From: Jurriaan Bendien (andromeda246@HETNET.NL)
Date: Wed May 19 2004 - 15:54:46 EDT
On Laffer, what I had to read as student was: Gardner, Martin, "The Laffer curve and other laughs in current economics", Scientific American, December, 1981. In addition, Edward Nell is sharp on these issues: Nell. Edward J.(ed.): _Free Market Conservatism, Allen and Unwin, 1984. As regards taxation policy, the main criteria are usually: - practical ability to collect a tax - cost of tax collection - efficiency and effectiveness of tax collection - actual ability of the population to pay tax, and their self-interest - economic effect of the magnitude and distribution of the tax burden - fairness and justice in de taxation system as a whole - collective interest in the collection and expenditure of tax funds Both income taxes and consumption taxes (or indirect taxes) can be progressive or regressive, since the tax rate on consumption can be varied according to the type of goods and services bought. A universal sales tax is normally a heavier burden on the working class, simply because they have a smaller income and budget. But you can tax sales of expensive durables and assets at a different rate. Marx's objection to a a VAT-type tax was that (1) it glossed over differences in social class position and (2) separated tax collection from the control over the spending of tax funds, i.e. taxes would be no longer earmarked for a specific purpose, administered by a specific authority and under control of taxpayers who give a specific mandate for expenditure of specific tax funds. The second point is probably more politically significant these days than the first, namely money gets spent for things that taxpayers gave no mandate for, and have no control over. On the one side, taxpayers nowadays have less control over how their taxes are spent, than if they buy stocks & shares (and they can sell off their stocks to recoup at least part of their money). That is the neoliberal criticism; they should buy stocks, not pay taxes. On the other side, accountability in the public service is usually much greater, since there can be much fewer "business secrets" than in corporations, and public servants are governed in their actions by legal rules and obligations to report to a public which has a legal right to access to government information. Taxation was one of the key sources of controversy in the bourgeois revolutions in Europe, and one of the cornerstones of the "social contract" whereby the government accepted certain obligations to citizens and secured citizen's rights. Quite simply, taxes were necessary to implement obligations and rights. Hence the saying, "one thing is certain, death and taxes", because civil society requires some kind of social contract, and to fund that social contract requires taxes. Anwar Shaikh is correct to say that US workers in total got from government more or less exactly what they paid in, so there was no real "social wage" in that sense, in the sense of an additional pay-out from government. But nevertheless social security funds were redistributed among workers; those who had accidents, had no job, etc. could claim a benefit for which other workers helped to pay. It is all very well to deride the social democrats, but (1) social security benefits are essential to many workers, and in a socialist society you still need a social contract and means to fund it, that means in practice some tax or other anyhow, even although you might be able to reduce the scope of taxation, (2) in the case of the USA, it never had a real social democracy in the first place, and therefore the demand for a social security system geared to meet the needs of the working class is actually pretty radical, and it's something that can be won and defended, which is a tangible gain, (3) socialists wish the expenditure of tax funds to be carried out with an appropriate mandate, so that money paid in is spent for those purposes for which it was intended, and not something else. Originally in the history of bourgeois society, there were many different taxation authorities mandated to collect and spend taxes, and gradually these were centralised. In the process, the tax burden shifted to wage and salary earners (easier to tax through PAYE), and control over tax spending was lost more and more. The objection to this type of argument is that it's all just reformism, but no revolutionary movement ever gained ground other than through a direct struggle for social reforms benefiting the working classes and working farmers. If leftwing politicians have no tangible social alternatives to offer than a free lifestyle and overthrowing the government, it doesn't get much of a hearing, because people want to see real effect and tangible gains in their own lives. The most basic expression of depoliticisation is that people do not care anymore how their tax money is spent or feel they have no control over it anymore, even if the tax money spent is very large. If you can explain that people have an immediate material stake in how tax funds are collected and spent, then you also generate more interest in a public politics which goes beyond lifestylism. There is a large economic literature on taxation, mainly under the rubric of public finance. But a lot of that literature is devoted to how businesses can minimise tax through tax avoidance and tax evasion. Taking a working class position on taxes is very simple really: it concerns what the costs are, in relation to the benefits to the working class, and this reflects the rights and obligations of the social contract. And then the question is one of minimising the costs, maximising the benefits, and ensuring good control over how tax money is spent. If that is not possible to any extent, then no social contract is possible either, yet civil society requires such a social contract. In that case, all that one can do is exactly what employers and the rich do, namely avoid or evade taxes. But that can work only if the working class is capable of doing it, of asserting its own alternative socio-cultural norms, and ensure that basic infrastructure actually continues to work well. Jurriaan ----- Original Message ----- From: "Anders Ekeland" <anders.ekeland@ONLINE.NO> To: <OPE-L@SUS.CSUCHICO.EDU> Sent: Wednesday, May 19, 2004 4:45 PM Subject: Re: [OPE-L] (OPE-L) taxation and public finance in Marxian literature > I'll think that 95% taxation will not happen. If the majority of people see > the very high incomes as fundamentally illegitimate, then we will have a > radical reorganisation of society, change of property relations etc. > > But I would like to introduce another issue, the bureaucratic and political > down-sides of progressive taxes. > > > At 22:16 15.05.2004, Paul Cockshott wrote about progressive taxes: > > >In this sense European social democracy has already incorporated many > >communist principles. > > One might discuss if progressive taxes is a communist principle, in any > case it is one of the important slogans of the Manifesto that the soc.dems > have implemented to a certain degree. > > And I think that it certainly was a good slogan. BUT, we must not loose > sight of the fact that the world has changed since then. By not changing > fundamentally the property relations and the income structure connected > with them, the soc.dems avoided attacking the distribution of income > generated by the market directly. This in my opinion had negative > consequences for the struggle for ideological hegemony. > > The soc.dems kind of accepted the efficiency of the marked, but wanted to > correct a bit the income distribution it generated. > > I do not at all believe the that taxes creates "inefficiencies" in the > economy, there is a real problem that Progressive taxes creates a not > enormous, but significant bureaucracy. It also turns wage-earners attention > to all the nitty-gritty details of the tax system. That is how to avoid taxes. > > It also is a problem that the middle-classes are "hit" by progressive taxes > that comes in at certain thresholds, creating some bizarre effects of small > pay-rises in that area. But the major problem being that they are > constantly outdated so that everybody pays them = no progressive > effect. (If you set them too high - no real effect - to few very rich > people that are not able to conceal their income. "You pay as much tax as > you think is politically correct", is the thinking in those circles, if one > is to believe the pink press) > > To what extent the taxes are progressive f.ex in Norway is really a debate. > There are signs that with all the loop-holes, different and complicated > rules (accumulated over time to stop tax fraud) the system is not very > progressive, it is just complicated. > > The property tax has a problem in Norway with poor/ordinary people owning > valuable houses (inherited) but have small incomes, they are the > foot-soldiers for the right wing attacks on property and fortune taxes in > general. > > I have started thinking that in maybe a non-refundable transaction tax > would be better, instead of the refundable VAT that is a major source of > tax income in Norway today. This VAT - is only paid by persons. The > refunding system creates a lot of paper and control mechanism. And since > the percentage is 24% - it is always tempting to "strike a deal" with the > plumber, the electrician etc. - it encourages the growth of a black > economy - also among working people. Tax cheating becomes a legitimized, > becomes a routine. > > A non-refundable tax of f.ex 5% would tax would be much simpler, it might > attack some of the of wasteful activities in the wholesale and retail > trade. It would make consumption more expensive, as opposed to non-marked > oriented, voluntary activities. > > In a country like Norway it is the "masses" that have to pay the taxes > anyhow since a large part of consumption is publicly organised. This being > the case - a simple, non-bureaucratic system is clearly to be preferred. A > system that also makes the firms pay out of their profits. > > When "people" complained that a transaction/sales tax would not be > progressive, the left could just say that the real problem is the unjust > remunerations of different types of work in the market place. That could > strengthen the support for the TUC's efforts to raise the wages of the > lowest paid - and make people more critical of capitalism as a system. In > short, it could be politically be more productive to spell clearly out > that we dislike the income differences, instead of using such a blunt and > bureaucratic weapon as progressive taxes. > > It is a problem for the left of the situation that the right-wing populist > party gets a lot of votes among the core of industrial and/or unionized > workers for their opposition to the *complicated* tax system. Although the > full digitalization has made the actual filling out of the forms very easy > for most of us. The rich still uses a tax-lawyer to find the loop-holes. > The only tax they really pay today is the VAT (often not even that since > they have part of their private consumption through their firms!) - and the > fees (water, garbage etc.). > > Is there any radical literature on tax-systems? > > Anders Ekeland
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