Thursday, 22 December 2011

Charity vs Tax

It seems, at least amongst my friends, that ‘right-wing’ is a dirty word.  Right-wing views stand for backwardness, ignorance, oppression, greed, cynicism, contrasted against the progressive and caring Left.

There are obviously some very good reasons for this.  Right-wing politicians (as a movement, as opposed to in specific cases) want to reduce benefits for the poorest in society, while cutting taxes on those who have the money to pay them: the rich get richer and the poor get poorer, as caricature would have it.

But while this viewpoint is incredibly popular, I honestly believe it also overlooks a powerful idealism that drives those who hold Right-wing, small state economic views.  Idealism is more commonly a charge levelled at the Left in response to their rejection of market economics, but I want to argue that the opposite is true: a real idealist must surely hold right-wing views.  Let me elaborate.

For an opening premise, I would suggest that in a truly ideal world, there would be no police, because there would be no crime.  There would be no Ministry of Defence, because there would be no war.  There would be no welfare, not because there would necessarily be no poverty or disability to make it necessary, but because society would act to support those people without needing to resort to forcibly taxing every member of society to pay for it.

Obviously it does not need to be pointed out that we are not in this ideal world.  We do need police and armies because there is crime and war; we need welfare systems because without them we (probably rightly) believe those in need would be left helpless.  

It seems in contemporary British society, we have become fixated by the idea that it is the role of the State to provide for every eventuality of its citizens.  There are enormous benefits as a result of this which cannot be overlooked: Britain has become an immeasurably better country for the sick and the impoverished than it was 100 years ago.  Further, lest we forget, almost all of us will end up sick or impoverished at some point: this is not a case of a community of copers supporting a group of no-hopers, as some sections of the media would suggest.

But, for all its benefits, I would have to question this state-dependency.  My problem comes not on economic grounds (although many economists far more qualified than I would suggest that it is currently impossible to continue with the levels of spending we have experienced), but on shamelessly idealistic grounds.

It goes without saying that the fundamental root of this system is taxation.  Welfare programmes of all shapes and sizes depend on taxation in order to fund them.  This is justified by the fact that taxpayers are entitled to benefit from the societal benefits of government spending.  It sounds good, except for one problem: everyone seems to hate it.

Attention is regularly drawn to celebrities and businessmen who go to great lengths to avoid paying taxes: U2’s headline slot at Glastonbury last year saw protests that the group-members do not pay taxes in the Republic of Ireland.  This is often portrayed as simply the arrogance of the super-rich, refusing to contribute to the welfare of the society that supports them.  This is probably true in many cases, but what seems equally true in my experience is that similar tax avoidance takes place on every level of society.  Whether it’s the tradesman who offers a VAT-sized discount if you pay in cash or the ex-student who conveniently forgets to notify the local authority that he is now eligible for Council Tax, it seems clear that the reason it is only the rich who hire tax-avoidance companies is not their moral bankruptcy, but simply the fact that tax-avoidance companies cost a lot of money.

You might respond to this by arguing we need to tighten up our taxation system to stop these people escaping the net, and that is probably correct, but isn’t there a more profound problem when the very foundation of our economic system is something that seems deeply unpopular with large parts of society?

I would suggest that the reasons people try so hard to avoid paying taxes are not simply that it takes money out of their pocket, but that it takes money out of their pocket with no discernable benefit to anyone.  A national system can only ever be impersonal: you might be getting care in a government hospital, but there are so many stages between that and tax-paying that it is hard to see any real connection.  It would be interesting to see how many taxpayers it takes to cover the annual operation of the tax system.  

These are all problems, but is there an alternative?  After all, tax has been at the heart of economics since (at least) biblical tithing: is it not the case that someone has to pay for these vital services, and it is fairest that everyone pays?  I want to suggest an alternative.

Would you rather pay £10 of tax, or £10 to stop your local hospital closing down?  £10 of tax, or £10 to support a local library?  £10 of tax, or £10 towards rehabilitation for young offenders from disadvantaged backgrounds?  I would imagine most people would not say yes to all three of those suggestions, but that almost everyone would say yes to one of them.

It seems clear to me that people at every level of society would be more willing to give if they were giving to something specific that they cared about.  We are in the middle of a crisis over library closures; is this not something that the UK’s numerous wealthy authors (and wealthy readers) could subsidise themselves? 

There are three obvious flaws to this plan.  Firstly, while we might be able to raise the money to cover healthcare or education or libraries, the number of contributors towards sewage or prisons or national debt would probably be lower.  This, I would suggest, is not really a problem at all: we would still need taxes to cover these services, but they would be significantly lower than current levels.

Secondly, and more seriously, there is the issue of ‘fairness’.  It would not be fair that the charitable members of society would be subsidising the selfish; those who funded a particular program would have a strong claim to dictate how that money was spent – imagine Richard Dawkins (or the Catholic Church, depending on your own views) buying control of the education system.

These are serious concerns, but I think they could be addressed.  To the first claim, that is surely not so different from the unfairness of the current system, where those who work hard subsidise those who do not, and the richest can buy their way out in any case.  You might think that the ability to opt-out of giving would destabilise society and pull people apart, but I would hope for the opposite: the current resentment of the super-rich would surely be reduced if a billionaire banker was responsible for a new Cancer ward at your hospital.  If a few members of society chose not to give and yet we could still carry on fine, I would suggest that they would be the one’s that lost out.

To the equally significant problem of new stakeholders in services that ought to be balanced and non-partisan, this could surely be managed.  On the one hand we could insist that certain things were not tampered with.  If donors to the education system were told they could not influence the curriculum then it might dissuade some from giving, but you would hope that enough people supported the principle of non-partisan education to make up the difference.  Equally in many areas the input of donors could actually be useful: if successful businessmen felt more involved in projects because of direct financial connection then they might be able to share their expertise, and help services run more effectively.

There is, however, a still deeper problem with my idea: would it work?  Cynics (and unfortunately probably realists too) would fear that private donors would not step in to fill the public shortfall; either nothing would change or public services would crumble.  Perhaps those who dodge taxes would relish a system where they didn’t even need to dodge, and human selfishness would ensure that this audacious idea would be dead in the water.  Even an optimist would acknowledge it would take years to change our national culture from tax-payers to willing givers, and that those years might see an unbearable cost in the meantime.

Nonetheless, I would still hold that such a system would benefit all taxpayers by reducing the impersonal burden they all pay, would benefit services by bringing in stakeholders who passionately care about their work, and would benefit society by bringing us closer together.  If the only way we can support the neediest members of society is by impersonally docking x% from everyone’s wages, then human nature is worse than I ever imagined.

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