Why does progressive tax work for people but not countries?

No-one likes to get an unexpected bill. When it’s a big one, and the claimant a hectoring EU, you might argue it is no surprise in the current political environment that toys are being thrown out of every pram in the Westminster crèche.

But if it would be political suicide at this juncture for any leader to raise his hands in reluctant acceptance, the reaction of the public (boosting support for UKIP by 4% on the news) is harder to reconcile with past positions. Isn’t this an electorate that believes by a clear majority that progressive taxation is the way forward?

For years it has been the Government position – and the view of the person in the street – that ‘the broadest shoulders should contribute the most’. ‘Broadest shoulders’ as a phrase is hard to define, but it tends not to include any mitigating circumstances relating to having made good decisions or having put in more time or effort to achieve a goal: it is generally seen as some combination of being the richest, the most successful, and the highest paid. It is those who, for whatever reason, are managing to get on, in difficult economic times, better than others. The most widely accepted view is that that sort of person should be paying up.

And the £1.7bn bill now presented to the UK? It is largely the result one thing: ‘since 1995 [the UK’s] productivity has grown faster than almost every other major economy’.

Admittedly, there hasn’t been much competition – what with Italy’s economy shrinking in eleven out of the last twelve quarters, or the Greeks allegedly spending much of the last twenty years sleeping in the sun. But how well or badly finances are managed in relative terms, or how much or little work two people do, have never been part of a conversation when it comes to assessing the ability to pay tax. One thing and one thing only has: how much you’ve made in a given period. Some of those counted among ‘the rich’ might not feel very rich, but they are rich in relative terms.

Just like Britain compared with the rest of Europe, in fact: we’ve made more, so we’re being asked to pay more. That is exactly what widely popular progressive tax systems are designed to achieve. Which is all very easy to call for when it’s to do with someone else’s finances, of course. Apparently it is not so popular when levied against the country as a whole.

 

 

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