mechanism it was inadequate. Not only was philanthropy partial it was also haphazard. One might now wish, reluctantly, tentatively, to suggest that what might at one time have been a genuine economic debate about the size and nature of the welfare state is now something much more sinister; it is, both in the United Kingdom and the United States, an acceptance of the inevitability of a social under-class with unpleasant racial overtones in the case of the latter.
In electoral auctions it takes enormous courage to opt out of the Dutch auction on tax cutting; the idea that a political party might promise tax increases and win is becoming as outlandish as the notion that we want our politicians to be honest. The best we can hope for from Al Gore and Tony Blair is that they will stick firmly to pledges to hold taxation where it is and use economic growth as the engine for new social programmes but, sooner or later, we will suffer economic reverses which will damage the poor most of all; it is then that we will be faced with the moral question: "Should we raise taxes to preserve social cohesion?" At that point one can only hope that the answer will be affirmative but prudence requires that we raise taxes in times of plenty, like now, and lower them in times of hardship, rather than the other way round; we should have learned this from the Biblical Joseph.
Such a strategy also has the added advantage of keeping inflation and borrowing down. Never mind, greed is rarely patient; the miser does not calculate his prospects, he counts his coins.
