I'd have thought this to be common sense. People are happy to buy expensive things for themselves when they see a direct and personal benefit, but are less likely to pay the same cost to have it shared amongst the whole of society. It's why we have a market for Rolex watches, Porsche's and £5m houses when there's people that can just about afford food. It's why millions of people have private healthcare instead of donating the premiums to the exchequer. It's likewise why millions give to charities that they feel personally connected too, rather than donating to the treasury.
Your graph backs up my point? The spike in tax as a % of GDP corresponds with UK recessions in the early 80's and 70's? The Guardian (strangely enough) put it perfectly "Britain’s overall tax take – revenues as a share of annual national income – stood at 34.4%, its highest sustained level since it was on its way down from the high levels seen during the second world war. "
In terms of spend to GDP which in truth is more pertinent as we still need to spend during recessions, despite tax take dropping. This follows the same trend. Apart from spikes during recessions we're at an all time high in line with 2007 spend and spend in the late 80's (post recovery) and are at a greater level that throughout the 90's and also the 00's until the recession (under Blair/Brown).
The Tories are taxing and spending more than ever (including more than the tax and spend policies of the Brown years); whilst pledging to spend even more, even the Guardian have said this. I see no evidence given these historic highs that they aren't taxing close to the maximum that can be extracted in non-recession peacetime. Of course this spend to GDP will spike again 2020 and 2021 due to COVID-19.
Both graphs are completely disingenuous. Corporation tax isn't the sole tax a business has to pay; they have to pay payroll taxes, premises taxes, product taxes, fuel taxes, insurance taxes. Individual tax rates also don't show what the richest are physically paying. If you implemented a 99.9% tax on PAYE earnings above £500k what do you think would happen to tax receipts above £500k? They would reduce from 45% of the current declared figured to receiving no taxes whatsoever, as people would change their habits accordingly.
The average household tax for the top 10th decile from 00-01 year to 17-18 year is as follows:
Total wages - increased 68%
Total tax - increased 71%
The average household tax for the top 10th decile from 1990 to 17-18 year is as follows
Total wages - increased 270%
Total tax - increased 288%
The average household tax for the top 10th decile from 1980 to 17-18 year is as follows
Total wages - increased 774%
Total tax - increased 781%
Annoying I can't find the OECD data on the top 1% of househounds. However by Googling "top 1% UK tax historic" the first few articles state:
"The top 1% have seen their share of total income tax payments rise from 25% to 30% since 2010 as policy reforms particularly under the coalition, increased income tax for the best off while reducing it for those on more average incomes. " November 2019 Accountancy Daily
"The top 1% of earners in the UK now account for more than a third of income tax paid to the government, following changes over the past decade that have left almost half the population exempt from making payments. In research underlining the dual nature of Britain’s income tax structure, the Institute for Fiscal Studies said above-inflation increases in the personal allowance to £12,500 a year meant 42% of adults paid no income tax. The thinktank said the top 1% of all adults accounted for well over a third of income tax, adding that the tax and benefit system was progressive. Meanwhile, the share of income tax paid by the top 1% of taxpayers – a smaller slice of the population because so many people pay no income tax – has risen from 24% of the total in 2007-08 on the eve of the financial crisis to 30% currently. “Unlike the increases in previous decades, this has not been driven by a rising income share at the top,” the thinktank said in a briefing paper. “Rather, it reflects policy reforms: there have been income tax rises for high-income individuals (the additional rate of income tax above £150,000, the withdrawal of the personal allowance above £100,000, substantial cuts in income tax relief for pension contributions, and a net real reduction in the higher-rate threshold), even while increases in the personal allowance have reduced or eliminated income tax for those with lower incomes.” November 2019 The Guardian
It isn't a contentious or even an arguably point that the Tories have been taxing the rich and giving tax breaks to the poorest over the past decade.
I's impossible to compare taxation to GDP across completely different economies. If your economy is underpinned by manufacturers then you can extract more taxation . If you're economy is underpinned by banking and financial services you'll be able to extract less. If your country is based on being a tax haven you'll extract even less (e.g. Ireland and many island countries). That's why you'll never see Ireland or Switzerland extracting 35% of tax to GDP, because in doing so their tax take would reduce. It's interesting for example that Ireland's corporation tax is the lowest in the EU, but their corporation tax receipts to GDP are the highest. The same is true of other tax havens.
Countries like Switzerland, UK, SIngapore, Korea, Japan etc will never be able to extract Belgium or Norwegian levels of tax to GDP and if they did it would repress GDP growth and tax take. If they attempted to do so you'd see GDP lag/fall as fluid companies moved to more competitive environments; but tax to GDP rise (albeit with lower tax take). This is already happening with UK businesses moving to more competitive environments like Singapore due to increases in taxation over the last 10 years. This is why we've seen depressing levels of GDP growth across Europe (high tax countries), but then places like Ireland and Singapore (low tax) have seen great GDP growth. The Tories made an active decision to reduce GDP growth but increase taxation to GDP.
Again single taxes can't be isolated to prove a point. The whole tax environment needs to be factored in. I've also never said that the problem with the UK is high taxes, I've agreed that funding is the problem. The argument is how we extract funding from an economy that already has historically high taxes and historically high debt.
If we increase taxes we will repress GDP growth as businesses will relocate to Ireland, Singapore, US and wealthy individuals will relocate to tax havens. This will result in a net fall in taxes which obviously won't help funding of the NHS. If we allow for an insurance based healthcare system you'll see that wealthy people will spend far more on healthcare and also aren't a burden on the state. Someone earning £500k per annum should not be receiving benefits from the government in the form of free healthcare, especially as they don't appreciate the healthcare they receive. If you gave a poor man a new Kia Rio free of charge as his only form of transport they'd be very happy, if you gave a millionaire the same offer he'd despise it. Give him the option of a free Kia Rio or the option to buy his own Porsche and he'd opt for the latter every time.
I don't think redistributive taxes are unacceptable, I think they have a limit in every country. The UK are close to that limit.
Agreed let's leave it there.
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