> Taxing the rich will always be politically popular, whether it’s justified as progressive redistribution or political expediency. There is a reason politicians keep promising that somebody else will pay.
> The difficulty is that Britain has already spent a generation taxing somebody else, and by international standards we have been remarkably successful. The UK now raises a relatively large amount of tax while imposing a relatively low tax burden on ordinary wages. But this has run its course.
> A generation of frozen thresholds means that they are no longer just a tax increase for “other people”; the average worker can expect to be directly affected. The popular new ways of taxing “other people” – targeting billionaires and banks – raise very limited sums in the context of UK public spending. And that ominous uptick at the end of the UK “tax wedge” chart matches the uptick at the end of the “British attitudes” chart.
> All this is, in part, a failure of the modern Left. The traditional social-democratic argument was never that we can fund a decent society by finding a few unpopular groups and taxing them ever harder. It was that good public services require broad-based taxation, and that people should be willing to pay for the civilisation they want to live in. Most of the contemporary Left has abandoned that argument. It still wants a European-sized state, but sells it with the fantasy that someone else can pick up the bill.
> This has been mirrored by a failure of the Right. It is still just as eloquent at denouncing the tax burden, but has become unwilling to identify spending cuts large enough to make a serious difference. It will argue for welfare cuts, but rarely identifies specific reforms that save more than a tiny fraction of overall spending. And it is generally unwilling to touch the biggest and most popular areas of spending: pensions, the NHS, social care and defence. So the Right ends up with its own version of the same evasion.
> And so we end up with political failure. The Left says we can have European spending without European taxes because “the rich” will pay – and so, when it finds itself in power, presides over deteriorating public services. The Right says we can have lower taxes without confronting the spending programmes voters most want to protect – and so, when in power, has raised tax.
> Britain may have a viable path in either direction: higher broad-based taxes to fund a larger state, or lower spending to sustain a lower-tax economy. I don’t know which would be more successful, but I know that we cannot have both.
> Politicians can keep pretending there are pain-free answers: cutting “waste” on one side, taxing “other people” on the other. That may fool the voters and win elections, but sooner or later, we have to choose. Higher taxes that most people will pay? Or spending cuts that most people will feel?
> The strategy of taxing “other people” has run out of road.
1 Comment
Nicely summarised in the article itself:
> Taxing the rich will always be politically popular, whether it’s justified as progressive redistribution or political expediency. There is a reason politicians keep promising that somebody else will pay.
> The difficulty is that Britain has already spent a generation taxing somebody else, and by international standards we have been remarkably successful. The UK now raises a relatively large amount of tax while imposing a relatively low tax burden on ordinary wages. But this has run its course.
> A generation of frozen thresholds means that they are no longer just a tax increase for “other people”; the average worker can expect to be directly affected. The popular new ways of taxing “other people” – targeting billionaires and banks – raise very limited sums in the context of UK public spending. And that ominous uptick at the end of the UK “tax wedge” chart matches the uptick at the end of the “British attitudes” chart.
> All this is, in part, a failure of the modern Left. The traditional social-democratic argument was never that we can fund a decent society by finding a few unpopular groups and taxing them ever harder. It was that good public services require broad-based taxation, and that people should be willing to pay for the civilisation they want to live in. Most of the contemporary Left has abandoned that argument. It still wants a European-sized state, but sells it with the fantasy that someone else can pick up the bill.
> This has been mirrored by a failure of the Right. It is still just as eloquent at denouncing the tax burden, but has become unwilling to identify spending cuts large enough to make a serious difference. It will argue for welfare cuts, but rarely identifies specific reforms that save more than a tiny fraction of overall spending. And it is generally unwilling to touch the biggest and most popular areas of spending: pensions, the NHS, social care and defence. So the Right ends up with its own version of the same evasion.
> And so we end up with political failure. The Left says we can have European spending without European taxes because “the rich” will pay – and so, when it finds itself in power, presides over deteriorating public services. The Right says we can have lower taxes without confronting the spending programmes voters most want to protect – and so, when in power, has raised tax.
> Britain may have a viable path in either direction: higher broad-based taxes to fund a larger state, or lower spending to sustain a lower-tax economy. I don’t know which would be more successful, but I know that we cannot have both.
> Politicians can keep pretending there are pain-free answers: cutting “waste” on one side, taxing “other people” on the other. That may fool the voters and win elections, but sooner or later, we have to choose. Higher taxes that most people will pay? Or spending cuts that most people will feel?
> The strategy of taxing “other people” has run out of road.