Monday, 1 October 2012


Two things to remember now the political season has resumed; 

When Question Time begins on Thursday night, hide all objects large/heavy/throwable enough to damage your television.

When Question Time ends on Thursday night, you have approximately thirty-five seconds to get up, leap across the room and turn off the television before Andrew Neil opens his mouth.

Today's Question

What's forty pounds to you? 

“You cannot make the poor rich by making the rich poor” is a phrase I heard used by Steven Norris a while ago, though it’s been around for a good while, and it’s been popping up more and more in the rightist magazines and blogs. It’s a favourite phrase of Conservatives as it conjures up images of the complete rejection of the present system, of forcibly taking every penny the rich have and showering it on those dreadful poor people (some of whom are from overseas!). It’s best illustrated by the old story of one of the Rothschilds being bearded by a mob of angry tenants demanding he redistribute his fortune amongst them. Rothschild threw a handful of coins at them and said something along the lines of “Here’s your two bob each - now bugger off”. Put that way, the absolute of ‘making the rich poor’ is ridiculous, and putting it that way is the classic reductio ad absurdum ploy to negate an argument by, in this case, making its supporters look like ardent Spartists. 

But if you add an aspect of relativity to the statement - if you make it state something realistic - everything changes. ‘You cannot make the poor richer by making the rich poorer’ is entirely different, and entirely false. Making the rich very slightly poorer is very much the way to make the poor richer. 

If you increase a rich man’s taxes by a small percentage, it will make little or no difference to him. Take three thousand pounds off of Roman Abramovitch and frankly he won’t notice it. However, that three thousand, re-distributed among one hundred poor people, will make those poor people relatively far better off. The extra thirty pounds that each poor person receives is, to them, the possibility of proper heating in the bitter winters we have these days, or of a far better diet - one of the next scandals this country should address is the spiralling cost of fresh vegetables compared with the plummeting cost of ready meals and junk food - which in turn leads to a fitter populace and lower health service costs. It makes them richer. Richer. Very much richer. It’s a no-brainer, unless you’re a stupid selfish bastard who thinks ‘making the rich poor’ means descending into Marxist-anarcho-syndicalist chaos, or taking away your Jag (which in most  rightist minds is pretty much the same thing). 

There are those who will say that increasing a tax rate will inevitably lead to a fall in tax take and so to a smaller amount of income from that tax being available for redistribution. Their evidence for this is something called the Laffer Curve, a graph which illustrates exactly this and as such has been used as a justification for tax cuts since 1984. One problem with the Laffer Curve is that it was thought up in a bar and scribbled on the back of a napkin, and while that may well have worked for Picasso when it came to  settling the absinthe bill, it doesn’t show the rigour of thought required for economic theory. Another problem is that it doesn’t work: there’s no way of knowing where on the Laffer Curve any particular economy should be placed, and without that knowledge there’s no way of knowing what the optimum tax rate/tax take is. 

How do I know this? I read an article about it in a magazine. Not Marxism Today, not Kill The Rich Monthly. I read it in The Economist.

The next question is: how rich is rich? I’d say that if your household income is around £70,000 or over, you can afford another 1 or 2% tax. That’s between about £13.50 and £27.00 a week, and that's only if you levy that tax on the entire income rather than just the proportion that would be liable for the higher rate (and I'll continue using that formula firstly because, as Roger T points out, I'm not an accountant and secondly because the higher figure bolsters my argument). £116 a month, tops. That works out at about four quid a day for the upper rate of increase. What’s the opportunity cost of that? A cup of coffee from Starbucks? A pint of beer? Would you really miss that? What would you rather have, a child from a low-income family getting a proper meal, or you getting a sugar buzz from the syrup in your gingerbread latte? 

The beauty of a small tax increase is that the more you earn, the less likely you are to suffer as a result of it. If you’re on £100,000 a year - an amount that most people would say qualifies you as ‘rich’ - you’re currently taking home around £1,250 a week. Would you really miss the forty quid that a 2% tax increase would cost you? Would you run screaming from this Bolshevik tax hell, the way the rightists swear you would? 

Or would you, as a humane person with an ounce of compassion for your fellow man, say “That’s pretty fair. I might not have that second bottle of Hermitage La Chapelle, but what of it?”

Here’s my final thought on this: there are people who think an extra forty pounds in tax is too much to pay. They’ll kick against it like a toddler faced with a plate of broccoli. To them, forty pounds is a small fortune. And yet, if you offer those people the same forty pounds in the form of, say, a pay rise or the fee for an hour’s work or even as a prize for a small lottery win, they’ll reject it as being too small, an insult, a disgrace. 

I’d like to say to those people: it’s one or the other. Make up your bloody minds.