Media Check – What Matthew Sinclair Doesn’t Tell You About Eurostat Figures

Whenever a left wing blogger doesn’t know what to write about, a sure fire way to find something to challenge that won’t take more than fifteen minutes of your time is to check out the Telegraph comments section.

Today, Matthew Sinclair has a piece which seems not really to have much in the way of direction but rather takes up plenty of words spouting your typical Telegraph soundbites.
(I count: ‘pass it [money] onto your children’, ‘punitive tax’, ‘The old Marxist lie’ and even a jibe against the ‘anti-capitalist French’…)

Aside from the splurge of your typical right-wing statements, what was the article actually trying to say? Well, the tagline went with: ‘Britain’s tax system is a complicated and unfair mess – a simpler, fairer system would benefit all’. My guess is the sub-editor installed that in a bid to make Mr Sinclair’s piece sound classier than it actually is, given there is little in the way of argument for a simpler tax system.

There’s an initial declaration that our savings are taxed multiple times (which somehow justifies tax avoidance, because if you get taxed more than once that means you don’t have to pay anymore tax ever again right?) (And also, defending tax avoiders on the basis that the tax system is complicated is like defending dangerous drivers because of all these stupid laws about staying in the correct lane and indicating etc…)

But after that the only substance in the piece is regarding some Eurostat figures which show Britain up for having an ‘uncompetitive tax system’ given that only the ‘anti-capitalist French’ have a higher rate of implicit tax on capital than we do.

Now, this is all good and true, check the figures out yourself. But what Mr Sinclair doesn’t add is why our implicit taxes on capital are that high… Sure, he makes some jibe at the end about it being because “Too many politicians and academics like to describe the return on savings as “unearned income”. That old Marxist lie is used to disguise the truth that people working hard and doing the right thing by putting some money aside are being taken apart by the tax system.” But he doesn’t actually address the real reason…

That reason is that we have some of the lowest rates of tax on ‘labour’ (the sum of all direct and indirect taxes and employees’ and employers’ social contributions levied on employed labour income divided by the total compensation of employees working in the economic territory) in Europe and a below average rate of implicit tax on consumption. Despite these ‘uncompetitive’ high tax rates (pardon me whilst I laugh) the Eurostat figures still show us having a lower tax revenue as % of GDP than Germany, France, the Netherlands, Belgium, Denmark, Finland, Sweden and Norway. Granted, we bring in more tax revenue than Greece and Ireland, proving once again that high tax rates equal disastrous economic consequences… or not

Anyhoo, the point; tax money has to come from somewhere. Yes, we tax capital highly, but only because we tax labour and consumption to a lesser (sometimes much lesser) extent. That is the obvious point to make given our overall tax revenues are comparable or lower than similar EU economies. So why isn’t Mr Sinclair’s article a tirade about why we should be paying much higher income taxes to offset these high capital taxes…? Obviously if you were serious about reducing tax on capital that’s exactly what you would do… alas, this is the Telegraph and to simply mention a tax rise that doesn’t disproportionally hit the poorest is heresy.

And it’s a shame the article doesn’t look at these different philosophies to tax between nations, because the UK’s kind of makes sense: Saying that we’ll tax those who already have wealth more highly than those trying to accumulate it, or those businesses which are trying to make wealth by employing more people, seems to foster a more competitive economy where attaining wealth is encouraged and paid for by keeping those with wealth amassed on their toes. It also means we don’t end up taxing consumption too highly so that people are free to buy things and make the wheels of the econonmy whir without feeling the ‘sticky fingers’ of the state rumaging through your pockets when you’re at the checkout.

Now, is it the best system? Should we have higher taxes on labour or consumption to pay for lower taxes on capital? That’s an interesting opinion piece I’d love to read, especially if it was written by an unbiased, well informed contributor.

A standard mud slinging, core conservative pleasing exercise from a right-wing hack, acting as an apologist for major companies who aggressively avoid paying their dues to society… that I’m much less inclined to do anything to but rip on. I hope it was worthwhile…

Cheers

Useful Links:

NEF – Mythbusters: “A competitive tax system is a better tax system”

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About iwastoldtheredbegin

Politics of the Left Wing and Liberal variety, plus gin!
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