There is much comment in the American media today at the news that Mitt Romney is only paying around a 15% tax rate. Now I am not going to defend that rate, it does seem ridiculously low. And can you imagine if one of our own millionaires or one of those evil bankers were paying such a rate? It's unlikely they would be standing for prime minister. They would be driven from the country.
But I have for some time found it a strange concept that the rich should see the rate at which they pay tax increase the more they earn. Why? How is that logical?
It is entirely fair and reasonable that those who earn more should pay more in tax. But that would be accomplished even if we all paid the same percentage on our earnings - 25% of a million is a lot more than 25% of 20 thousand after all. It is called a flat tax and it has much to recommend it. Those who call it unfair should expain why.
Yet in this country, and most large developed countries around the world, the rate actually increases as earnings go up. The state is actually confiscating, in our case, half or more of someone's money based on some politician's notion of what is and is not fair. And then we wonder why people do their best to avoid or sometimes evade tax (no names, obviously).
Yet if this government were to have the courage of their convictions (that's the Tories obviously, Lib Dems prefer to try to avoid convictions - not just the motoring type - as they are electorally inconvenient) then they would cut the top rate of tax. Some, like me, would probably like to introduce that flat tax for all but would be wary of the consequences. Yet it is perfectly fair, equitable and reasonable that everyone should pay the same rate of tax. It would, evidence suggests, create higher revenues, curtail avoidance and evasion, attract people to these shores and would make the administration of our tax system simpler and more understandable. Oh accountants wouldn't like it too. There's a winning argument if ever there was one.
Politicians and those who have somehow found themselves in parliament, like our idiot bishops, like to tell us that they want fairness. But fairness is a moveable feast. Ultimately what could be fairer than ensuring that the state takes as little of our earnings as possible and leaves us to spend our money as we see fit? What could be fairer than making hard work rather than indolence pay by taking the very low paid out of tax altogether? Even if the state spent our money well and didn't waste countless billions each year - as we know it does - it would still be spending our money on other people's priorities and notions of what is 'progressive,' whilst failing to notice that the measures they take have created a benefit dependent underclass who feel it their right not to have to work for their benefits and are prepared to waste more taxpayers money to defend that right in the courts.
If, for instance, you were to come off the dole now and go and work until the end of the tax year in a job on the minimum wage or not much higher, you would most likely have to pay no tax at all until the beginning of April so as to use up your tax allowance. That is a real incentive.
Now imagine if you could do that all year round? That, rather than the attempts by members of the House of Lords yesterday to impose their peculiar version of what is fair and caring, would be a really 'progressive' step in every sense of that ill used word. Earning your own money, working for it, doing a few extra hours to pay for the kids birthday or Christmas presents is a healthy and socially responsible way for people to behave. It's only those in the ermine towers who seemingly cannot see it.
Guido today reports that Tory MPs are trying to introduce a measure that would itemise exactly how our taxes are spent. You can be sure that Labour will oppose such a measure tooth and nail as it would expose just how spectacularly expensive our welfare state has become and how much we all pay for it every week or month via our salaries.
What was originally supposed to be a safety net has become a vast redistribution system producing perverse outcomes. It has created millions who now demand money for nothing and recompense for every twinge or minor ailment. Last week we had Tanni Grey-Thompson, someone elevated to the House of Lords because she is very quick in a wheelchair, actually arguing that she should get extra money from the rest of us because she needs an automatic car. Labour have even got themselves into the ludicrous position that they argue that there should be universal benefits paid to all, regardless of whether they need them, so that those who do need them aren't made to feel like scroungers.
Is this what the benefits system was set up for? Or is it another example of legislative creep, of politicians promising baubles paid for with other people's money? The worst part about it is that they have slowly made Britain uncompetitive to pay for their own electoral bribes. And so the tax rate rises.
Ultimately, whatever politicians say, the rich by being rich have not actually done anything wrong. The vast majority have become wealthy by doing what politicians should be encouraging, not penalising. Even those city fat cats (with the possible exception of those working for state owned banks) are enriching themselves with shareholders money, not ours. Yet it offends politicians and so something must apparently be done. Perhaps they should take a look at their own lavish pension schemes, their own compensation schemes for MPs who lose at elections before they talk about reward for failure. Perhaps they should look at the vast and expensive array of quangos they use as rewards and bribes for those who used to be politicians until kicked out.
Our benefits system, rather than the safety net that was intended, has become one gigantic multi billion pound reward for failure and giving up - or not bothering in the first place. In some cases it genuinely addresses real need. In others it just creates need and dependency and entrenches it. Worse it deprives those who really need help of the kind of funding that would make their lives easier by handing it to those who want an easy life at someone else's expense. Those who now try to water down much needed measures are not being caring. They are trapping millions of people in the system and a life of hopeless fecklessness. They are also 'progressively' strangling the life out of the British economy.
PS
Figures out today show that Britain's national debt, a large part of which was created by Gordon Brown as part of his spending and redistribution binge, has now hit £1 trillion. And that's just the bit that is not hidden off the books. This is a figure that we must all live with now. It will never be seriously reduced except by inflation eating away at it. It is the price of political failure and cowardice handed down to future generations.
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