Tax, have I got this wrong? - my bid for total unpopularity

'The people in the big house should pay more for us who don't have a big house'.

'Even though their risk-taking and endeavour means that we have jobs'.

'the bastards'.

I do of course realise that what I'm about to advocate will be massively unpopular - 'massively' is something of an understatement and an overstatement given my level of following, but you know what I mean.

So tax is about people who earn money making a contribution to those who don't to help them to live, to get by, until they can work and earn money for themselves? Along the way some of those contributions go to pay for the dignity and welfare of those who cannot work for whatever reason - disability or age usually.

And that's how it should be. It is partly about the generosity of the 'haves' but it's more about their own self-interest of course. But that is not incompatible with the needs of others.

Tax is about raising revenue from those who can afford it, to pay for the things they don't want to be arsed with themselves - or can't do themselves. Policing, healthcare, border control, military exploits. In basic terms it's like paying for a cook to cook. You need to eat, but you're no longer a hunter gatherer, you have harnessed the crops, developed a means of income from selling your surplus, and can now pay others to handle that stuff for you. Because your time is better spent (more valuably spent) raising your crops than cooking the food. It's about 'time' - if you earn more money working than cooking, and it therefore pays you to employ a cook to save your 'earning time' then it makes sense.

If you're lucky you make enough money to provide an education for your kids, and generously offer that same educational opportunity to the kids of your employees. You might be lucky enough to help to provide healthcare for your family and your workers and their dependents. You might even get to the position where you can tell the King that you will provide money instead of valuable people for his (often stupid) campaigns foreign or domestic. It's all for the common good isn't it?

And it's based on the generosity of the wealthy, caring for others but realistically, defending their own interests. It was ever thus. Defending their own interests meant keeping good people in place rather than going off to fight foreign wars, but it also meant providing employment to local people so that they could raise their families and provide opportunity for their offspring. But this only happened because it was in the interests of the employer, not really for any philanthropic reasons.

Now obviously the cards are stacked. The have's are massively more likely to succeed than the plebs. But if you wipe out the 'haves' you don't have any jobs for the plebs. It's a dilemma.

So fast forward to now.   

Let's assume that we agree as a society that we (earners) should pay say 20% in tax to help the worse off. Obviously so long as that level means that we can meet the needs of the worst off in terms of them having somewhere to live and enough food to live on. I know that this is a bit fundamental, but bear with me: It also requires that the family in the big house can afford to pay for this.

So the man, or woman (so as not to become Life-of-Brian-esque here I'll use 'man', but it's obviously interchangeable), who earns £10 pays £2 towards 'welfare'. (let's call it that for simplicity).

And the man who earns £100 pays £20. That seems fair to me. You?

And then the man who earns £1,000 pays £200. And if he's lucky enough to earn £10,000 he pays £2,000.

£100,000 pays £20,000, and so on.

So why, in our society, do we have the guy earning £100,000 paying 40% or £40,000? How did that happen? Either 20% is enough or it's not. Does the higher earner pay more 'because he can'? Why should he?

Isn't that discriminating against success? If the guy who earns £100,000 and employs lots of people who earn £10,000, (and has taken the risk in order to do so) and who pay their taxes, why is he penalised?

Socialism. That's why. Envy. That's why. 'Entitlement', that's why.

You see the thing is that we don't work out what we need to run the government, defence, policing, health, education and welfare state and then divide that by the amount of income people earn and then raise taxes accordingly, sharing the 'pain' fairly across all earners. Oh no. That would be just too simplistic. What we do is we create a 'public sector' that then tries to get as much money as it can out of the wealth creators and workers, not only to cover its costs, but to pay for as much other stuff as possible. Whether we need it or not.

And part of that process is to pay people in that public sector in terms of salary and pensions, way above what they really deserve. These people do not create wealth they just administer the money in the way that they see fit. Often this comes in the form of gold plated pensions for themselves and 'legacy' projects that are at best dubious in their value.

So we end up paying managers large salaries, whilst the nurses who deliver the service (the product if you will) are paid peanuts.

And then, and then. We decide that people who earn more money should pay a higher percentage of what they earn than everyone else. So the person who is lucky, skillful, hard-working enough to earn say £100,000 and is already therefore paying ten times as much as the worker who earns £10,000, should actually pay 40% of his earnings to the state instead of the previously agreed 20%. Why is that? On what planet is that fair and equitable?

Isn't it penalising endeavour? Effort? Risk-taking? Creating employment for others?

Wouldn't it be better just to work out what was needed to run the government and then divide that by the income of the workers? That way the more that the top earners earned, the less the lower earners would need to contribute.

It would be a naturally fair system.

And it would naturally stop high earners being criticised for not paying enough, when actually they're paying more than they should be, for a reason that they seem to accept, but which makes no sense.

There are studies that suggest that a flat tax (of around 30%) would actually generate much more income for government than is currently the case, and that would be much fairer.

The current 40% or even 50% for higher earners makes no sense to me. We're over complicating the whole issue. My guess is that this is because it creates jobs in the tax office (HMRC) and elsewhere, but jobs that don't really need to exist. It is also a political issue, where different parties can claim to be being hard on high earners and, therefore, sympathetic to low earners.

But that's bullshit isn't it? If running the government is based on paying a percentage of one's income in order to fund an agreed, and finite, central government budget?

We're increasingly mad.

Go figure.

Thanks for reading.