Have you got that? 6%! Yes 6 piddling percent. So...why on earth would the 94%, i.e the rest of us, want to pay for tax cuts for the wealthiest 6%? And we all know that we would have to pay for it, the Tory figures don't add up. They have over-estimated the numbers and the ability of the majority of non-domiciled people to pay their 25k charge. The non-domiciled are also very hard to tax, so there would be few who would pay it, they would more than likely disappear abroad and take their wealth and skills and use it to build up another economy. This would leave billions for the Tories to find from cutting the NHS and education etc. All for the sake of the richest 6% of estates that have more than likely come from the richest 6% of earners who 'earn' over 50k a year. And who relies on the NHS and state education system? Well you can bet the least likely to be bothered about cuts to the NHS and education are those liable for inheritance tax.
The average earnings are 21k and the average earners already pay a...
bigger slice of their earnings in tax. I could understand support for tax cuts for the average earners but not the top SIX PERCENT of earners. What is going on? How have the Tory press managed to persuade us this is such a good thing?
I have heard all sorts of ridiculous statements like 'it is immoral to tax the dead', 'it is immoral to tax somebody twice'. If you want to talk about immoral taxes, talk about the Tory invented council tax, that takes no account of people's ability to pay and as an almost flat rate tax is one of the most regressive, taking an increasing slice of the lowest earners pay. Or what about VAT, that Thatcher/Major favourite that they more than doubled when in office. VAT hits those on the lowest incomes and is most definitely a tax on already taxed income.
In comparison to these, the inheritance tax - a tax that hits the richest group that pay the least in tax, is a very moral tax. And what could be more moral and meritocratic than taxing unearned income? Why should people get massive unearned hand outs tax free? How does that encourage them to work hard?
I have got to hand it to the Tory press, they can make people believe anything.
I have heard all sorts of ridiculous statements like 'it is immoral to tax the dead', 'it is immoral to tax somebody twice'. If you want to talk about immoral taxes, talk about the Tory invented council tax, that takes no account of people's ability to pay and as an almost flat rate tax is one of the most regressive, taking an increasing slice of the lowest earners pay. Or what about VAT, that Thatcher/Major favourite that they more than doubled when in office. VAT hits those on the lowest incomes and is most definitely a tax on already taxed income.
In comparison to these, the inheritance tax - a tax that hits the richest group that pay the least in tax, is a very moral tax. And what could be more moral and meritocratic than taxing unearned income? Why should people get massive unearned hand outs tax free? How does that encourage them to work hard?
I have got to hand it to the Tory press, they can make people believe anything.
Amazing Neil, a post of yours that I find myself in complete agreement with. You are correct that the 'taxing people twice' argument doesn't hold water, for what else are Council Tax and VAT but taxes upon already taxed income. However don't expect a progressive attitude to be taken by the Labour party on this matter. It continues the Tory tradition of using the tax system to facilitate wealth redistribution from the poorest to the richest, and is desperate to appease the middle classes. If Brown does decide to call an election then I would not be surprised if the manifesto includes plans to cut inheritance tax plus less publicised measures to receover the revenue through regressive taxation.
ReplyDeleteThe only part of the Tory case that does make sense is the claim that this tax mostly affects the moderately well-to-do middle classes rather than the super-rich, who will already have invested in the legal advice to avoid its effects. Which would prompt the obvious policy. Start using the law to show the super-rich that paying tax is not an optional extra that you can opt out of.
Stephen: Completely agree with you.
ReplyDeleteNeil:
ReplyDeleteYour '6%' number is a true, but misleading. Most people are married, and don't pay IHT on the death of the first of the couple. It would perhaps be more accurate to say that 10-12% of families will pay IHT. Still a minority, of course, but not quite so small.
Here's my problem with IHT: I don't see myself as a financial individual. I have a wife and children, and everything we own is ours. My salary is not "mine", it belongs to the family. We don't let our kids make big financial decisions, but that's because they are children, not because they don't have a stake in our financial wellbeing.
The spousal exemption for IHT recognises that husbands and wives do not (generally) draw arbitrary lines between "his" money and "her" money, but the law forces me to draw lines between my money and my children's money. For our family to face a large one-off tax bill because I happen to die is not ideal.
If you think you need a tax in order to reduce the effects of dynastic wealth (which is certainly arguable, although the children of the rich are usually quite good at letting money sip between their fingers without any help from the taxman), a wealth tax does just as well as an inheritance tax, but suffers from none of the problems with IHT (you don't get the very real hardships imposed on a minority of middle-class families when they suddenly face a big tax bill and having to sell the family home because Mum died, and there's no point in trying to give your wealth away to avoid paying the tax - the wealth gets taxed whoever owns it)
Anon: You say face a 'big tax bill'. The average house price in the North is £210,000 which is of course would incur ZERO inheritance tax because it is well below the £300,000 limit. Even in London the average of £354,000 would incur only £21,000 bill or just 6% of the total. Also remember that the limit will be raised to £350,000 in 2 years time.
ReplyDeletePlus remember this is money that someone is aquiring. There is no hardship involved in receiving assets of £354,000 and having to pay a £21,000 tax bill. The person is £333,000 BETTER OFF. I think IHT is clearly the MOST moral of all the taxes.
Neil,
ReplyDeleteWhile I agree with what you say, I think it would give a clearer picture if you considered the married couples allowance too. I thought that was a good move by the Tories.
And why did your man Brown back out of the early election? Who did the better speech this week? :-)
Keep up the good blogs.
Greg
When this government are able to control the money they spend they can tell us that any tax cuts are affordable - but when every capital project they have begun has ballooned out of control and when they are spending £600,000,000,000 a year (that's an astonishing £10,000 per person btw) I'm certain that it'll be easier to find £3.5 billion cuts. The real fault of the tories is there insistence that they will continue to meet labour's spending plans. Because labour are spending too much, too quickly and borrowing to pay for it.
ReplyDeletePlus remember this is money that someone is aquiring. There is no hardship involved in receiving assets of £354,000 and having to pay a £21,000 tax bill. The person is £333,000 BETTER OFF. I think IHT is clearly the MOST moral of all the taxes.
ReplyDeleteBut that's my point - it's not money that is being acquired. It's money that the family already has.
No one seems to consider either that the money has been taxed before the person's death.
ReplyDeleteIf I earn money and save from it, the savings have been taxed.
So if that is then inherited by MY children, I've paid tax, and at this level I've probably paid 40% tax.
It's a punitive tax based on envy. Why they never seem to consider flat taxes is beyond me - everyone pays the same percentage and we don't need an army of bureaucrats to administer the system.
Shug: Council Tax and VAT are taxes on taxed income (and far worse because they disproportionately hit the poor). IHT only hits the rich (only 6% of estates). As for govt expenditure - we spend less per capita than most EU countries. While I agree we need to do something about govt efficiency or lack of it (and the Tories record is worse than Labours), we also need to put the same into health, education, public transport ans other infrastructure as France or Germany, or even Sweden.
ReplyDeleteThere's nothing wrong in principle with including a wealth element in your tax base - we can argue about how much cash the government ought to be raking in, but that argument is orthogonal to the discussion of how to most equitably raise whatever amount of money we decide is the necessary amount.
ReplyDeleteIf one man earns, say, 20,000 quid a year and has almost no savings, and his neighbour has the same job, same salary, but sleeps on a bed constructed from gold bullion, it's not unreasonable to expect the neighbour to pay a little more than the man with no savings.
An IHT is a bad wealth tax - the "super-rich" can usually minimise the amount they pay - if nothing else, anything they give to their kids more that 7 years before they die is exempt - whereas the middle classes can't (they need to keep their cash in case they need to pay for nursing care or whatever). It's (can be) a relatively large bill, and turns up just as a well-loved relative dies. A bit ghoulish?
Replace it with, say, a 0.5% annual wealth tax, and you'll raise probably a bit more money, and the loopholes almost automatically close.
OK Neil. But why is the answer always more money at the system?
ReplyDeleteI'm not that knowledgeable about the other EU countries systems for health provision, but here's a wee thought.
If I earned the 'average' wage in the UK, my take home pay would be about £1400 a month.
Of that we could say (generously) £450 on a mortgage, £100 Council Tax, £10 BBC tax, £250 food, £180 small car and petrol, £50 phones and internet, £50 fuel.
So I am out working 37 hours of the week to be left with about £80 a week to spend on anything else I need - lunch at my work is going to eat a tenner at least.
So I pay my taxes, I'm a good citizen. I need to pay for any medication I get if I fall ill, my dental care and opticians charge me.
What am I paying tax for? Where does it go? We can fund the NHS all you like, (personally I think it's overfunded and performs services it was never intended to) but the bottom line is I can't afford to do any more than they get already.
This government are totally inept, and it's people earning £18000 - £28000 a year who are suffering the most - not 'middle' England, not the disabled, not the rich. The ordinary people who cannot take any more, we're disillusioned and telling us the tories are crap is not helping us at all.
We need to see a benefit for the money they take now, if they take much more we'll end up losing our homes - and then we'll become a burden on the state.
Before ANY more money is thrown at the problems I want to see a coherent, structured spending plan that is affordable and fair.
But pretending that a tax which, even on your 6% argument affects 25,000 FAMILIES a year is needed to pay for schools n ospitals is a disgrace.
This government have totally failed to make things any better for the average taxpayer in this country. That will be what kills it.
Shug: In the US, someone on £1400 a month would have to pay similar taxes to us PLUS another £200-300 a month for health insurance that is unreliable, they may get quicker better service in some healthcare as a result but at least the NHS doesn't regularly turn sick people away like health insurance in the US does with it limits and clauses.
ReplyDeleteWhen people talk about the US being cheaper - it is the food and land prices that make the difference - this has nothing to do with their government - which is awful - much more inefficient than ours. Food, consumer goods and land is cheaper in the US because they live in a country with an agricultural surplus, massive economies of scale from a large internal market, huge resources in raw materials and much much more land per head of population.
Neil - for once I'm in agreement. I've been saying for ages to anyone who'll listen that this IHT thing is a real red herring. It's one of the facets of this glorious nation of ours I like least that people will believe all sorts of rot. It used to depress me when poor and disposesed (sp?) people kept voting for Thatcher even though she kept looking after the rich and royally shafting the rest of us. it depresses me in the widespread support for capital punishment and DNA databases and ID cards, however, I fully expect to see Gordon stealing the IHT policy in modified form.
ReplyDelete"The real fault of the tories is there insistence that they will continue to meet labour's spending plans. Because labour are spending too much, too quickly and borrowing to pay for it."
ReplyDeleteExactamundo. Spending has increased by £200 billion since 2001/2.
Ian: I just don't accept that this is a high spending government. Like I say, people in the US on the average wage, pay similar taxes to us for far poorer services. In similarly developed countries in the EU they have higher taxes (and better public services as a result). Even historically, 40% of GDP in tax is less than what we paid in the 50s, 60s, 70s and even the Thatcher 80s. It is also only marginally higher than 1997 (38%). In the recent post-war past it has been as high as 48% of GDP!
ReplyDeleteWhat is more important for me is who is paying the tax and since the the 18 years of Toryism the burden has moved heavily onto the lower paid. The Tories cut income tax (particularly the higher rate) and increased taxes that hit the poorest (VAT doubled, council tax/poll tax and restructured income tax). The Tories also spent more on services the upper middle class care about (defence) and cut services for the poorest (health, education, public transport etc).
The way out of this is to make council tax more progressive (by widening the banding), and introduce a citizen's income (non means tested universal benefit that covers all basic costs). It certainly isn't to cut inheritance tax, one of the most progressive taxes. At least this election talk has got the Tories to show their true colours. The difficult task for Labour now is to defend taxes like inheritance tax in the face of the relenting pressure from the Tory press distorting public opinion.
Like I say, people in the US on the average wage, pay similar taxes to us for far poorer services.
ReplyDeleteThe average wage is about 20,000 quid. Someone earning that in the UK will pay GBP 2,983 in income tax per year, plus GBP 1,731 National Insurance, giving a total of GBP 4,714 tax, or 23.5% of his gross income.
There are two dollars to the pound at the moment, so we'll compare him to a $40,000 earning man in the US.
If he's single, he'll pay $4439 in federal income tax, and $3060 in FICA and medicare taxes, for a total of $7499, or 18.7% of his gross income. He'll also pay probably another 3%, give or take, in state income taxes [varies state-to-state, some states have flat taxes and some have progressive taxes. Some don't have income taxes]. That brings his total to 21.7% of income, which is only a couple of percentage points lower than his UK counterpart.
However, when Mr. UK spends his money, he'll pay 17.5% VAT on most things, whereas Mr. US will pay more like 7% sales tax. (There is no federal sales tax. Some states don't have a sales tax. In some places you will pay sales tax to the state, the county and the city.). Mr. Average Wage probably spends about half his income on things that attract sales tax / VAT, so that puts Mr. UK's tax bill another 5% ahead.
Single Mr. $40K probably doesn't own a house, so he doesn't pay property tax. Mr. GBP 20K probably shares a flat in council tax band B with a friend, which might cost him another 500 quid a year in council tax. (That's another 2.5%).
So far, I have Mr. UK average paying getting on for half as much tax again than his opposite in the US (an extra 10 percentage points).
Some of my estimates might be slightly off, and whilst I tried to use 2006 tax tables everywhere, some 2007 numbers might have snuck in.
I don't think this can support your assertion that the average earner pays the same amount of tax in both US and UK.
It's probably also fair to say that the US provides a better military service to its citizens than the UK does. You may, of course, not consider this an advantage.
(Yes, this comparison is only for a single average earner. Running the comparison again for couples and families with children is certainly possible, but more complicated. I don't intend to do it by hand.)
Sam: You are being incredibly selective. According to Wikipedia, the average US sale tax is around 8.5% (not 7% as you claim) and it is as high as 16.75% in some states. You also put state income tax at 3% but in a lot of states it is over 9%. Also excluding property taxes for the US but not the UK is hardly fair. You also conveniently ignore couples with children that do far better in the UK due to tax credits. Add all these differences up and you easily make up the 10% difference you claim. Like I say, the US and UK tax figures for average earners are roughly similar BUT crucially the US citizen gets no NHS for their tax (they have to pay an extra £200-£300 a month for health insurance that fails them when they most need it and most average earners cannot afford this anyway), and as the Michael Moore film shows - US citizens are crying out for an NHS.
ReplyDeleteSam: You are being incredibly selective. According to Wikipedia, the average US sale tax is around 8.5% (not 7% as you claim) and it is as high as 16.75% in some states.
ReplyDeleteHere are the state sales tax rates:
http://www.taxadmin.org/FTA/rate/sales.html
Cities tend to charge a small premium. For example, in the city of Chicago, you'll pay 9% (total), which is high. If Chicago raises its tax to 11%, as is proposed, it will be the highest-tax city in the US. Your 16% number is the total tax on a hotel room in San Antonio, Texas - that wouldn't be at all elective, I suppose?
You may also be interested in the total state tax take (income taxes, sales taxes, property taxes etc.):
http://www.taxadmin.org/fta/rate/06taxbur.html
You will see that in most states it's less than 10%. I really don't think it's me that's being selective here.
You also put state income tax at 3% but in a lot of states it is over 9%.
Here are the state income tax rates:
http://www.taxadmin.org/FTA/rate/ind_inc.html
The biggest number on that page is 9.3%, being the highest marginal rate of tax in the state of California.
I applied a 3% flat tax on our man's entire income, with no personal allowance. That gives a realistic estimate. If you'd care to redo the calculation for individual states, including all the state personal allowanced and/or state tax credits, please feel free. You need to do a bit more than just make up numbers, though.
Also excluding property taxes for the US but not the UK is hardly fair.
You have to draw the line somewhere, and I drew the line at taxes paid by the individual. It's also not fair to not include the effect of corporate taxes on the prices that people pay in the shops, but we've excluded those, too. For a US renter, property tax is just another one of his landlord's business expenses.
You also conveniently ignore couples with children that do far better in the UK due to tax credits. Add all these differences up and you easily make up the 10% difference you claim.
I "ignored" couples with children because they're harder to calculate. You're right - in the UK, Mr. 20K with a wife and children would be claiming Child Tax credit. In the US, he'd file joint taxes with his wife, claim a personal deduction for himself, his wife and each of his children, and a $1000 tax credit per child. He'd probably end up paying no federal income tax at all.
I don't have time now to do a proper calculation, but I don't think it would be anything like as similar as you think.
Like I say, the US and UK tax figures for average earners are roughly similar
You say that, Neil, but provide no evidence to back up your claim. My figures suggest that you're wrong. You are free to disagree - I made what I thought was a representative comparison, but with more work a better one could certainly be made - but you need to disagree with actual data, not just a couple of largely fictitious numbers and a repeated unsupported assertion.
BUT crucially the US citizen gets no NHS for their tax (they have to pay an extra £200-£300 a month for health insurance that fails them when they most need it and most average earners cannot afford this anyway), and as the Michael Moore film shows - US citizens are crying out for an NHS.
Yes, the US doesn't have an NHS, and so yes, our Mr. $40K will have to buy health insurance or pay for his healthcare out of pocket. I've got no idea whether your 2-3 hundred quid a month for a single man is realistic - it's a lot more than I pay, but my employer pays most of the cost. I also have no intention of defending the US health insurance system - it is by no means an ideal system, and not one that I would recommend for the UK.
However:
1. Your claim was that an average US and UK taxpayer paid the same amount of tax, but the US man got fewer benefits. You can't support the first part of your claim by waving the second part around. Yes, the US man doesn't get an NHS. I don't dispute that. I dispute your assertion that he pays the same amount of tax as Mr. UK.
2. Michael Moore is a talented polemicist, but he's hardly an unbiased observer. "Sicko" doesn't "show" anything. It's certainly true that some US citizens are crying out for an NHS. It's equally true that many others are crying "Hell, no". There isn't overwhelming support for anything.
Sam, I said that the UK and US worker on £1400 ($2800) a month pay similar taxes and I stand by that. I also said the average earner in both countries pay roughly similar taxes and I stand by that as well because handily wikipedia have done the federal/FICA tax for a $40k earner in the US and it seems your claims are incorrect. The tax they pay is not $7499 (18.7% of income) as you claim, but actually $9617.50 (24.04%). So Mr US is already paying 0.5% more tax than Mr UK even before we take account of US state income taxes!
ReplyDeleteI outline the rest of this calculation below, but before outlining this, it is good that you agree that the US citizen gets poorer public services and in particular suffers from having no NHS. The £200-£300 a month is realistic (I did provide a link)- the average for a single person is $4200 (£2100) a year , for a family of four it is $11,500 (£5750) a year - most of this of course would have to come from maybe the only full time earner in the family this would be nearly £500 a month. Ironically those on or below the average wage tend to get less cover for higher premiums than those that higher earners have to pay - a double whammy for them. Whatever minor difference in tax rates between a US and UK average earner it certainly wouldn't be anywhere near these extra healthcare costs that Mr US has to pay.
So onto the comparison.
Mr US paying $9617 (24%) ..so far
Mr UK paying £4717 ($9434) (23.5%)
Lets say Mr US is living in New York. He will also have to pay another $2343 in state income taxes.
This means Mr US is now paying $11960 (30%) compared to Mr UK paying $9434 (23.5%).
So before sales taxes and property taxes, Mr US is paying nearly 7 points HIGHER tax, not 5 points less as you claimed.
Yes sales taxes are lower in the US. But Mr UK does not have to pay VAT on food and some other items are zero and low rated whereas Mr US might have to pay sales tax on everything. So any savings are unlikely to make up this much difference. But if we allow a very generous 5 points gain for Mr US on sales taxes (as you suggested) that still leaves Mr UK paying 2 points LESS in tax.
As for property taxes they are roughly similar between the US and UK (In New Jersey more than 50% of homes have rates over $5352 (£2677 p.a). Council Tax (single person, band A-D) varies from £600 to £2000 per home in the UK. Admittedly property taxes do vary even more wildly in the US - but who wants to live in Louisiana?) So overall as I said, the US and UK average earner do pay similar taxes. I could do this calculation for someone on £1400 a month (£16800 p.a) and Mr UK would be even better off because allowances are more generous in the UK for lower earners.
If you want to also look at corporation taxes then once again we can see that UK rates can actually be lower - 28% compared to 35% in the US. The amount of tax Mr UK pays to Mr US may vary a few percent either way, but it would be splitting hairs to claim this as significant. There is certainly not a big difference.
I stand by that as well because handily wikipedia have done the federal/FICA tax for a $40k earner in the US and it seems your claims are incorrect.
ReplyDeleteThat calculation is wrong. It forgets to take the standard deduction that our Mr. $40K would claim. If you want to do the calculation yourself, I suggest you download form 1040-EZ and its instructions from www.irs.gov, rather than relying on something someone posted on wikipedia.
You then go on to put our man in New York, which has high taxes by US standards. If you're looking at US-average services from taxes, you need to look at US-average taxes, too. The figures you linked to were 2004 tax rates - if you redo the calculation for 2006, our $40,000 man will have $32,500 taxable income in NY, on which he will pay $1829 tax. You missed a trick, though - you could have made our man live in New York City, in which case he would pay another $1078 in city income tax.
Presumably someone that decides to live in a high-tax location gets more tax-provided services than someone who lives in a low-tax location. For example, big cities tend to have subsidised public transport, whereas suburban and rural areas don't. You would expect city taxes to be higher to pay for that. Presumably someone that chooses to live in such a location thinks the benefits are worth the extra tax.
In response to some of your other points:
1. I don't deny that US governments are inefficient - they are. I just don't think the UK is very much better. One of the reasons you will find me supporting a CBI is that it enables us to sack anyone who has anything to do with benefits, and reduce the scope for government meddling. (CBI has lots of other good features, which I think we agree on.)
2. Yes, the UK taxpayer gets the NHS, whereas the US taxpayer only provides Medicare and Medicaid. The UK taxpayer provides more heath services free at the point of use. I'm not sure that it follows that your blanket "US has poorer services" statement is true, though.
The US taxpayer, for example, buys more army than the UK taxpayer does. The US taxpayer is provided with a better military service. You might think that is a bad decision, and that enhanced military services aren't useful, of course.
Given the trend in the UK towards bi-weekly rubbish collections, I'd probably have to claim that the average US taxpayer is better served in that department, too.
The US has more prison places per head of population than the UK. Does that mean it provides a "better" service at locking up criminals? Maybe.
It is clear that the US has, on average, different priorities for government spending than the UK does. It is clear that US priorities tend to be less socialist than UK priorities, so it's clear that a socialist would prefer the UK's choices. I'm not sure that you can just drop the blanket statement "poorer services, so lower government efficiency" on the US, when what you really mean is "makes spending choices that don't align with Neil's politics".
3. One of the least attractive parts of US tax policy is the large number of little local taxes on small areas of commerce, generally introduced along the lines of "We need an extra few million dollars to pay for extra school teachers, so we'll introduce a 10 cent tax on a can of beans. (I don't think anywhere actually has a tax on beans, but the real taxes aren't much more sensible).
It's absurd - the question of how to equitably distribute the tax burden amongst the people is almost independent of the question of how big the tax burden should be. Silly little hypothecated taxes are the result of a government stitch-up between powerful special-interest groups: some big interest group wants more cash for its pet project, lots of people squeal loudly that they don't want to pay bigger property/income/sales taxes, and so the legislature hunts around for minority activities that don't have big enough defenders, and taxes them. It's very democratic, and obviously completely lacking in anything resembling justice or equity.
In the Land of Sam, you'd be allowed broad-based taxes to raise the revenue that you wanted (income, sales, land value and possibly wealth) and you'd be allowed Pigou taxes to internalise the external costs of eg. congestion, pollution, landfill etc., with the conditions:
a. These taxes aren't a revenue stream - the entire "sin" tax take will be returned to citizens alongside a CBI and/or as a reduction in tax rates. If you want to raise revenue, go raise one of the revenue taxes.
b. You have to do it right. If you want to introduce a tax on bottled water, to "pay" for the costs of rubbish pickup and landfill, you have to introduce the same tax on other bottled drinks, and you have to justify the size of your tax with a public calculation.
Oh, and we didn't compare the value of Mr. US's social security benefits and Mr. UK's state pension rights. I've got no idea of the sign of that comparison, although I probably should have. (And, of course, both systems are unfunded government "promises" that are subject to the future whims of the governments).
ReplyDeleteIncidentally, I think this discussion shows that "fair" tax comparisons are hard. Nevertheless, it's an interesting comparison to make. I'm almost inspired to try and do a better job, and see how it changes as a function of income, family etc.
One would, I think, naively expect that poor people were better off in the UK, and rich people were better off in the US. That's probably true. The shapes of the tax curves could be interesting, though. If I get a round tuit, I'll let you know.
Sam: Thanks for your detailed replies. Looking at the corrected figures you suggest, Mr UK av. and Mr US av. still seem to have similar taxes (give or take a point or two), am I wrong?
ReplyDeleteI think we both agree that low earners pay less tax in the UK and get better public services than they would in the US, which was the main point I wanted to make.
US taxes are probably lower overall (federal comparisons with our budget are misleading as it ignores state spending etc), but the burden falls heavier on the lower and average earners.
You are right that I do think that spending more on armed forces is of less value than spending it on state health or education. Also I think spending more on prison places is of little use if it doesn't reduce the crime rate. I believe prisons are universities of crime so no surprise I think the US is wasting money here as well.
But overall I think the lack of an NHS in the US is the clincher for me. They may have similar rubbish collection but looking at the filth in a lot of city streets in the US, this seems debatable. Most places in the UK still have weekly rubbish collections. Do they get weekly recycling collections in the US like we get here?
I agree completely with you about the need for a CBI, I too think individuals can (but some cannot so need help) spend money better than government in most areas (there are a few areas where I think collective spending works out better). If the CBI was set at a reasonable rate to cover basic living costs, I think most government could be scrapped.
I too get angry when our taxes are wasted and we hear stories about that auditor spending 27k on meals! But remember this stuff goes on whether Labour are in power or the Tories are, Thatcher appointed this guy for instance. There will always be waste in government but that doesn't mean that taxation is bad. When it comes to a CBI, I think a Labout government is more likely than a Tory one but we might have to wait a long time.
I think we both agree that low earners pay less tax in the UK and get better public services than they would in the US, which was the main point I wanted to make.
ReplyDeleteThe UK certainly has a more generous system of benefits than the US, particularly for, for example, the single mother so beloved of the tabloids. "Low earners" is a somewhat fuzzy category - it's certainly believable that "low earners" are better off in the UK, but I'm not prepared to assert it as truth without going away and doing some calculations.
The part about who pays how much tax is fact - we can go away and calculate it. The question of whether public services are "better" in place A or place B is rather more of a value judgment. That isn't to say that it's impossible, but at some point we are going to have to try to compare the value of, say, a police force and a health service, and that's quite hard to do. It's clear that having the NHS (or something functionally similar) is important to you, but it doesn't automatically follow that it has the same importance to everyone.
Mr UK av. and Mr US av. still seem to have similar taxes (give or take a point or two), am I wrong?
That wasn't Mr. US average - that was Mr. New York, who pays rather higher than average taxes.
Do they get weekly recycling collections in the US like we get here?
That would depend on the city, but certainly I get a weekly recycling collection (blue plastic box, anything recyclable goes in it).
But remember this stuff goes on whether Labour are in power or the Tories are, Thatcher appointed this guy for instance.
Yes - I don't think the politics of the government has an affect on how efficient Sir Humphrey is.
There will always be waste in government but that doesn't mean that taxation is bad.
If government is less efficient at doing something than just leaving people to do it for themselves, it certainly does mean that that particular government spending is bad.
The government shouldn't do things because it can. It should only do things because it has to.
[Of course, one would traditionally expect a Labour government to be more generous than a Tory one in the handouts to the poor'n'starving department. Whether you view those handouts as a good thing, or as government waste will depend on your politics.]
When it comes to a CBI, I think a Labour government is more likely than a Tory one but we might have to wait a long time.
I don't think either is very likely. The Labour party is dominated by people that make special pleading for their particular interest group. These people would be reluctant to give up the control that they like to have over the myriad of extant benefits, which you just can't do with a sensible CBI scheme. The Tories are too hung up on the idea of only wanting to give money to the "deserving poor" and not fund layabouts to watch Trisha in their pants to buy into a CBI.