On excess taxation, or theft

If there is any revolt in the West, is likely to come from the overtaxed middle class.

As I write this on July 27, 2011, many discussions have been going on about the level and type of taxation.  In France, July 27 this year marked the day when French people could finally begin working for their own enrichment, not the state’s.  Last year, it was July 26.  So, an extra day’s wages went to propping up the government and various social welfare programmes.

RMC (Radio Monte Carlo) carried a series of panel discussions and phone-in debates on the subject.  Does every person working in France pay tax?  No, it appears that some get paid under the table, but only in small businesses. Should everyone — even those on benefits and pensioners — pay income tax?  An online poll showed that 75% of French listeners believe that everyone should pay some form of income tax, even a token amount.  Among the 25% who disagreed, reasons were given as follows:

– ‘If every household in France overspent the way the government does, the country would be in a heck of a situation’.

– ‘Why does the government waste so much of the tax revenue?’

– ‘Why should people on the minimum wage or pensioners pay income tax?  They can barely get by as it is. Anyway, they still pay tax every time they go to the shops.’

My objection is that administration costs would no doubt far outweigh the revenue.

Here in the UK, Richard Branson is moving his Virgin Enterprise operations from London to Geneva in an attempt to reduce the amount of tax the company pays.  A normal reaction.  However, other businesses carrying the brand name — Virgin Media and Virgin Atlantic — would continue to be based in the UK, paying UK tax.

As for British wage earners, the Telegraph reported — also on July 27 — what many of us had long suspected: the middle classes are being wrung dry (emphases in bold mine).

Most people imagine that only people paid over £150,000 a year suffer tax at more than 50pc but many members of the ‘squeezed middle’ earning much less than that pay marginal tax rates of 62.5pc …

The explanation is a combination of income tax at 40pc, National Insurance Contributions (NICs) at 12pc and the clawback of personal allowances at the rate of £1 for every £2 of income in excess of £100,000 a year. That clawback – initially announced by Labour Chancellor Alistair Darling but upheld by his Conservative successor George Osborne – means the personal allowance, which enables everyone else to earn £7,475 before they must pay tax, has been lost altogether before earnings reach £113,000 a year.

… the effect is for people earning much less than the average house price to suffer marginal tax rates which mean they receive little more than £1 for every additional £3 they earn, while HM Revenue & Customs (HMRC) grabs £2 ...

Low earners suffer even higher marginal rates of tax because of the way that means-tested benefits are withdrawn when pay reaches a fraction of national average earnings. These poor people have actually seen their marginal tax rates go up under the Coalition Government.

As the article states, it won’t be long before people stop staying late at the office. What’s the point?  Entrepreneurship will be further stifled if a business owner sees more of his takings going to HMRC (Her Majesty’s Revenue and Customs).

But, despite all this, there’s more on the horizon.  Pier Carlo Padoan, chief economist of the OECD, proposes that Britain scrap some of its taxes in favour of a ‘revolutionary’ property tax.  And, this would be very revolutionary, indeed.  Talk about redistribution of wealth:

Mr Padoan argues [Chancellor George Osborne] should scrap many VAT exemptions – including food, passenger transport and domestic fuel – and abolish council tax and stamp duty in favour of ‘a property tax based on market values’.

Leading accountants described the proposals, to be set out in the August edition of Prospect magazine, as “revolutionary” and predicted they would hit house prices and prove extremely unpopular. Pensioners and even tenants would suffer higher costs under a property tax, accountants predict.

You can imagine how our properties would be revalued — ever upward!  Landlords would pass any increase on to their renters.  And 20% tax on food and eye-wateringly expensive train fares?  Oh, my!

Why can’t people just keep more of what they have earned?  Is that such a difficult concept?  This is why people become libertarians — low taxes, small government.

The comments following the property tax article are illuminating.  A few for you here:

bubbles15: Here’s a better idea. Scrap the departments for environment, trade and industry, education, and culture. Get rid of the toothless of-whatevers. Shred the NAO [National Audit Office] until it’s got a point and force councils to provide only what we urgently need. The rest allow people to provide for themselves.

I’m utterly sick of paying for a bloated, useless, moronic, arrogant, incompetent, ignorant stupid statist to take ever more of my money to urinate down the drain of their spending …

The tide must turn toward a small state, low tax, right wing world. Anything else is akin to oppression powered by the state to steal from us and should we disagree turn the police on us – which we’re paying for! – to get their own way …

I do … believe that the better off should contribute to support the worse off. I have no compunction about buying a wheelchair, a hearing aid or providing treatment to the sick.

I am truly fed up with not helping those people and instead seeing my taxes poured into things no one needs. Losing your legs in an accident is different to having eight children and demanding a free house and money …

I’ve already paid tax on my house. I pay tax to support it, to have my rubbish collected and to use the road outside of it. I seem to pay so other people don’t have to, yet get the same, often better services than me.

Why?

It’s not a cash machine, it’s a ruddy cash sink. A new boiler, new radiators, insurance premiums to repair a flood, a new washing machine, changes to sewer law to make me responsible for old, leaking, broken pipes, and then I hear about a kid with three kids getting annoyed about not getting a ‘hardship loan’ to pay for her kids birthday presents or gas bills because she’s spent it all on getting her nails done.

It makes me angry in a way I don’t want to be.

brianr: Start by cutting overseas aid, all of it. Next, EU funding, all of it that doesn’t DIRECTLY benefit the UK.  Stop (and reverse)  immigration. Stop EU migrants taking UK jobs.  Stop EU students taking UK university places.  There is a start, none of those would hurt UK interests, in fact all would help us. 

Then we turn to the “green” agenda.  Burn it. All of it. 

We’d be back on the road to recovery by Christmas.

jaded_libertarian: I see the “One rule for me, another for thee” principle on which governments operate is still going strong.

Let’s suppose I was up to my arse in plasma screen tellys, playstations, Wii’s, new cars and foreign holidays.

Let’s also suppose I had out of control debts as a result.

How do you think I would fare if I went to my employer and demanded a massive pay rise, explaining that my out of control debt required it?

Now, why is this approach OK when you’re a government?

UK_Debt_Slave: The UN is openly proposing that nobody in the developed world should be earning more than $10,000 pa. Imagine trying to live on that.

itzman: I have no income. I live on my savings, which attract no interest, in a house probably worth a million. I qualify for no benefits, and I will receive little  in the way of a state pension. I have worked and saved to get it. I have never borrowed, and never had beyond a minimal mortgage.

I barely use a car, my rubbish is negligible, I spend around 20% of my total expenditure on fuel and around 50% on food. I take no holidays, don’t eat out, buy no expensive TVs. But I have assets. ALL I have is assets.

Now you want ME to pay, because I saved and worked, for people who did not and have not …

The final outcome is that no one WILL work, or save…which is precisely why we are in the mess we are in. Borrow and spend is what got us here, not work and save.

NotSoStupid: … I find it somewhat ironic this proposal being made against the backdrop of the Eurozone debt crisis which in large part has been caused by State profligacy …

wallhousewart: That is why pensioners end up having to move.  You may not realize the capital until you sell, but the state doesn’t care.  That is now your “assessed” value.

lostkingdom: … Local income tax has more merit as reflects change in circumstance , redundancy health etc. The last thing a widow  or cancer victim needs is to face selling a loved and cherished  home to pay  a property tax like the one suggested. This turns UK culture up side down and again punishes those who work hard [and] invest in their homes rather than  spending as they go …

jbder:  Mmmmm…. I’m not quite sure what to make of this. I’m 1/2 French and, as such, am used to crippling property tax of the likes that we have in France.  There you have 2 forms of tax, one is the council tax which pays for local services. The second is habitation tax which is calculated on the square footage of your property and its value …

Sarkozy is now proposing a new form of tax on second homes whereby the owner pays per annum in tax the rental value that the property would fetch on the open market…… GULP!

omargourd: Now the Organisation for Economic Co-operation and Development (OECD) says Britain should adopt a Continental European-style property tax.  Just who are these people and tell me when did we actually elect these people?

They’ve said it all.

Excess taxation — theft — is the greatest threat the West faces today.