‘Tax freedom’ – is tax really oppression, or more like rent?

A commenter on my blog mentioned the ‘tax freedom day‘ announced regularly by the Adam Smith Institute, a right-wing policy think-tank that aims to extend free-market principles. The principle of ‘tax freedom day’ is that it moves earlier or later in the year depending on a notional calculation of how far into the year you have to work before you’ve covered the total tax (all forms of tax, including fuel duties, VAT etc, not just income tax) you’ll have to pay in that year, so that the rest of what you earn for that year is ‘yours’. The later in the year that TFD falls, the more of your income is taken by the government.

According to the ASI, this year’s TFD was 29 May. My correspondent raised this in the context of a discussion on fair/increased taxation, as a way of demonstrating just how ‘onerous’ the tax burden already is on UK people.

Let’s leave aside for now a discussion of whether it’s a fair representation of the situation to say that ‘for 149 days of the year, every penny earned by the average UK resident will be taken by the government in tax’, when in fact there isn’t a single day when every penny you earn is taken in tax.

Let’s leave aside the very interesting discussion of how the right loves to appropriate the word ‘freedom’, even when in fact most right-wingers are quite happy for others to be oppressed and exploited, as long as their freedoms aren’t impinged upon.

Let’s also leave for now a discussion of the irony an anti-tax, free-market think-tank calling itself the ‘Adam Smith Institute’, when in fact the 18th-century philosopher and economist was very much against any system of taxes that favoured the rich while disadvantaging the poor, and very much for aiming taxes at wealth that came from being wealthy (as quoted even by the Australian ASI here!)

The question raised by the idea of a ‘tax freedom day’ is a more fundamental one, going right to the heart of how we view society, government and our own place and obligations – and which is extremely revealing of how Tories view the world, themselves and others.

If tax is something to be ‘free’ from, then by implication it’s a form of oppression. We wish to be free from tyranny, free from poverty, free from threat and danger etc – those things are clearly oppressions. But ‘free from tax’? Is tax really a form of oppression – a robbery by the state of what’s ‘rightfully ours’ and what we should be allowed to keep and use as we choose, with no interference from the ‘oppressor’?

I think this worldview couldn’t be more false, or more misleading. It may appeal to a section of society in the US – those who still like to think of themselves as cowboys, frontiersmen, pioneers, to whom government is a limitation of their freedom, even though they now live in a town rather than in an unpopulated wilderness – but we’re not solitary animals, living and dying by our wits among ‘nature, red in tooth and claw’.

No. We’re social creatures, and we live in a society – and the ability and willingness to do that is why Homo Sapiens has been able to spread and cover most of the earth. Society provides protection, structure and law  (and right-wingers love to talk about law and order, which is a contradiction of their love for unstructured, do-as-you-like ‘freedom’). Structure and protection reduce risk and allow us a chance of building a decent life – even for some of us to become rich. This structure is a form of shelter – and it has a value.

For this reason, I believe that taxation is far more correctly regarded as a rent, rather than a form of oppressive, state theft of ‘what’s ours’. Let me paint you a little word-picture that might be helpful:

Imagine the UK as a very big apartment block, many floors high. The top floor is divided into a small number of very big luxury apartments, and as you move down the floors, the number of dwellings become progressively smaller and more numerous, as well as becoming less well-appointed. The government is the landlord, and he sets the rents. He also provides security, maintenance, cleaners, a clinic, a sprinkler system, to ensure that the building doesn’t fall down, catch fire and so on.

The people in the lower floors (some even live in the basement) are poor. Their rooms are small, barely enough to live in. The landlord knows he can’t expect much rent from them – they just don’t have anything to spare, and what they have is mostly taken up by essentials: trying to feed and provide for their families.

The people on the top floor are the rich. Their apartments are huge and lavishly appointed – far bigger than they and their families actually need. When the landlord considers how to fix their rent, he shouldn’t just charge a multiple of the poor-tenants’ rent based on how much bigger the apartments of the rich are. There are other factors to consider: they have the most beautiful views, the cleanest air, the most sunshine; they don’t have neighbours living above them making noise or whose bath might overflow and leak down on them, or much disturbance from the people around them; the fabric of their apartments is far superior to that of their poorer co-tenants.

So the landlord sets the rent at a level he feels is appropriate, and the rich pay it and enjoy a very nice life. It’s not theft – it’s the fee they pay to enjoy the many advantages the landlord and his beautiful building provide, including the security for them to do business and stay rich, or become even richer, and to raise their families in safety and luxury.

But one day, the landlord is doing his books and he sees that the costs of maintaining the building, of paying for security and fire-protection, of providing the clinic and the cleaners, have risen. Now he has decisions to make.

Should he cut back on the services he provides to his tenants? That would be foolish. The building would degenerate and become less desirable to live in, and since many of his tenants are employed providing those services, he’ll only worsen his situation as they start defaulting on their rent because they can’t earn a living.

Should he raise the rent of his poorer tenants? After all, they can’t afford to go anywhere else. But they’re already poor and don’t have much in the way of funds to spare. They’re already living in cramped conditions, and those crowded apartments could become a powder-keg if the tenants feel they’re being penalised too heavily for living there.

No. If he’s wise the landlord will increase the rents of the people on the top floors as much as he needs to in order to cover his costs. The tangible and intangible benefits they enjoy are substantial – and he’s probably been under-charging for them anyway. They can afford it – every year their bank accounts get fatter, the furniture they fill their apartments with finer and more opulent, the parties they throw for themselves and each other more and more lavish.

Of course, a few might decide they don’t like the new rents and leave. But the landlord knows that his top-floor apartments and the benefits they offer are very desirable. New tenants will move in who know it’s worth paying a little extra to live in a well-maintained building with contented neighbours on all the floors who won’t wreck the place in their frustrations or set fire to it one night – and other tenants who’ve always fancied a place on the top floor will move up. In fact, everyone might well be better off if a few of the best-off tenants did leave – and if he balances his budget in ways that will degrade the structure and security of his building, the rich will leave anyway, so cutting services or impoverishing his poorer tenants further instead of charging the rich more will only worsen his situation in the long run.

Of course, in this little allegory the rent is taxation, and the size of each apartment represents the relative wealth of poor, rich and those in-between. You might like the image or not, but I think it illustrates an important truth. Taxation is anything but a form of oppression. It’s a rent charged by the government to its people for the privilege and protection of living here – protection that allows some people to become very rich indeed, and which is therefore commensurately more valuable to them than it is to the poor, because they benefit more from it.

Far more than the poor, the unemployed, the disabled do, even though the current government – which is anything but wise – likes to portray those people as being the scroungers and skivers, as the sections of society that are getting ‘something for nothing’.

Taxation is not theft, nor is it oppression that we should long to be ‘free’ from. It’s rent. And if anyone should understand the right of the landlord to set the rent as he chooses – and to spend his ‘income’ as he sees fit, even if it’s on the less fortunate – then it’s a right-winger.

That’s why the right is so careful to portray it as theft, oppression, unfair or pretty much anything else that won’t get you thinking in the terms I’ve just set out. Don’t be fooled.