This taxation business (1978)

From the July 1978 issue of the Socialist Standard

In the first issue of this journal The Socialist Party of Great Britain stated that it does not matter to the working class whether taxes are high or low, or whether they are direct, like present day PAYE, or indirect, like the duties on beer and tobacco. Other political parties and the trade unions greeted this with astonishment and unbelief; how, they asked, could anyone be so blind as not to see that workers would be better off with lower taxes? It is the purpose of this article to show that the statement was, and still is, a correct one.

Taxation is always in the news and it got special attention on May 8 last when a collection of opposition parties in Parliament forced the government to reduce Income Tax from 34p to 33p in the pound. The debate was being broadcast on Radio, which accounts for the MPs utterances containing more than the usual amount of humbug. With one exception, all those who spoke, whether for reducing the tax or for not reducing it, said that their sole concern was the wellbeing of “the nation”, but each side had the gravest doubts about the good faith of the others.

Mr. Healey thought the real intention of the Tories was to “grub up a few extra votes”. It seems that in his sheltered life he had never before encountered a political party so depraved as to frame its policy to catch votes. He made much of the Tory and Liberal admission that they favoured reducing direct taxation and increasing indirect taxation, VAT. What shocked him most was the Liberal John Pardoe’s view that there should be an even greater reduction of Income Tax. Did Pardoe not realise that the consequent “enormous ’’increase of taxes on beer and tobacco would raise the cost of living by as much as 3 per cent? (Under Mr. Healey’s guiding hand since February 1974, the cost of living has gone up by nearly 100 per cent).

An argument that did appear in several speeches was that reducing Income Tax would improve the workers’ "incentive to work”.

The one MP who stood aside from the general discussion was Enoch Powell. He made it clear that his group of Ulster Unionist MPs (who usually vote for the Labour Government) were simply using the occasion to bring pressure for the restoration of local government in Northern Ireland. Not one MP mentioned a certain forbidden ten-letter word — the word capitalism; but it is capitalism they were dealing with.

Capitalism is a complicated social arrangement, with many internal conflicts and contradictions. One consequence is that politicians, who need the workers’ support and votes, have perfected the art of presenting capitalist policy as if its real aim was to benefit the workers. It is not safe to accept things at their face value, which is the error made by those who tell the workers that what they need is lower taxes.

At first glance the case they make seems self-evident. If the PAYE deduction from wages goes up or if taxes put prices up surely the workers are worse off? And if PAYE or prices go down surely workers are better off?

The people who use this argument about price increases associated with higher VAT use the same argument about all price increases, whether related to higher taxes or not. (It is not necessary here to go into the question whether taxes on goods actually do simply put up their prices. For the present argument we can accept the belief that they do have this effect).

We can at once concede that at the moment when PAYE goes up or the cost of living goes up the workers are that much worse off: but what we should be concerned with is the longer-term, continuing, situation. And the fact is that, subject to variations due to other, quite different causes, the wages and salaries of the working class as a whole become adjusted to changes of PAYE and changes of the cost of living.

What really matters to workers is their “take-home pay” after deduction of PAYE and Social Security contributions, and what it will buy. It is this purchasing power that continually adjusts itself; not automatically, but through the struggles of workers inside and outside the trade unions, struggles influenced by the varying levels of unemployment. Government “wage restraint” propaganda and policies also play a part.

When purchasing power is reduced by higher tax deductions or price rises, workers react by seeking higher wages. When there are tax deductions or prices fall the workers’ resistance to pressure by the employers weakens. Earlier this year Mr. Healey held out an offer of lower PAYE as an inducement to unions to moderate wage claims.

There is plenty of evidence from past experience to show how take-home pay has adjusted to tax changes, and to changes in the cost of living.

First let us look at Income Tax. In the 19th century hardly any workers came up to the pay level at which tax became payable. During the Crimean War the government considered lowering the tax level so that most workers would pay tax. The idea was dropped for two reasons. First, the high cost of collecting large numbers of small amounts of tax would have been greater than the total amount collected. That is why, with inflation, Chancellors of the Exchequer periodically raise the taxable level to exempt low paid workers from tax. The second reason was that, because unemployment was then very low, it was realised that the workers would be able to get higher wages and thus maintain their purchasing power in spite of tax deductions.

Between 1938 and 1947, Income Tax changes brought far more workers into the pay level at which tax was deducted, and the proportion of pay deducted as tax had greatly increased. (In addition the cost of living had risen sharply). So were the workers worse off? A study of wages in Britain published by the American Department of Labour found that the purchasing power of take home pay had just about kept up with all the changes. A comparison between the purchasing power of present average earnings and that in 1938 shows that this upward adjustment has been more than maintained between 1947 and 1978.

Now for changes directly affecting the cost of living. In 1846 the industrial capitalists secured the abolition of the Corn Laws, thus enabling cheap food to be imported (at the expense of the landowners). It was presented as a boon to workers. Would not their wages now buy more? What the industrial capitalists really aimed at was that cheaper food would enable them to pay lower wages. (Later on when many manufacturers themselves wanted protection to keep out cheap foreign goods they presented it in the guise of “protecting the workers’ jobs”).

Between 1920 and 1926 the cost of living fell by 31 per cent, and PAYE was also reduced. Lucky workers? Not at all. Unemployment was heavy so that, in spite of attempted resistance through strikes, the workers were forced to accept an average reduction of wages of 32 per cent.

A special case of capitalist policy presented as something to help the workers was the introduction of rent restriction in 1915, by a Tory Minister in a coalition government. Because house-building had stopped on the outbreak of war in 1914, rents were rising. Rent restriction was imposed (at the expense of the landlords) in order to dissuade workers from striking for higher wages which would have adversely affected manufacturers as well as interfering with the war effort.

Rent restriction was adopted in many other countries and in the nineteen twenties the International Labour Office conducted enquiries into its effects. A typical finding was that related to Austria. It showed that in Vienna the rent paid by workers had fallen from 20 per cent. of wages in 1914 to barely 1 per cent. in 1923. So were the workers better off?

Most of the workers were in the same position as in Germany; they had practically no liabilities under the heading of rent, but the corresponding amount was not included in their wages. The actual gain was thus nil.

So we are on the solid ground of experience in asserting that taxation is not a working class issue, not forgetting that this presupposes that the workers continue the struggle to maintain and increase wages as far as conditions allow.

For the capitalists the position is quite different. Having exploited the workers to the fullest extent, having got maximum output at the lowest wage they can induce workers to accept they have to pay, out of their profits, the cost of maintaining the State apparatus, the armed forces and so on. The burden of taxation falls on them. It follows that as a class they have very good cause to keep government expenditure as low as possible so that taxation can be correspondingly low. The workers have no such interest.

There is another difference between the two classes. The capitalists have every reason to continue capitalism indefinitely, but workers who give the matter a little thought must conclude, with us, that it is in the interest of the working class to get rid of it.

Edgar Hardcastle

Crime — who loses? (1978)

From the July 1978 issue of the Socialist Standard

I suppose you'd say my politics are Tory, really. I believe in getting as much money for myself as quickly as I can, by any method. I'm a free enterprise man. (Bank Robber—Wormwood Scrubs.)

It is a long, long time since the figures for recorded crime indicated any decline in its popularity as a method of getting rich quick, or at least staying a little less poor. The Chief Constable of Greater Manchester (of whom more later) recently described it as ". . . possibly the biggest and fastest growing enterprise in the world”, which is how the City columns once talked about the oil industry or the activities of Jim Slater. Yet at the same time the belief persists that crime can be reduced or even wiped out.

For example Horace Cutler, the flamboyant Conservative leader of the Greater London Council, said last April:

Never has London been so dirty, so vandalised, so decaying and dangerous. We must take action now to eliminate the mugger, the vandal and the football hooligan. (Daily Telegraph, 21/4/78).

No half measures for Cutler—he wants to eliminate crime and, as he was speaking just before the local elections, we can assume that he was suggesting the best way of doing this was. to vote for his party. This might have been more convincing were it not for the fact that he is already responsible for running this city he describes as dirty, vandalised and dangerous.

Another popular assumption is that if crime can be eliminated and everyone starts living a quiet, law abiding life everything will be alright. (Although the bank robber quoted at the head of this article would probably disagree—he would be likely to die of boredom.) This assumption is based on the idea that law and order is a matter of morality, that the law sets standards which protect and benefit us all and that criminals are people who behave in an immoral way:

. . . what is serious crime but a lack of consideration for others, a failure to recognise their full reality and rights? (Colin Welch—Daily Telegraph 17/4/78).

(Our bank robber has some views on the way banks in their dealings are notable for a lack of consideration for others but never mind.) But many lawful acts are anything but protective and beneficent—for example the acts of organised violence carried out by the armed forces. Similarly, private property rights—on which capitalist society is based—are inconsiderate of the mass of people in the sense that they deny them free access and clearly work against their interests.

How big, in reality, is the problem of crime? There is such an abundance of statistics that anyone can take their pick. Try these:

In 1900 there were less than 80,000 offences recorded in England and Wales. In 1976 there were over 2 million.

Over the past twenty years the number of indictable offences per 100,000 of the population has quadrupled. Violent crime has doubled since 1969.

Last April the British Insurance Association said that between 1976 and 1977 the value of property taken in burglaries from the home went up from £22.4 million to £30.3 million. The BIA had reason to be pained; during 1977 they paid out a record £64.2 million to cover losses by theft.

It is usual to conclude from information like that that crime is rising like some great noxious wave. Parallels are drawn with the increase in divorce, abortions, venereal disease, to compose a picture of a society about to collapse into a new Dark Age. Retired officers in Bournemouth cower behind their Daily Telegraph and take hope from the politicians— usually Tory — who call for harsher penalties and tougher prisons.

In a sense they have reason to be concerned; so steep a rise in recorded crime is a comparatively recent trend. From 1900 to 1920 crime tended to rise in line with the population; it went up more sharply during the Slump, then levelled off before bursting up in the post war “crime wave”. That, too, was seen as a fundamental threat to social order but it was followed, between 1950 and 1954, by a relative stability in the figures. Since then they have been rising and are now doing so at about 15 per cent each year.

But these figures should not be taken neat and regarded as an accurate measure of social behaviour; there are important qualifications which need to be applied. Firstly, “serious” crime—murder, the more grievous assaults; armed robbery—makes up only about 4 per cent of the total. Much of the rest, apart from motoring offences, consists of theft—and about 65 per cent of that involves property under £25 in value. So if the figures for crime tell us anything, it is not that we are about to be murdered in our beds — statistically we are more likely to be involved in a little shoplifting.

Then there is the matter of the very basis of the statistics—the fact that they measure only recorded crime, or crime known to the police. And of course a lot of offences never come to police notice—minor acts of vandalism or the theft of a small amount of money from an unattended handbag or a black eye after a night on the beer. This means, firstly, that there is a lot more crime than we ever hear about and secondly that the statistics might be completely wrong, especially in recording rises or falls in particular crimes, because there may be reasons which persuade people to report a crime at one time and not at another.

For example, the National Association for the Care and Resettlement of Offenders thinks (The Guardian, 25/4/78) that the apparent increase in burglaries, which so worries the British Insurance Association, is due in part to people being readier to report the offence and the reason for this is that there has been an increase in the insurance of household contents, along with insuring the mortgage.

In the same way, the police may in some circumstances arrest someone for an offence when at other times they might let him go. Police activity can be influenced by the policy—which might mean the personal quirks—of their Chief Constable. In Greater Manchester the head policeman, James Anderton, has a reputation for a persecutionary zeal against those who are labelled as sexual deviants. According to The Guardian (11/4/78) Anderton’s policemen are especially active against homosexual clubs and were actually considering bringing a prosecution against one, under a bylaw of 1882, for “licentious or indecent dancing”. But the Greater Manchester force does not display the same enthusiasm to hunt down all law breakers; their policy in the case of motorists is to go soft and to try for persuasion before prosecution. Now the figures for crime in Greater Manchester in 1977 went up by over 10 per cent, while those for motoring fell by 35 per cent. But this does not mean that when in Manchester you can cross the road safely but must watch who you dance with.

Much of the response to crime can only be described as a panic in the face of what have been called folk-devils. In recent years we have seen many examples of this, of the mob reaction to Teddy Boys, Mods and Rockers and now muggers and football hooligans. This panic is open to exploitation by vote-hunting politicians but it also infects eminent members of the judiciary, who seem to allow it to affect the sentences they dish out. Last April at the Old Bailey Melford Stevenson, who has made his name in a number of cases not notable for their lenient treatment of the person in the dock, sent a man to prison for three years for the manslaughter of his baby and made the comment that this offence is

. . . now frighteningly too frequent ... It is a curious thing that about 15 years ago the phrase “baby battering” was not in the ordinary Englishman’s vocabulary.

It was not reported, whether Melford Stevenson is aware that the popularity of a phrase is not a measure of the frequency of an offence, nor whether he realises that any increase in prosecutions for baby battering is more likely due to a higher awareness of the problem, and the more efficient machinery for detecting it, than any proven increase in the offence.

Now if the majority of crime consists of offences against property, is it too simple to conclude that the ending of property rights, by the abolition of capitalism, would have the effect of ending crime? There are many who argue that it is too simple, that crime is a response to an emotional maladjustment. Superficially there is something to be said for this as it is common for offenders to come from broken families or to have a history of living in institutions like orphanages. But this can only be a superficial argument since it takes no account of the fact that our type of family is itself a social organism of capitalism, with defects typical of that social system, and cannot be considered in isolation from that system.

And what, in any event, are emotional maladjustments but reactions to or efforts to defend ourselves from, the stresses of capitalism? The ideal of capitalism is the supremely competitive being, a sort of James Bond of industry or commerce whose ruthlessness is shot through with glamour. In reality, capitalism offers a poor bargain to the docile, law abiding worker who carries his degradation with him wherever he goes. John McVicar, who was one of England’s recently most celebrated (and most hunted) big time criminals put his view on this:

Money has never been, or ever will be, my primary object . . . My life was always exciting and dramatic; wherever I was. I was part of the action. Psychologically, I had the satisfaction of personifying the counter-culture with which I identified myself, and I found this was confirmed by my notoriety and prestige. (McVicar By Himself.)

No bank clerk, no assembler on the endless production line, no conforming worker wearing his mortgage and his HP debts like so many albatrosses, can make any such claim. His prestige is limited to a reputation for keeping the paperwork flowing from In tray to Out, or not falling behind with the payments. He personifies the drabbest and most restrictive of cultures, the culture founded on his own exploitation. Perhaps it is arguable whether McVicar (now a “reformed character”) who ended up with a total of twenty three years prison, really got a bad bargain.

Working class emotional problems cannot be separated from the environment in which they are raised. It is no coincidence that crime is high, and violent, in the great urban concentrations—London, Liverpool, Glasgow—where life is fast and pressured and where one generation of slums follows another. Such places did not arise by accident; they originated in capitalism’s need to crowd workers together near their places of employment and to house them in dwellings built as cheaply as possible. This is not something which died with Charles Dickens; such places are still being constructed and need very little to realise their destiny of slumdom and breeding grounds for discontent and crime. One such is the Hyson Green estate in Nottingham, which recently won much notoriety for an especially nasty affair and where one of the unfortunate inhabitants with an aerosol epitomised the agony of living there—“These flats are the slums of tomorrow”.

There is every reason for people who live in conditions which offer no hope to behave in a hopeless fashion. Consciously or not, they grasp that capitalism offers them nothing and they react in what they see as an anti-social fashion, attacking the property precepts on which capitalism is based. One recent case, which was concerned with squatting, allowed Lord Denning to set out those priorities:

. . . the courts must, for the sake of law and order, take a firm stand. They must refuse to admit the plea of necessity to the hungry and the homeless . . . (Quoted in The Politics of the Judiciary—J. A. G. Griffiths.)

If this statement makes it clear that property rights are all-pervasive, it also sets out the near impossibility of not offending against those rights, if only because they are themselves offensive to human interests.

So the “crime busters” must lose and so must the criminals, who at best can hope to claw their way a little above the rest of the working class and who often end up, like our bank robber, rotting away years of their lives in mind-numbing prisons. For it is the working class, who read their newspapers and watch television and worry, because they are told to, about crime, who are massively the losers. At the same time as they worry, they dream of the equivalent of a Great Train Robbery, to lift them away from their life of indignity heaped on degradation. But although it has its losers—and its winners—capitalism is anything but a game.

Ivan.