taxation

What are taxes actually for?

Published by Anonymous (not verified) on Thu, 16/08/2018 - 3:06pm in

We need to talk about taxation. I do not think it means what you think it means.

(This piece was originally published on Patreon)

While some of us are pretty conscious of the importance of using the correct terminology when it comes to issues of social justice, race, gender and sexuality, when it comes to addressing inequality, we are still using language straight out of the neoliberal handbook.

We need to be honest about how the tax system works and what it is for. To do so isn’t radical, or even progressive. It is simply the economics of reality.

What are taxes for?

In countries whose governments issue their own currencies, taxes do not pay for federal services.

Governments like those of the US, UK, China, Australia, Canada, etc run spend & tax economies, not tax and spend. They do not need your taxes to pay for anything. You might be angered to know that, actually, your taxes are not used for anything after you pay it. Not at a federal level. Your taxes are essentially destroyed upon receipt. Taxation is the act of taking currency out of the economy. Using your taxes to pay for public services would keep that money in circulation, thus serving the very opposite of its purpose.

There are some exceptions here which are important to underline: Taxes pay for services at state and local levels, but that is only because they are themselves inadequately funded by federal governments and therefore raising taxes becomes necessary to make up the revenue shortfall. Taxes also nominally pay for spending in countries whose governments adopt foreign currencies (most EU member states, for example), or peg their gold to a foreign currency.

So why pay tax at all?

Taxes are important. Just not for the reasons that are often talked about.

Taxes exist for a number of reasons:

- To maintain the value of the currency.

- To stabilise aggregate demand.

- To manage growth and distribute wealth. and, depending on what you think government is for and who it exists to serve, ensure prosperity and equality of opportunity for their constituents.

- To discourage bad behaviours (taxation on cigarettes, for example, are designed to discourage smoking and reduce the burden on health systems) & encourage good behaviours, (like promoting sustainability through a tax on carbon and investment in renewable energy).

- It also exists to accurately cost public spending requirements: infrastructure, education, health, public safety: police, fire, ambulance, defence, intelligence etc.

As economist, Professor Randall Wray recently pointed out: Governments do not need a single dime from the wealthy to address inequality. That is not how taxes operate, or what they are for.

“Taxes on the rich might take ‘resources’ from people who have too much — in that their demand deposit account is debited,” he writes for Naked Capitalism. “But taxation does not ‘give resources’ to people who have too little.”

“Rather, government spending directed to those who ‘have too little’ is what gives the poor access to resources. (They can use their demand deposit credits to buy food, clothing and shelter, etc). They are functionally two separate entities.

“Government can spend to help the poor without taxing the rich or anyone else.”

Buying into the myth

Nonetheless, the idea that taxes pay for government spending persists as an inaccurate bipartisan consensus, one of the greatest collective myths of modern capitalism.

When you hear politicians or pundits squawking about workers’ hard-earned tax dollars paying for this or that, you can almost certainly guarantee they have no idea about how taxes work either.

Our acceptance of this lie is, to quote anthropologist David Graeber, “collectively acquiescing to our own enslavement.”

The continuation of the status-quo depends upon the public’s ignorance or blind consensus as to the true nature of banking, finance, government spending, job creation and the nature of work itself.

The very myth that the vast majority of us have settled on is the very thing preventing full and gainful employment, and guarantees a future (and a present) where the only way to buy our way out of public squalor is through rising private debt.

In his recent book, Bullshit Jobs, Graeber describes modern day capitalism as a system of ‘Managerial Feudalism’, a form of social and political control achieved through corporate bureaucracy: the proliferation of middle-managers, supervisors, administrators all employed to ‘appropriate labor through usury’, stealing wealth, resources, opportunity and power from the working and middle class and transferring ownership to the political and elite classes and the idle rich.

“Marx appears to have been right when he argued that ‘a reserve army of unemployed’ has to exist in order for capitalism to work the way it’s supposed to,” he writes.

“…we are identifying with our rulers when, in fact, we’re the one’s being ruled.”

To truly address inequality and abolish austerity politics, we must start being honest about how taxation works and what it is for.

Language is important. You can be as woke as you like about gender and racial politics, but using the wrong terminology for taxation is kryptonite for social justice. We cannot subvert the neoliberal playbook while continuing to use the very same language invented to ensure a permanent economy of inequality and austerity.

Thank you for reading. I couldn’t afford to continue my research, or write this book, were it not for the support of my generous sponsors. Support independent journalism, sponsor me on Patreon, starting at $3 a month, or throw some money at my PayPal.

Preview: What are taxes actually for?

Published by Anonymous (not verified) on Wed, 01/08/2018 - 10:18am in

We need to talk about taxation. I do not think it means what you think it means.

While some of us are pretty conscious of the importance of using the correct terminology when it comes to issues of social justice, race, gender and sexuality, when it comes to addressing inequality, we are still using language straight out of the neoliberal handbook

We need to be honest about how the tax system works and what it is for. To do so isn’t radical, or even progressive. It is simply the economics of reality…

To continue reading, subscribe to my Patreon for as little as $3 a month

The case against income tax

Published by Anonymous (not verified) on Thu, 05/07/2018 - 11:38pm in


“If income tax were really important, how come those who make the most often pay the least?

Income tax doesn’t really pay for government services federally. So why do we, the 99%, even need to pay it? Isn’t it just punishing people for earning?”

Me at Renegade Inc. on the case against income tax. Click here for the full schpiel.

Frightened May Holds Out Possibility of Undoing Tory Reforms of NHS

For all the repeated smears against Jeremy Corbyn and the Labour party as a nest of vicious anti-Semites and Trotskyites, the Labour leader clearly has the Tories worried. Last week Tweezer made a couple of pronouncements about the NHS, which showed more than a hint of desperation in one, and a fair amount of the usual Tory deceit and double standards in the other.

According to the I, Tweezer had made a speech in which she discussed the possibility of trying to improve the NHS by going back and repealing some of the Tories’ own recent legislation. The article, which I think was published in Wednesday’s edition of the newspaper, but I could be wrong, stated that she was specifically considering repealing part of the 2012 Social Care Act. This is a nasty piece of legislation, which actually needs to be repealed. It was passed when Andrew Lansley was Dave Cameron’s Health Secretary. The verbiage within the Act is long and confused, and deliberately so. Critics of the Act, like Raymond Tallis, one of the authors of the book NHS SOS, have pointed out that the Act no longer makes the Health Secretary responsible for ensuring that everyone has access to NHS healthcare. The Act gives the responsibility for providing healthcare to the Care Commissioning Groups, but these are only required to provide healthcare for those enrolled with them, not for the people in a given area generally. It has been one of the major steps in the Tories’ ongoing programme of privatising the NHS. For more information on this, see Jacky Davis and Raymond Tallis, NHS SOS (OneWorld 2013).

The fact that Tweezer was prepared to hold out the possibility of repealing, even partly, her predecessors’ NHS legislation suggests to me that Corbyn’s promise to renationalise the NHS has got her and her party seriously rattled. It shows that this policy, like much else in the Labour programme, is actually extremely popular. And so Tweezer is doing what she had done elsewhere with dangerously popular Labour policies in the past. She’s going to try to make it look as if the Tories are going to do something similar. Like when Labour talks about renationalising part of the electricity grid, the Tories immediately start going on about how they’ll cap energy prices.

Actually, I doubt very much that Tweezer has any intention of revising Lansley’s Health and Social Care Act, or about restoring the NHS to proper public ownership. The Tories have been trying to sell off the NHS and support private medicine since Maggie Thatcher back in the 1980s. But if Tweezer did repeal part of the 2012 Act, my guess is that it would only be to make it much worse. In the same way that Cameron announced he was going to clean up the lobbying industry and make it more transparent, and then passed legislation that actually made it far less so. This gave more power to the big lobbying firms, while making the kind of lobbying done by small groups like charities much more difficult. You can see something similar being done by the Tories with their proposed NHS legislation.

And then there was the report last week, which stated very clearly that due to the terrible underfunding of the past nine years or so, the NHS would need an extra tax of £2,000 to be paid by everyone in the UK. Or so Tweezer and the Tories claimed. Mike dealt with that projection in a post yesterday, where he noted that the Tories have been reducing the tax burden on the rich. He went on to quote Peter Stefanovic, a blogger deeply concerned with the crisis in NHS care and funding created by the Tories. Stefanovic said

“Or alternatively the Government could tax those earning over £80,000 a little more, scrap tax breaks for the very rich, stop PFI deals bleeding the NHS dry & companies like Boots accused of charging NHS over £3,000 for a £93 cancer pain-relieving mouthwash.”

Mike makes the point that with the increasing privatisation of the NHS, the call for more taxes to be spent on it is in fact a demand for more to be given to private healthcare providers, who are delivering less.

Mike concluded with the words:

These people are trying to make fools of us. They are to be challenged. Let them explain why they think the poor should be taxed more when we all have less, thanks to Tory policies.

https://voxpoliticalonline.com/2018/05/27/lets-kill-this-talk-about-more-tax-for-the-nhs-right-now/

I also wondered if there also wasn’t a piece of subtle, ‘Nudge Unit’ type psychology also at work in the statement that we’d all have to stump anything from £1,200 to £2,000. This is a lot of money for those on very low incomes. And the Tories see themselves very much as the party of low taxation. Hence their attacks on ‘high spending’ Labour and claims that their tax reforms allow working people to keep more of their money. Though even this is a lie. The Tories have actually moved the tax burden from the rich on to the poor, and made the poor very much poorer through removing vital parts of the welfare safety net. My guess is that they’re hoping that some people at least will see that figure, and vote against increasing spending for the NHS on the grounds that they won’t be able to afford it. It also seems to me that they’ll probably try asserting that Labour will increase everyone’s tax burden by that amount when the Labour party starts fighting on the platform of NHS reform.

And with frightened working class voters rejecting an increase in taxation to pay for the NHS, they’ll go on to claim that the NHS, as a state-funded institution, is simply unaffordable and so needs further privatisation. Or to be sold off altogether.

This is how nasty, duplicitous and deceitful the Tories are. And I can remember when the Tories under Thatcher were similarly claiming that the NHS was unaffordable in the 1980s. Just like the Tory right claimed it was unaffordable back in the 1950s.

In fact, a report published in 1979 made it very clear that the NHS could very easily continue to be funded by increased taxation. And that taxation should be levelled on the rich, not the poor. But this is exactly what the Tories don’t want. They don’t want people to have access to free healthcare, and they really don’t want the rich taxed. And so they’re going to do everything they can to run down the NHS and tell the rest of us that it’s too expensive. Even though this country’s expenditure on healthcare is lower than that of many other countries in Europe, and far lower than the American’s expenditure on their massively inefficient and grossly unjust private healthcare system.

If we want to save the NHS, we have to reject May’s lies, and vote in Corbyn and a proper Labour government.

Ten things to know about the 2018 Saskatchewan budget

Published by Anonymous (not verified) on Sat, 21/04/2018 - 4:13am in

I’ve written a ‘top 10’ blog post about the recently-tabled Saskatchewan budget. Points raised in the blog post include the following:

-This year’s budget was quite status quo.

-Last year’s budget, by contrast, included a series of cuts to social spending. Last year’s budget also announced cuts to both personal and corporate income taxes that were subsequently reversed.

-Saskatchewan has one of the lowest debt-to-GDP ratios in Canada.

-This recent budget announced the phase out of a rent supplement program that helps low-income households afford rent on the private market.

Here’s the link to the full blog post.

Ten things to know about the 2018 Saskatchewan budget

Published by Anonymous (not verified) on Sat, 21/04/2018 - 4:13am in

I’ve written a ‘top 10’ blog post about the recently-tabled Saskatchewan budget. Points raised in the blog post include the following:

-This year’s budget was quite status quo.

-Last year’s budget, by contrast, included a series of cuts to social spending. Last year’s budget also announced cuts to both personal and corporate income taxes that were subsequently reversed.

-Saskatchewan has one of the lowest debt-to-GDP ratios in Canada.

-This recent budget announced the phase out of a rent supplement program that helps low-income households afford rent on the private market.

Here’s the link to the full blog post.

Five things to know about the 2018 Alberta budget

Published by Anonymous (not verified) on Mon, 26/03/2018 - 10:20pm in

On March 22, the NDP government of Rachel Notley tabled the 2018 Alberta budget. I’ve written a blog post discussing some of the major ‘take aways’ from the standpoint of Calgary’s homeless-serving sector (where I work).

Points made in the blog post include the following:  this was very much a status quo budget; Alberta remains the lowest-taxed province in Canada (and still the only province without a sales tax); Alberta still has (by far) the lowest net debt-to-GDP ratio of any province; and it’s been six years since social assistance recipients in the province have seen an adjustment in their benefit levels (to reflect inflation, for example).

The full blog post can be read at this link.

Five things to know about the 2018 Alberta budget

Published by Anonymous (not verified) on Mon, 26/03/2018 - 10:20pm in

On March 22, the NDP government of Rachel Notley tabled the 2018 Alberta budget. I’ve written a blog post discussing some of the major ‘take aways’ from the standpoint of Calgary’s homeless-serving sector (where I work).

Points made in the blog post include the following:  this was very much a status quo budget; Alberta remains the lowest-taxed province in Canada (and still the only province without a sales tax); Alberta still has (by far) the lowest net debt-to-GDP ratio of any province; and it’s been six years since social assistance recipients in the province have seen an adjustment in their benefit levels (to reflect inflation, for example).

The full blog post can be read at this link.

Ten proposals from the 2018 Alberta Alternative Budget

The 2018 Alberta Alternative Budget (AAB) was released yesterday—it can be downloaded here. An opinion piece I wrote about the AAB appeared yesterday in both the Calgary Herald and the Edmonton Journal.

Inspired by the Alternative Federal Budget exercise, this year’s AAB was drafted by a working group consisting of individuals from the non-profit sector, labour movement and advocacy sectors.

Here are 10 proposals from this year’s AAB.

  1. Introduce a 5% provincial sales tax. The AAB gives the Notley government credit for generating additional revenue by increasing both personal and corporate tax rates, while also increasing tobacco and fuel taxes. However, in light of the very substantial loss in revenue as a result in the drop of the price of oil, we’d like to see the Alberta government take one step further and introduce a provincial sales tax. A 5% provincial portion, added on to the 5% Goods and Services Tax, could result in a 10% Harmonized Sales Tax (HST). This would generate approximately $5 billion annually.

 

  1. Introduce an HST rebate for low-income households. It’s well-known that sales taxes in general have a larger impact on low-income households than on higher income households (that’s because lower-income households spend a larger proportion of their income on consumption). To counteract that, the AAB proposes the introduction of an HST rebate for low-income households.

 

  1. Introduce provincial pharmacare. Many low-income Albertans currently struggle to afford prescription medication; and many employers (especially small businesses) struggle to afford health and dental programs for their employees. Not only would a universal coverage prescription drug plan ensure prescription drug coverage for all; it would take advantage of bulk purchasing, reducing costs for both households and employers.

 

  1. Increase staffing in long-term care facilities. This year’s AAB would hire more registered nurses and health care aids for Alberta’s long-term care facilities. We would spend enough to bring facilities up to the minimum recommended staffing levels. This would result in improved quality of care.

 

  1. Reduce class sizes in K-12 education. Specifically, the AAB proposes to bring class sizes at the K – 3 level down to levels recommended by the Alberta Commission on Learning. We’d do this by hiring more teachers, education assistants and support staff.

 

  1. Reduce tuition fees for all post-secondary students in the province. While we believe the complete elimination of tuition fees is a laudable long-term goal, for this coming budget year, the AAB proposes to reduce tuition fees for all post-secondary students in Alberta by 20%. The AAB would also eliminate the interest on the provincial portion of student loans, as well as invest in grants to current students.

 

  1. On the Indigenous file, create an Intergovernmental Relations position in each provincial ministry. The AAB would invest in cultural capacity-building in all 22 provincial ministries. One Intergovernmental Relations position would be created in each ministry; that role would focus on relations between the ministry and Indigenous peoples, keeping in mind challenges when working across ministries and departments at all orders of government.

 

  1. Implement universal child care. The AAB would expand the Notley government’s current pilot program of $25-per-day child care, making subsidized and regulated child care to all Alberta households. Among other things, we expect this to result in increased labour market participation by women.

 

  1. Increase social assistance benefit levels. Social assistance (i.e., ‘welfare’) recipients have seen the monthly value of their benefits decrease in real terms over the past several years. Today, a single adult (without dependents) on social assistance in Alberta receives just $8,000 annually to live on.[1] The AAB would increase monthly benefit levels by $150 and index these benefits to inflation going forward.

 

  1. Create more affordable housing. The AAB would fund the repair of existing social housing units; it would also provide funding to build new affordable housing for vulnerable populations (e.g., persons experiencing absolute homelessness, the frail elderly, persons with HIV/AIDS). Further, it would provide funding for rent supplements (i.e., financial assistance for rent) to low-income households.

 

In Sum. Budgets are always about choices, and that principle has guided alternative budget exercises across Canada for over two decades. This year’s AAB proposes a costed-out set of policy proposals that would improve labour market, health and education outcomes, while also addressing principles of reconciliation and reducing income inequality.

 

[1] A person with a severe disability can receive more.

Ten proposals from the 2018 Alberta Alternative Budget

The 2018 Alberta Alternative Budget (AAB) was released yesterday—it can be downloaded here. An opinion piece I wrote about the AAB appeared yesterday in both the Calgary Herald and the Edmonton Journal.

Inspired by the Alternative Federal Budget exercise, this year’s AAB was drafted by a working group consisting of individuals from the non-profit sector, labour movement and advocacy sectors.

Here are 10 proposals from this year’s AAB.

  1. Introduce a 5% provincial sales tax. The AAB gives the Notley government credit for generating additional revenue by increasing both personal and corporate tax rates, while also increasing tobacco and fuel taxes. However, in light of the very substantial loss in revenue as a result in the drop of the price of oil, we’d like to see the Alberta government take one step further and introduce a provincial sales tax. A 5% provincial portion, added on to the 5% Goods and Services Tax, could result in a 10% Harmonized Sales Tax (HST). This would generate approximately $5 billion annually.

 

  1. Introduce an HST rebate for low-income households. It’s well-known that sales taxes in general have a larger impact on low-income households than on higher income households (that’s because lower-income households spend a larger proportion of their income on consumption). To counteract that, the AAB proposes the introduction of an HST rebate for low-income households.

 

  1. Introduce provincial pharmacare. Many low-income Albertans currently struggle to afford prescription medication; and many employers (especially small businesses) struggle to afford health and dental programs for their employees. Not only would a universal coverage prescription drug plan ensure prescription drug coverage for all; it would take advantage of bulk purchasing, reducing costs for both households and employers.

 

  1. Increase staffing in long-term care facilities. This year’s AAB would hire more registered nurses and health care aids for Alberta’s long-term care facilities. We would spend enough to bring facilities up to the minimum recommended staffing levels. This would result in improved quality of care.

 

  1. Reduce class sizes in K-12 education. Specifically, the AAB proposes to bring class sizes at the K – 3 level down to levels recommended by the Alberta Commission on Learning. We’d do this by hiring more teachers, education assistants and support staff.

 

  1. Reduce tuition fees for all post-secondary students in the province. While we believe the complete elimination of tuition fees is a laudable long-term goal, for this coming budget year, the AAB proposes to reduce tuition fees for all post-secondary students in Alberta by 20%. The AAB would also eliminate the interest on the provincial portion of student loans, as well as invest in grants to current students.

 

  1. On the Indigenous file, create an Intergovernmental Relations position in each provincial ministry. The AAB would invest in cultural capacity-building in all 22 provincial ministries. One Intergovernmental Relations position would be created in each ministry; that role would focus on relations between the ministry and Indigenous peoples, keeping in mind challenges when working across ministries and departments at all orders of government.

 

  1. Implement universal child care. The AAB would expand the Notley government’s current pilot program of $25-per-day child care, making subsidized and regulated child care to all Alberta households. Among other things, we expect this to result in increased labour market participation by women.

 

  1. Increase social assistance benefit levels. Social assistance (i.e., ‘welfare’) recipients have seen the monthly value of their benefits decrease in real terms over the past several years. Today, a single adult (without dependents) on social assistance in Alberta receives just $8,000 annually to live on.[1] The AAB would increase monthly benefit levels by $150 and index these benefits to inflation going forward.

 

  1. Create more affordable housing. The AAB would fund the repair of existing social housing units; it would also provide funding to build new affordable housing for vulnerable populations (e.g., persons experiencing absolute homelessness, the frail elderly, persons with HIV/AIDS). Further, it would provide funding for rent supplements (i.e., financial assistance for rent) to low-income households.

 

In Sum. Budgets are always about choices, and that principle has guided alternative budget exercises across Canada for over two decades. This year’s AAB proposes a costed-out set of policy proposals that would improve labour market, health and education outcomes, while also addressing principles of reconciliation and reducing income inequality.

 

[1] A person with a severe disability can receive more.

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