The real tax bombshell

As the parties release their manifestos for the 2017 General Election (#GE17), Maurice queries the accuracy, and motivation, of some of the coverage of Labour’s tax plans.

The Daily Mail claims that 1.5m ‘middle class workers’ would have to pay an average £3,000 a year extra each under Labour’s proposed new tax plans – or rather, Labour’s tax ‘bombshell’ as they inevitably put it.

They say Labour “wants to raise an extra £4.5billion from workers earning £80,000 to fund Jeremy Corbyn’s spending spree”.

Really? Let’s take a look. Here’s a chart Tweeted by the Institute for Fiscal Studies.

The IFS Tweet showing the cost of the proposed new tax thresholds

It turns out the Daily Mail’s first claim is deceptive. The second is simply false – there’s no other way to put it. Let’s take them in reverse order.

Does Labour plan to raise billions “from workers earning £80,000”? No.

If you earn up to £80,000 you will not pay a single extra penny. Even if you earn exactly £80,000 you will pay an extra…zero. Nothing. £80k is the proposed new threshold. You don’t suddenly get hit with a big tax bill for your whole pay packet as soon as you earn that amount. You get taxed just as you always did on the first £80k of your earnings (though obviously for the vast majority of us, this just isn’t an issue), and then pay a bit more, in increments, on the top slice of your income. So no, Labour do not plan to raise extra £4.5billion from workers earning £80,000. Simply false.

Which brings us to the other claim – that ‘middle class’ families will have to pay an extra £3,000 a year each, on average. This is deeply, perhaps deliberately, misleading. In fact, something like 95 to 98 percent of the adult population of the UK will not have to pay an extra penny under the Labour plan. The Mail appears to have added up all the extra tax to be levied on the top slice of the earnings of the top 2 percent – including that on hyper-wealthy multimillionaires – then averaged it out.

It reminds me of the joke where Bill Gates walks into a bar with fifty ordinary workers in it, and one of them shouts “Hey, good news guys: everybody in the bar is now a billionaire on average”.

To use the crude average (mean) figure when there is a massive disparity across the incomes of the top two percent, with many at the lower end of the range and a very few people earning multiple millions, is as absurd as it is disingenuous. To do so when perhaps 98 percent of the population will not have to pay an extra penny, and when the average person’s wage is about a third of the new threshold, begins to look like more than carelessness.

Let’s look at how it really works. For every £1k over and above the £80k threshold, should you be lucky enough to earn that much, you will have to pay an extra…£50.00. So if the average person suddenly found their pay packet more than tripled, to the point where that they were earning £81k, the Labour ‘tax bombshell’ would be…fifty quid. A hundred quid for those earning an extra thousand on top of that, and so on. You’d have to earn quite a lot more than the £80k before you reached the Mail’s ‘average’.

Look at the IFS figures again and you will notice that you have to be earning fully £20,000 a year above the threshold – so £100k in total – before your additional tax bill even hits the £1,000 mark.

I guess if you think a family with three members all earning £100,000 each is a ‘middle class’ family then, yes, they will be hit with an extra £3k tax bill. Then again, out of their collective income of £300,000, I’m not sure that will be catastrophic.

In fact, according to the IFS, as an individual, you would have to be earning more than £123,000 to be billed for the extra £3k the Mail trumpets. That would put you in the top 1 percent of earners.

Yes, that’s right: fully 99 percent of the adult population of the UK would be charged less than the Mail’s ‘average’ for ‘middle class’ families.

That would probably include, I imagine, 99 percent of the Mail’s readers. So why is the paper pushing this line? Why issue such a stark warning when your readers are not going to be affected by the charge – and indeed may well benefit from the extra funding for the NHS and education system it releases? Does this not show a callous disregard, even a contempt for your own readership? Why try to deceive them into opposing tax-funded investment in public services? Sheer malice?

Could it be anything to do with the fact that the editor of the Daily Mail, Paul Dacre, “took home £1.5m in 2016, maintaining his position as Britain’s best-paid newspaper editor”?

I’ll leave you to work out the maths.

In the end, tax is how we contribute to a common pool of resources from which we all draw, sooner or later, across our lifetimes.

If the wealthy want to set themselves apart, over and above the common people, that’s one thing.

If a newspaper’s rich owners and editors set out to deceive their relatively low-paid readership into voting against their own interests and against the common good in order to avoid a tax hike for themselves, that’s quite another thing.

Indeed, there’s your real bombshell.

 

Maurice Macartney

20 May 2017

Private World

Maurice argues that the increasing tendency to separate out celebrities and CEOs from ‘ordinary members of the public’ not only entrenches inequality, but also has a detrimental effect on our democracy

It isn’t called the House of Commons for nothing.

Two stories, side by side in the Guardian of Saturday 13 May.  They are on page 20, so you have to dig a bit. But they speak volumes about the direction we are going today, globally speaking.

One, ‘The cost of inequality: security guards outnumber police in half the world’ (here’s the longer, on line version) describes how the global market for private security is booming, so that there are more private security guards than police in the US, the UK, China, Canada and Australia, among other countries. The sector is growing at about 6 percent a year.

The second story, ‘Private airport terminal lets rich watch other travellers suffer’ (again, here’s the online version) reveals that there is a new terminal in Los Angeles International Airport exclusively for the rich, complete with a screen at the entrance showing the overcrowding and chaos in the other part of LAX – the part used by those who can’t afford the extra three or four thousand dollars per trip that would get them into one of the spacious luxury facilities. This new terminal is to be called ‘Private Suite’.

Taken together, these stories speak of a direction of travel. Those who can afford it are increasingly separating themselves off from everyone else.  They are increasingly creating a parallel world in which to live, one in which they need not rely on public services, or even queue with other members of the public in private facilities such as airports.

‘Other members of the public’. Hold that thought.

These two stories – and there are plenty of other examples – indicate not just a change in travelling habits and security needs. They indicate a dangerous conceptual shift too. It is as if the wealthy are separating themselves from the public. They are creating a new, private world accessible only to those with sufficient purchasing power, separate from – indeed, to be protected from – members of the public. Ordinary members of the public are admitted only as security guards or hired servants.

The signal goes out: celebrities and CEOs have different needs from the rest of us. It would be awful to think of them having to stand in line with the ‘common three fifths’, in the old Ulster expression. If they do venture out in public, of course they must do so behind sunglasses and a discreet ring of bulky bodyguards. They must have separate facilities at airports, exclusive suites in hotels, discreet private clinics, tinted windows on their limousines. They, and their public, begin to expect it, begin to conceive of each other as belonging to two separate categories, such that different rules apply.

Gavin de Becker, who runs the Private Suite at LAX, rejects any suggestion that his venture symbolises inequality, pointing out, according to the Guardian’s report, that it costs taxpayers nothing, and generates income for the airport. “It’s all about the airport”, he is quoted as saying, before adding: “When you charter, you can buy your way out of the line”.

Out of the line. Out of the social norms whereby you and I stand before or behind one another in the queue depending not on which of us has the greater status or bank balance, but on which of us happened to show up first.

And contrary to Mr de Becker, this does come free of cost to taxpayers – or rather, that very notion betrays the core problem with this conceptual paradigm.

There are now two kinds of taxpayers. There are those who pay their taxes and rely on the common pool of resources the funds provide. And there are those who pay their taxes – sometimes large amounts, to be sure, in monetary terms – but do not need the public services thus funded because they have plenty of money left over to buy in better services from the private sector.

You get what you pay for, and if the wealthy can afford better services than the state can provide they will continue to pay for them – with or without an untroubled conscience. Perhaps some of those in the Private Suite at LAX, looking at the hubbub and frustration beamed in from the other terminal, feel bad about it. Perhaps they really do have to use a more private route for travelling because were they to try to walk through the public terminal they wouldn’t get anywhere for the paparazzi and selfie-hunters. According to Mr de Becker, though, only a tenth of those using his Private Suite are ‘celebrities’, the rest consisting of members of the corporate elite, who may think they need ‘privacy’ to get on with their business. Which is none of ours.

This divergence between the public and the other, private world (or, perhaps better, Private World), inevitably institutionalises inequality, of course; but it also erodes democracy. People come to accept a two-level society. They are told that there is no alternative, that calling for first class public services for all not only risks alienating the ‘wealth-creators’, upsetting the markets and so on, but that it is just a symptom of class-envy. These poor rich people, we are told, carry the lion’s share of the ‘tax burden’ (as it is inevitably described). And now we, ordinary members of the public, have the gall to criticise them for not paying enough? Well of course if you do that you are not an ‘ordinary member of the public’ at all; you are one of the ‘hard left’ (as it is inevitably described), or one of their dupes.

No: ‘ordinary members of the public’ – at least according to the Daily Mail, UKIP and now the Conservatives – are those hard-working-families who are fed up with their wages being undercut by immigrants (not by union-busting multi-nationals, mind you), and who think businesses would be freed up to give them better jobs if it weren’t for all the red tape imposed by foreigners in Brussels, or who think there isn’t the money to put into public services because ‘scroungers’ have bled the state dry, benefits were too ‘generous’, and so on.

Now it is true that the Labour Party spent too long being ‘relaxed about people getting filthy rich’ (whether or not they paid their taxes), and it’s true that many of the liberal elite have a lot to learn about working class people. But it is astonishing that a party (the Tories) that spent decades selling off everything the British people owned in common, trying to downgrade public services, and offering all the help it could to those intent on building an offshore, non-dom, hyper-wealthy, first class Private World can now (suddenly) present itself as the party of the patriotic working classes without being laughed off the stage. How have they got away with it?

Well, perhaps because far too many of us believed them when they said Private World was none of our business, not a public matter, not something that concerned us. It has a certain plausibility, after all. Which of us wants the state coming nosing into our private affairs? Who among us would not take the first class treatment available in Private World if we got the chance?

But there’s the rub. Only the top 1 percent get the chance. Only they have the money both to pay their taxes (albeit keeping them to a minimum) with enough left over to buy themselves out of the public sphere – or at least to try to.

Because the separation is, in a sense, an illusion. You may have built a fence and a big security gate, but you have done it within the public realm. You have been able to do it not because you have enough private security guards to defend it, but because successive governments have recognised your right to do so, have issued the appropriate permits, cleared the development with the local authorities, have policed the whole thing from start to finish. With public police.

Private World, let us be clear, is a derivative of the public realm; it is a ‘dependency’, to use the old colonial-era term. It could not take place outside the legal and institutional framework provided by the public realm, even if it presents itself as being outside.

The trick is to make people think it is the other way round – that the public realm comes about when ‘the State’ (that monster!) takes away chunks of my private property.

‘The State’ is presented in this way, though, is just as much an illusion as Private World. Indeed it is presented as some meddling external bureaucracy determined to interfere with the way I want to run my life and spend my own money precisely in order to force public and private apart.

Rather, ‘the State’, or for that matter, the economy,  is not some external entity; it is just something that we do, collectively.  If it is to be democratic, it is something we need to do in common – because in a democracy we are all commoners.

We need to stop thinking on the basis of separate realms, and start thinking about the dynamics of a single system that throws these two realms up as apparently separate. We need to look at the gearing, too much of which is currently pointed vertically, separating people out into ‘the public’ on the one hand, and the population of Private World on the other – that half-a-percent or so of the population consisting of celebrities and CEOs, who seem to inhabit a ‘higher sphere’.

In the end, though, they too are members of the public. Nothing more. But nothing less.

Maurice Macartney

15 May 2017

 

A Mayday tug-of-war

To mark #MayDay, Maurice Macartney considers the history and changing character of the celebration.

The bridge and the cranes: monuments to Belfast’s industrial history

Today is May Day. Or International Labour Day. Or ‘Loyalty Day’ in the US.

Why the range of names? A quick visit to Wikipedia reveals that May Day was originally a Spring festival with its roots in pagan Europe, then became a secular celebration before becoming associated with Christianity. By the 18th Century, it was tied to devotions to the Blessed Virgin Mary in the Roman Catholic tradition.

In 1889 the Second International dedicated 1 May to International Workers, in the wake of a Chicago rally, in support of an eight-hour working day, that began peacefully but ended in violence.

In 1955 Pope Pius XII revived the religious dimension, dedicating 1 May to ‘St Joseph the Worker’, husband of Mary and carpenter, apparently as an explicit counterpoint to the socialist celebrations.

In fact, though, the Pope was beaten to it by the US government, who in 1921 declared 1 May ‘Americanization Day’, again as an explicit riposte to International Workers Day. By the 1950s, Americanization Day had become Loyalty Day.

So it is hard to know what Mr Trump thought he was doing when, on Friday, he declared that 1 May is henceforth to be celebrated as ‘Loyalty Day’. It already had been, for decades. On this day, US citizens are expected to reaffirm their allegiance to the principles upon which America was built, including freedom, equality and justice. The two really new elements introduced by Mr Trump are a dedication to fighting terrorism and a commitment to “limited government”.

It is odd (or ought to be) that this blue-collar billionaire, the champion of the ‘forgotten’ working people of America, should jump in on this tug-of-war over the meaning of May Day and pull it towards loyalty and limited government. Surely he ought to be in there, shoulder to shoulder with the workers, celebrating the progressive legacy of the labour movement, as their representative in government?

But then, Mr Trump is not so much a champion of the worker as of those workers whose loyalty, whose allegiance he was able to command in his drive towards economic nationalism. Which means the crank economy conveniently shorn of any pretence of international commitments (such as environmental protections or labour rights).

Here in the UK, of course, today also marks the 20th anniversary of the first Blair government. Mr Blair has already resurfaced, claiming that his “brand” of politics (his word, and a very interesting choice it is too) would have the Tories “flat on their backs with their feet in the air” (one presumes he does not mean laughing in gleeful gratitude, but who knows).

Now to be fair it’s a long way from New Labour to Mr Trump, and Mr Blair is right to celebrate achievements such as the introduction of the minimum wage, investment in schools and hospitals, and even the Good Friday Agreement.

However, to ignore, as he continues to do, not one but two huge elephants in the room – Iraq and the subordination of democracy to the ‘needs of market’ – is to create just as ‘alternative’ a set of facts as anything dreamt up by Sean Spicer.

Let us be clear: progressives should continually seek to ‘modernise’, as Mr Blair urges. It’s just that his ‘brand’ of politics, and indeed modernisation, doesn’t do that. It is now old hat. It seeks to please the markets and placate the losers (those whose industries were shut down, for instance), for instance by raising the tax threshold and redistributing benefits.

But a crank with cushions is still a crank. It still pushes rewards to those at the top and presses down on those at the base of the economic pyramid – keeping workers’ power low and regulations ‘light’. This is inherently anti-democratic: vertically directed forces move more in the direction of plutocracy than democracy.

We need to build a truly new movement (and this has already begun), to spread power horizontally, so that the wealth, and thus power, that our society creates in common (and only in common) leads to widespread flourishing. We need to aim, too, for a regenerative form of economy aimed not at limitless growth, but at sustainable circulation within the planet’s capacity to replenish itself – we need to live within the ‘doughnut’.

For all the attempts to co-opt it and counter it, May Day remains International Workers’ Day, a day to celebrate what working people, in various combinations (from the Unions to the Chartists to the Friendly Societies to campaigners for the vote, for civil rights and much else) have achieved together: nothing short of the ongoing democratisation of our global society.

Maurice Macartney

1 May 2017

Postscript

For a fascinating take on the contested history of May Day see this video featuring Peter Linebaugh