Taxes are a cost, not a benefit

Yes, he goes a bit awry here:

A culture where taxes seem to be “a bad thing” has been allowed to develop within the political parties of the UK, best exemplified by the fear of increasing the rate of income tax even when fiscal and social policy might require it.   In this environment politicians implicitly endorse a strained relationship between HM Revenue and Customs and taxpayers in the United Kingdom, where a culture of tax non–payment is apparently endorsed by describing tax as a cause of social harm e.g. in restricting growth, undermining enterprise, acting as a disincentive to work, and to harming a culture of saving.  This culture, and this representation of tax, is wrong. Tax is the bedrock on which we have built Western democratic states and mixed economy capitalism, where the interaction of a strong state supporting private enterprise through the protection of property rights in a regulated market space in which people can trade with confidence, knowing that a safety net has been provided by the state  so that if markets, services, or personal circumstances fail  the consequences will be mitigated has given rise to an environment in which prosperity of a previously unknown level has been enjoyed.

Let\’s take this seriously for a moment (so no cavils about how having to chip in for Ed Miliband\’s salary is a benefit we can do without).

We do indeed get benefits from public spending. One can argue about how much benefit from any one piece of it, from the huge benefits of the State being the only people allowed an army or the power to imprison in the criminal justice system, all the way through to the debatable marginal contribution of the last diversity advisor.

But these are indeed benefits.

The other side of that coin is of course that we\’ve got to pay for that public spending. That\’s the tax part: and tax is not, as implied above, itself a benefit. It\’s a cost*. We might have to pay this cost in order to gain that benefit, but then that\’s true of just about everything in this life. Being pleasant to one\’s shag, buying a box of chocolates occassionally, is a cost of getting shagged, just as getting shagged is itself the benefit of those costs.

And yes, we are greedy little shaved apes and yes, we do want the most benefits for the least costs. So we want to have the most and most efficient public spending we can get for the cost we\’re prepared to pay in tax.

\”describing tax as a cause of social harm e.g. in restricting growth, undermining enterprise, acting as a disincentive to work, and to harming a culture of saving. \”

Tax does indeed do all of these things and we\’d like to reduce these costs as much as we can. It is absolutely true that at least some of what we buy, the benefits, with tax revenues is vastly greater than the cost of having to pay those taxes. But taxes are still a cost and have to be considered as such.

Arguing that taxes themselves are a benefit is, well, it would be as strange as an accountant confusing debits and credits, wouldn\’t it?

*This becomes more complicated when we look at certain taxes, say certain Pigou taxes, which we could rightly describe as a benefit.

7 thoughts on “Taxes are a cost, not a benefit”

  1. “well, it would be as strange as an accountant confusing debits and credits, wouldn’t it?”

    Or “deficit” and “debt”

    Or “capital” and “flow”

    Or “million” and “billion”

  2. even when fiscal and social policy might require it

    Obviously I am one of the unspeakable b’stards who thinks taxes are a bad thing (or at least a necessary evil). That being said, while I can just about imagine scenarios where tax increases are necessary from a fiscal point of view, under what set of logic does social policy have a say on taxation?

  3. “This becomes more complicated when we look at certain taxes, say certain Pigou taxes, which we could rightly describe as a benefit.”

    Really? The taxes are still a cost except their effect might be more directly beneficial rather than going round the houses to pay for a benefit. Even so the benefit of a Pigou tax (eg on CO2 per Stern) might only be positive if you agree that the outcome of the imposition of the tax is, in fact, beneficial or even necessary.

  4. under what set of logic does social policy have a say on taxation

    I guess things like paying tax to prosecute child abusers, trying to buy social peace in Northern Ireland, kicking the Argentinians out of the Falkland Islands, diplomatic gifts to other countries’ heads of state, etc.

  5. Hmmm, seems to be a more fundamental flaw in the logic here than whether taxes are a benefit or a cost.

    The argument seems to boil down to:

    We are rich.
    We have government
    Therefore government must have made us rich…?
    Lets get more Government.
    Pay more tax !

    Whether the guy thinks government has made us rich because it is clearly so much better at spending money, or believes that we must be bad at spending money since government has managed to make us all so rich I haven’t worked out yet. Not convinced it matters, tbh, just a morbid curiosity.

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