Apparently the Free Marketeers have declared today (June 18th) to be "Tax Freedom Day" in the UK.
The idea that people have been working for the government up to this point is really powerful - the nonsense of it all got me thinking of a completely different way of approaching taxation.
Why not think of a "Tax Freedom minute" within the hour? This led me to develop my hourly averaging proposal, explained in my book Rethinking Taxation.
Calculating "Tax Freedom"
If you do want to work out how much of your time goes to the government/society and how you get for yourself, then it would not just be be very difficult to do, it would actually be impossible.
Think about it:
- How much does anyone "contribute" to society?
- How much does anyone "benefit" from society?
If you want to use market prices for one you'd have to do so for the other as well. What is the value of the resources that each person receives over their life, from their families, government, employers and investment gains? I'll come back to this.
When it comes to contribution things are even harder.
- Someone who follows the law (and its spirit) is contributing to society, while someone who doesn't is not.
- Someone who tends their garden thoughtfully and picks up litter benefits others, someone who litters and pollutes egregiously detracts.
How can you put a number on all these forms of contribution?
Nagel and Murphy in their book The Myth of Ownership, showed this this whole line of thought is based on a simplistic everyday libertarianism. We assume that our gross income is in some sense ours as if we live in an imaginary libertarian economy.
But we don't live in that economy. We live in our economy, in the real world.
Tax isn't the only kind of contribution. However, it is an important one and everyone should be happy to pay their taxes out of a sense of reciprocity.
Benefits received
Of course, as I indicated earlier, what this "calculation" also misses is that we all benefit from government spending, past and present.
The government provides all sorts of goods and services that benefit us all.
Some people, as is right, get more from the government than they put in.
Children aren't going to be contributing, but all being well they will grow up and contribute later on.
Some older people might not be contributing, but they will have done earlier in life.
If this was an honest exercise it would attempt to account for all the benefits that people receive over their life.
It isn't an honest exercise, it is just libertarian propaganda that makes no sense.
Net contributions?
Even if you think it is possible to calculate someone's tax contribution, and that it would be meaningful (which it isn't), the number would vary hugely from person to person.
Some people will get more than they contribute in ways that are right. We should want proper systems in place to support the vulnerable in society and not just abandon them.
Is it forgivable to spread nonsense?
You can criticize the supporters of "Tax Freedom Day" for being selfish, which is probably right.
Or you can criticize them for being unrealistic ideologues, which is fair.
But most importantly, they are also just talking nonsense in thinking that the numbers are in any sense meaningful.
People have got a right to be selfish, they have a right to believe and propagate nonsense.
It is a free country after all.
The rest of us have a duty to see through it all.
