Saturday, September 22, 2007

The moral case for tax cuts

According to The Independent, Baroness Thatcher’s call for tax cuts has ‘rocked’ the Leader of the Opposition, and her assertion that ‘you can’t have stability if you don’t have tax cuts’ is quite at variance with the Osborne/Cameron pledge to ‘share the proceeds of growth’ between spending on public services and reductions in taxation.

The problem is that nobody knows what they are talking about. The more platitudinous waffle that is talked by politicians, the more they are perceived to be divorced from the real world. A tax cut is simple to understand, and even talk of ‘tax relief’ would be welcomed by the masses, but an insistence that ‘economic stability’ is primary, and the policy is to ‘share the proceeds of growth’ is the language of political anoraks. Philip Hammond MP, the shadow Chief Secretary to the Treasury, insists that tax cuts could come in the longer term under a Conservative government. But the tense is unattractive, and constitutes an assurance of nothing. Going to the polls with manifesto pledges of coulds and mights and maybes will simply lead voters to stick to the devil they know.

The Conservative Party appears to have been persuaded that high levels of taxation, high public spending, or high levels of borrowing lead somehow to a more just and compassionate society. This is the mantra of New Labour which has permeated the age and infected almost all sections of the media. But it is a lie.

There are sound economic arguments against high taxation, and Baroness Thatcher lived and breathed the philosophy. High taxes lead to a ‘brain drain’ of entrepreneurs, and businesses move overseas to be competitive. Voluntary giving is reduced, growth is stunted, unemployment rises, and the poor multiply. And these poor are real people in real situations – the very people to whom the Lord ministered and placed in a privileged position in the Kingdom. They were called blessed, and were given assurances and promises of a better life in the world to come. They are hard-pressed pensioners or single mothers pulling their hair out trying to make ends meet; they are not simply numbers in the latest government round of statistics. The reality of their plight becomes a very strong moral argument for lower taxation, and if any in the Party knew anything of Conservative philosophical foundations – which are and have always been acutely compassionate - they would arrive at the conclusion instinctively.

The government has a duty to taxpayers to ensure that their money is well spent, and the moral obligation is all the greater because this taxation is extracted through compulsion, on pain of imprisonment. And when billions of pounds are poured into black holes of bureaucracy, inefficiency and incompetence, it is a moral outrage. To take a worker’s hard-earned money through coercion demands that the level of public spending be good enough to fulfil the trust and good faith of the worker. The benefit to society of the tax must outweigh the pain of paying the tax. This is not an economic argument for a specific level of taxation, but a moral argument for limiting taxation. The limit should lie where the trust is fulfilled - where the value obtained for taxpayers from the money outweighs the harm done by the tax.

But this is not some attempt at a scientific Benthamite concept of psychological hedonism or utility analysis by which pleasure and pain may be measured to devise a new moral standard of behaviour. One cannot easily measure the pain inflicted by tax, or even the good that is contributed to society through public spending. It is rather an utterly unscientific appeal to a sense, a feeling, an intuition that the actions of government are useless or counter-productive, that public spending no longer justifies the pain of the levied taxation.

Over the past 9 years, council tax as soared, NHS spending has soared, spending on education has soared, and money has been poured into numerous government departments to very little discernible effect. People are not ‘happier’ than they were twenty years ago, and they are acutely aware that they are paying much higher taxes without experiencing any proportionate benefit. They now have this sense, this feeling, this intuition that the Utopia they were promised has failed to materialise, and that they are paying heavily for the government fraud committed against them.

The promise of lower taxes is therefore a necessity. It takes moral courage to take the tough decisions associated with the policy, but no-one wants more government, and very few actually want big government. So while Labour vilifies the greedy ‘fat cats’ of the private sector, Cranmer is more concerned by an obese government oblivious to its terminal condition. Government needs to be smaller, so it must slim down. One could resort to liposuction, but the self-discipline of a healthy diet will be more enduring. When it is slimmed, it will be fitter, leaner, and much healthier. Taxes can then fall, and people will feel better. Harm is limited, and the good proliferates. Growth increases, jobs are created, unemployment falls, and poverty will diminish.

What on earth is so difficult to understand about that?

10 Comments:

Anonymous Morus said...

Your Grace,

Although an avid fan of this weblog, I cannot but feel that this posting is a little silly by your uniquely high standards. When the mechanism of state politics is bereft of immanent moral purpose, then its decisions will always be based in the notion of utility bounded by rights. Tax is the best example of this.

Your own final defence of tax cuts, though it is denied, could come straight from Bentham - "Harm is limited, and the good proliferates". For those of us interested in moral an political philosophy, must we not accept that the facile era of accepting consequentialist ethics is over? I have no doubt of the economic efficacy of tax cuts, nor the courage that would be required to suggest them, but that, does not make the tax cuts thmselves a moral necessity.

The moral measure should not be the shallow utility of "what produces economic growth and happiness", but the telelogical understanding of virtue. With respect, I feel that the promotion of tax cuts is frequently (though not here) motivated by concern for selfish preservation, and supported by those who dislike the burden of wealth redistribution, irrespective of its justification. They care about their own accumulation of wealth more than mandated relief for those who need it. This is selfish, both in the description of them as economic actors and as moral actors.

So whilst I acknowledge the economic sense of tax cuts, the moral case (understanding the virtue of characters who support them) leads me to suggest that they should not seek this form of justification. The immorality of waste still applies, and the virtue of phlanthropy is acknowledged, but both can exist independent of tax regime. Low taxes are simply not a moral necessity.

Your respectful servant,

Morus

22 September 2007 at 12:27  
Blogger AethelBald, King of Wessex said...

Tax cuts is code for benefit cuts, right?

Here are some proposals:

1. Eliminate state pensions. Anyone who can work should work. Ligging off your, or others', children is immoral. If you cannot work then you will get a decent disability pension which will be effectively validated to your disability. Enforced age-based retirement to be illegal. You think you deserve an indefinite holiday at my expense? Then get over it.

2. No free housing. No free food. No work = no survive.

3. No more state education. Privatise it all. Those public sector teachers have a high proportion of instutionalised bums. I know, I was there, I was one.

4. Abundant free education. You want it, you got it. But once, only. Expelled = expelled for good.

5. Chop off our military hip-joint with the USA. It's hellish expensive and has done us precious little good. We need cyber defenses, internal architectures that make invasion unthinkable, and a geopolitical stance that is not driven by a belief in the send coming.

6. Abandon the imprisonment of non-violent criminals.

7. Ban Harriet Harman.

OK, it needs some work. But isn't that what tax cuts should really mean?

22 September 2007 at 12:48  
Anonymous Anonymous said...

From David Lonsdale

Your Grace is right in his assertion that taxation has a moral dimension. Income tax is the demanding of money with menaces. Some forms of taxation you will choose to make. Excise duty on cars, for example is a payment you make to an authority who, in return, will build roads on which you may drive your car.
The government have a moral obligation not to waste our hard-earned money. This government, devoid of a moral compass, spends our money buying the votes of government employees in marginal constituencies. They are no different from gangsters.
Income tax in the last financial year was 144 billion pounds. Quangos cost 130 billion, belonging to the EU cost 15 billion and John Prescott's office cost 9 billion. From that lot we should be able to save 144 billion. And if the Conservatives could not make a moral case for scrapping John Prescott's office then they are not worth voting for.

22 September 2007 at 16:39  
Anonymous 4micah said...

States cannot be compassionate because compassion is an attribute of free individuals. Is it compassionate or moral to take from a man his rightly earned property and give it to another, but not before diverting much of it away in a maze of bureaucracy? That's not compassion, that's compulsion. Technically, it's banditry because it's done through force of arms. I find it highly immoral.

It is impossible to ignore the fact that there are, and always will be, the poor and the sick. The question is who should take care of them? First, they have a responsibility to take care of themselves (Gen. 3:17-19). If this is insufficient, their immediate and extended families must help out (1 Tim. 5:8). If the family cannot rescue them, they should turn to the Church (Luke 18:22). If the Church's contribution still leaves them short, there are national charitable organizations they can appeal to.

At present, individuals, families, churches, and charitable organizations have very little to give to the poor and the sick because the government has taxed them up to the eyeballs. It is depriving the citizenry of the opportunity to be charitable because it leaves them no money to give.

The most just level of taxation is in the single digits (the sum of all levels of government, as a % of GDP). I will prove this when I have the time.

22 September 2007 at 17:05  
Blogger Man in a Shed said...

Tax cuts - yes your Grace.

The waste of government is immoral, the belief in micro management is arrogant, and the sapping of men's own self reliance enslaves them.

Also, we might also win the next general election. Otherwise we will be left with McStalin and after he has changed the voting system and rigged the constitution there may never be another chance.

22 September 2007 at 20:17  
Blogger idle said...

This all makes sense to me.

I suggest you print it onto an A3 flyer and hand it to those attending the Blackpool Bellybutton-Inspection next month.

22 September 2007 at 21:24  
Anonymous Anonymous said...

I see no immorality in the principle of taxation. What is immoral is the taxation of wage-earners who are at the minimum wage level.
Incomes up to about £11,000 per annum should be tax-free.

Victor

23 September 2007 at 11:07  
Blogger AethelBald, King of Wessex said...

Victor said: Incomes up to about £11,000 per annum should be tax-free

And thus a substantial tax-and-spend minority in the electorate. People who do not have to pay tax are usually very much in favour of tax increases for the rest of us. See Public Choice Theory

25 September 2007 at 13:33  
Anonymous Anonymous said...

Scrap the council tax!
I mean what does my council tax pay for! A couple of lads having a laugh picking up two bags in front of my house once a week!

27 September 2007 at 10:23  
Anonymous Anonymous said...

What Maggie Means by Tax Cuts is Less EU Socialism.

1 October 2007 at 13:45  

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