Sunday, September 09, 2012

Eat the Rich (whatever that means)

Our politicians are frequently heard to say we must tax "the rich" more. They must "pay their fair share" they say. "Those who earn more must pay more" is their constant mantra.

Of course those who earn more do pay more. In a system where tax is calculated as a percentage of your income, those who earn more always pay more. In a system where the more you earn, the higher the percentage of your income you pay in tax, not only do those who earn more pay more - they pay increasingly more. It's not difficult to find statistics illustrating how much more of the overall tax-take is paid by higher earners.

Those who earn more tend to take less as well. They are unlikely to require welfare payments or other state benefits.  They may educate their children privately, they may pay for private healthcare, they will probably put money aside for their retirement. So not only do they pay more in taxes but they tend to expect less in return for those taxes. Some might argue they should actually get a discount.

"The rich" that our politicians talk about is deliberately a very nebulous term and has different meanings to different people. To many people a rich person is simply someone who has more money then them. It's that imprecise and subjective and this is what politicians rely on - they talk about "the rich" without quantifying who "the rich" are because very few people actually think they are rich. Most people think the country is full of people richer than they are with the consequence that most people think politicians are talking about somebody else when they talk about "the rich".

I suspect a lot of people who do not consider themselves rich (who does?) are going to get a surprise when they discover where politicians draw the line. Whilst politicians' rhetoric may imply their  definition of "the rich"  is bankers quaffing champagne on their yacht moored at Monaco, what it actually means is a swathe of above average earners whose wealth is very easily quantified. These people are soft targets. Easily found and easily taxed. What politicians' pursuit of "the rich" will not easily entrap however is the people whose wealth is much more difficult to assess and who have spent a lifetime studying how to obfuscate and hide their assets and barely pay any tax anyway.

Finding those people is extremely difficult and getting money out of them if you do find them usually costs more than it is worth. Every high profile multi-millionaire tax evader that is caught will have occupied the time of dozens of people for months, possibly years. If they have to be taken through the legal system then whatever return you hope to get at the end will certainly be lost. Our current difficulties are not going to be solved by finding these people however evil you may think they are. It's simply not cost effective whatever politicians might want you to think. The bar will have to be set considerably lower than that and cover a much broader group of people.

The eternally disillusioned electorate of France are quickly realising that electing a president who declared "I don't like the rich" might sound like a good idea but it has already become clear he has little else to offer other than a resentment of people who have got more in their back pocket than him. Governments the world over have found themselves engulfed in a mountain of debt and few, if any, have come up with a credible way of getting out of that debt.

This is not a defence of "the rich" - other people having more money than me does not consume me with rage in the way it seems to affect some people. Not being in debt to anyone keeps me happy on a fiscal level. I accept in our society that some people will have more than others and that inequalities will always exist. Some people get rich though inheritance, privilege or connections - c'est la vie. The rest do not instinctively aspire to richness but simply hope to achieve security through their hard work but if they achieve too much are then often villified by politicians for doing so.

Political rhetoric then determines it must address those inequalities. Politicians seem to want to encourage people to improve their lot in life through their hard work and industriousness but then seek to attack those same people if they rise too high. I can think of nothing more crushing that the thought that however hard you try to improve your position  that a government might decide its role is to level everybody off again by whatever means they think fit. That's been proven to be a busted philosophy.  

Politicians the world over desperately try to find terminology that they hope everyone will relate to whilst also hoping nobody notices how meaningless it is. They also realise that as long as they do not qualify who "the rich" are they are in no danger of alienating the people they might actually be talking about.


Nota Bene said...

Ah now I read this and nearly broke my neck nodding in agreement...

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