From the August 1929 issue of the Socialist Standard
One of the most dangerous of fallacies is the idea propagated by every political party except ourselves, that the workers have an interest in reducing the burden of taxation. This unsound theory is none the less dangerous when it is used to back up a policy which is otherwise sound.
Many people who have instinctively felt that the workers ought to oppose war, have backed up their argument by telling us that the taxation needed for the upkeep of armaments and for the replacement of destroyed property, falls on the working class!
We, on the contrary, have constantly pointed out that the position of the workers is the same, whether taxes are high or low. If taxes decline and prices follow, so do wages.
The danger of the argument used by these people was recently illustrated by Mr. Snowden’s attack upon the Baldwin Government on the ground that Great Britain is paying more to America on account of war debts, and receiving less from France than ought to be the case. We ask you to recognise that it does not matter at all to the working class how the Capitalists of England, France and the U.S.A. divide up between them the proceeds of their exploitation of the working class, and the proceeds of the reparations payments taken from the German Capitalists. Those who preach otherwise are helping to stir up national hatred between the workers here and those in France and the U.S.A. The essential thing to remember is that reparations payments go to the Capitalist class, not to the workers, and taxes for armaments are a burden on the Capitalist class. If this were not so would Capitalist Governments trouble about reducing the cost of armaments, and would the German Capitalists try to resist the payment of reparations if they could pass the burden on to the German workers?
Let us consider the facts as regards the cost of the last War. Under the Dawes Scheme, Germany paid to the Allied Government £87½ million in 1928 and will pay £125 million in 1929. (See Liberal Year Book, 1929—P. 232.) And taxation per head of the population in Germany in 1927-28 was 134 Marks as against only 31 Marks in 1913-14; that is, the taxation was more than four times as great. (See Constitutional Year Book, 1929—P. 420.)
Yet in spite of Germany having to pay huge sums in Reparations the German working class are not worse off than in 1914. The taxation has had to be paid by the only class which can afford to pay, that is the Capitalist class. Defeat in the War has hit the German Capitalists, not the German workers. Figures taken from German official sources disclose something of the extent of the loss of Germany’s propertied class. (See “Observer,” Mar. 17th.) In 1914, there were 15,549 persons with fortunes of one millions marks or over; now there are only 2,235. And owners of more than £500,000 have decreased from 229 to 33.
Now let us consider wages. The Report on Economic Conditions in Europe, published in May by the Royal Economic Society (London), shows that the purchasing power of the wages of skilled workers in Germany is about 6 per cent, or 7 per cent, above the 1914 level. (This makes no allowance for increased unemployment since 1914.) And according to a German semi-official publication (Wirtschaft und Statistik, January, 1929) the wages of unskilled workers in Germany have risen somewhat more than this.
In Great Britain, one of the victors in the War and the receiver of part of the Reparations payments from Germany, the purchasing power of wages in 1928 was about 8 per cent, above the 1914 level, while if the increased unemployment in allowed for, the purchasing power of wages is practically the same as in 1914. (See Labour Bulletin, June—Published by the Labour Party. The figures are based on official and other authoritative estimates.)
So we see that the German workers are not worse off through Germany having to raise more taxes to pay Reparations, and British workers are not better off through Great Britain receiving Reparations. The factors which govern the workers' wages under Capitalism are not in the long run affected by the highness or lowness of taxation. The working class have no interest at stake in wars between Capitalist countries, and have no interest at stake in questions of taxation or reparations. The working class can escape from their subject position only through Socialism, not by juggling about with direct and indirect taxation, or by making "Germany” pay or by making "France” pay.