Thursday 1 November 2018

Labour's Tax Bombshell

A question to everyone who thinks Jeremy Corbyn and the current Labour leadership aren't much cop. Can you imagine a Tory chancellor, a noted fiscal hawk, proclaiming the end of austerity if Labour wasn't an effective opposition and hadn't made the running against the cuts? And the honest answer, of course, is no. It says something about the growing hegemony of the left that the likes of Philip Hammond are forced to ventriloquise its programme. And yet, just to reinforce the point this was a Tory budget, there is the movement of the 40p tax threshold, of raising it from £45k to £50k from 2020 onwards. There is no economic necessity behind the move, Hammond chose to do this for naked political reasons. And this is where things get interesting.

From the standpoint of the slow-burning Tory crisis, Hammond's tax move was aimed at preserving their declining voter coalition. The reasoning goes that by offering a subsidy to higher earners support for the Tories will be shored up, and make the difference among those layers tempted by Corbynist fare. It's a bet that hundreds more in the pocket is enough to make better off voters forget the mess and the cruelties the Tories have dished out. This then was no attempt to reach beyond but preserve, conserve their vote, but one that falls short of the narrow requirements of party interests. When support is literally dying and not getting replaced, one might suggest something with a broader appeal might be considered.

Then came a curve ball: John McDonnell has decided to accept this move, and drawing down criticism from the soft left and the usual suspects in equal measure. Yes, it's a bizarre spectacle to find erstwhile Blairites and Brownites criticising and rebelling against the party on this when, had either of their heroes done the same thing, you know they would have hailed it as a master stroke. See, for example, the contemporary praise for New Labour's pledge to stick to Tory spending plans for the two years following 1997. But, as Stephen Bush points out, most members tune out complaints from habitual bellyachers unless they're going out their way to attack the leadership. Still, it is a move not without risk as plenty of front benchers have criticised Hammond for prioritising this cut over and above the urgency with which crumbling infrastructure and the ever-present threat of climate change warrants. And by implication, criticism of Tory taxation plans is now a critique of Labour's.

What then is John's game? Why is a shadow chancellor unafraid of publicly commenting on his debt to Marx set on giving premier league footballers, FTSE 100 CEOs, and A-list TV personalities 900 nicker a year at the public's expense? As Stephen rightly suggests in his piece, there is a desire not to hammer the professions whose salaries often cluster in the £35k-£50k range. They're part of the Corbynist coalition too. But I'd also suggest it's about heading off future Tory attacks. Labour could commit itself to the most demented Friedman-Hayekian programme of flat taxes, privatisation and market fundamentalism, and the Tories will still paint it as a tax and spend party. By accepting Hammond's tax plan it does two things. It helps insure the next manifesto against attempts to reduce questions of economic competency to taxation - just as Dave and his media helpers managed in 2010 and 2015 with the deficit - and blunts Tory attacks. There can't be any smoke if there's no fire. This also gives Labour more room to pivot scrutiny onto Tory weakness, which is pretty much every aspect of their record. They are vulnerable on investment, growth, quality jobs, homes, and government debt.

Nevertheless, it is a funny business, an uncomfortable business for a left wing would-be chancellor to go down this road. Especially when there's no end to the benefits freeze in sight and public sector wages remain depressed. To add bite to the party's position, Labour could consider the possibility of introducing additional tax bands for higher earners, and other measures like beefing up Hammond's social media tax. Both would please the base and defend the leadership against charges of cynical positioning, as well as finding another angle to add punchy, populist policy to the next manifesto. While no doubt the Tories would try piling in, suggesting the likes of Jeff Bezos and Piers Morgan shouldn't pay more tax is not the stuff of which a popular politics is made.


Boffy said...

People earning £50,000 a year, or even £100,000 a year are not rich, or even to use the correct terminology (rich refers to stock of wealth, not flow of income) affluent. They are generally people who have to sell their labour-power, albeit they get a bit of a higher price for their labour-power than many other workers.

The problem with social-democracy, has always been that in order to pay for the welfare state, it has taxed this group of workers increasingly heavily in order to pay for benefits to be paid to the rest, which become necessary, because a large number of inefficient small capitalists pay poor wages, whilst the cost of living for things like housing rises. This transfer of income also requires a huge state bureaucracy to implement, which is also very inefficient, compared to workers simply having high enough incomes to begin with.

So Labour is right to say a) it does not want to penalise these slightly higher paid workers, so as to subsidise lower wage paying employers, and b) that its main means of reducing public spending will be to reduce the amount of benefits it has to pay out, by raising the minimum wage, and restoring union collective bargaining power. Of course, the Blair-rights don't like this latter approach, because it implies encouraging direct working-class self-activity, which they fear getting out of hand.

All of the tax redistributive stuff is so much nonsense, sa Marx described over 150 years ago. The Tories, for example, and Liberals, boast about having reduced taxes on millions, but fail to mention about the massive rise in VAT they imposed on them, which had a more dramatic negative effective, or the increased costs imposed upon those who now have to pay for local government services no longer provided.

The rich are not those who have to work to earn a living, but those with sufficient capital to be able to live comfortably without working. If you have, say £1 billion, then even if you just got 1% a year on it, that is £10 million, which shows how paltry an income of £50,000 really is. But the truly rich, of course get far more than that on their capital, and in recent years, their main form of increase in wealth has come not in the form of revenues, but in the form of capital gains, as their shares, bonds and property have soared in value, by 10, 20 and more percent a year. That is why central banks and governments have been prepared to wreck the real economy with QE and austerity, so as to keep those asset prices high.

Its against that parasitic wealth, that Labour should focus its attention.

Unknown said...

Labour"s 'pragmatic' embrace of trickle down is just wrong. They seem to have given a blank cheque to accommodate Tory tax cuts between now and the next election.

Naturally the Tories will bank this and Labour don't have a quid pro quo of higher tax bands to claw back this lost revenue whilst public infrastructure continues to fall apart.

A lot of people seem to think McDonnell is clever for avoiding a Tory trap. It seems to me the exact opposite - McDonnell is back in the New Labour comfort zone - a supposed Marxist running scared of the 'tax and spend' label. I thought Labour had ditched this discredited brand of politics - obviously not.

Anonymous said...

'was aimed at preserving their declining voter coalition. '

in the 2017 election the Conservatives got 42.4% of the vote (its highest share of the vote since 1983),

Shai Masot said...

A handy cut-out-and-keep list of "labour" MPs for priority deselection:

Karen Buck, Yvette Cooper, Neil Coyle, Stella Creasy, Mike Gapes, Roger Godsiff, Kate Green, Margaret Hodge, Helen Jones, Liz Kendall, David Lammy, Pat McFadden, Alison McGovern, Ian Murray, Lisa Nandy, Jess Phillips, Lucy Powell, Emma Reynolds, Gareth Snell (🤬) and Martin Whitfield.


CCAAC said...

Capitalism is a collective system where everybody works for the good of a few privileged individuals. Clearly a Corbyn led Labour party has no intention of changing this state of affairs. Still please go out and vote for him.

Communism is a collective system where everybody works for the good of the collective.

Marx understood this and in the communistic manifesto called for a heavily progressive income tax. Marx also understood that the labour movement was primarily the unskilled workforce, as Engels said; the middle classes can be bought off initially. Revisionist like Boffy have made the movement one primarily in the interests of the middle classes

The middle classes in the UK are obscenely wealthy by global standards and their carbon footprint is a burden to us all (incidentally no one on planet earth needs anywhere near £100k a year to live on and anyone who thinks they do are the enemy). These middle classes, constantly moaning about their burdens, crying foul when they are asked to pay an extra penny in the pound, really do need to be brought to heel.

The middle classes wave their union jacks while doing everything to defraud the state of much needed investment.

Of course none of this is an answer in itself. The answer is a radical transformation of the system. Many of these answers can be found in our latest white paper – The end of the American debasement.

Incidentally the committee recently accepted an amendment to one of our policies:

Ban of puppets and cartoon characters in adverts as a fight against infantilism, consumerism and propaganda

CCAAC said...

The amendment being:

Ban of poetry, puppets and cartoon characters in adverts as a fight against infantilism, debasement of human creativity, consumerism and propaganda

Unknown said...

Labour no longer hails or promotes trickle down economics, not when it massive membership knows it's a con designed to support massively obscene wealth. Sorry but you're barking up a tree of history and ignoring today...

Unknown said...

I seem to be relatively isolated amongst comrades on my particular take concerning John McDonnell's recent manoeuvrings.

Perhaps the scales are finally falling before my eyes. However something sticks in the craw about the reasonings being offered up for McDonnell's decision not to contest the Tory tax cuts. Cuts which for the most part are concentrated within the top 10% of earners.

The waters have been muddied even further by opposition being largely confined to an unsavoury crew of anti-Corbynite figures, therefore making it relatively easy to bat away criticism. Even soft left figures like Burnham and Nandy have tarnished their case at respective points. Burnham's recent letter also rather let the side down by unconvincing pleading exoneration for voting the wrong way under Harman's stewardship on Osborne's malevolent welfare bill with a rather cheap jab at the unsophisticated twitterati! On the contrary Mr B, I think they had the measure of you at the time.

Anyway, besides these tawdry disqualifications and the rank opportunism I still feel something all is not well here and that Burnham and Nandy still have a valid point here. They may be damaged goods but even a broken down clock is right twice a day as they say:

There is a disengenuousness in the idea that we can concentrate tax hikes on a narrow spectrum of uber rich 5 percenters. The blunt reality is taxes need to be progressive but broad based which necessitates reasonable taxation of comfortable middle income groups (as to what is 'reasonable' is an ongoing debate). As is frequently said, we can't enjoy high quality Scandinavian type public services based on the current low tax Anglo Saxon model. This is evidently clear from the carnage of our infrastructure.

McDonnell has channelled a classic bit of New Labour triangulation through Corbyn's ostensible new era socialism. The subsequent levels of cognitive dissonance are such that the Emperor wears his new clothes with complete impunity. Now able to make counter-intuitive pitches and have the new left cheerleaders able to demonstrate their post hoc ingenuity, providing intellectual ballast to Mandelsonian electioneering, is indeed highly ironic.

"One senior Labour insider briefed on the shadow chancellor’s rationale said they had witnessed an “eerily similar spiel in the New Labour years” when Tony Blair and Gordon Brown were thrashing out how best to raise extra funding for public services, including the NHS, without paying a price at the ballot box."

Tmb said...

When the BBC, virtually all of the mainstream media, the Guardian and even many Labour MPs continue to rail against Corbyn, for being a basically left of centre politician, you know things have gone too far.

I can't speak for anyone else, but my left of centre politics is merely an antidote to the hard right politics we have today, that rewards the rich and the middle class simply for being already wealthy and prepared to sell the rest of us out. There may be some on the left who dream of a socialist utopia, or a money free society etc, I just want a fairer society, starting with a fairer economy, affordable housing, more working class MPs, things like that. Pragmatism first, ideology later. I think most people who are genuine feel the same, but I could be wrong.

CCAAC said...

“I think most people who are genuine feel the same, but I could be wrong.”

There was no one more genuine than the Nazis, how did that turn out?

The argument against your position is that a fairer society, a fairer economy is precisely what is Utopian in a capitalist society, at least in the long run. In capitalism fairness can only be a fleeting thing. Therefore, the argument goes, the only way to achieve a fairer society, a fairer economy is to overthrow capitalism and replace it with a classless society and one free of market mechanisms. So by genuinely and humbly wanting modest improvement you sow the seeds of the inequality you rail against.

And it doesn’t matter how you define fairness, even the capitalist apologists ideal of fairness, meritocracy, can only be achieved by ensuring everyone has equal opportunities, otherwise merit may be based on privilege and not ability. Therefore we have the contradiction, the only way to achieve a fair meritocracy is through equality but in a meritocracy we get inequality.

This is why from each according to their ability to each according to their need remains the ultimate pragmatic approach to these contradictions and is actually the least Utopian way to get any kind of fairness.

To sum this up, it shouldn’t matter how great or how small your contribution to progress or to human well-being appears to you or how great you imagine your talents are, you never deserve more than the average.

This is the kind of value system we aim to build.

Boffy said...

Marx made clear more 150 years ago that no improvement for workers can come from tinkering with taxes and benefits. In the Critique of the Gotha Programme, he wrote,

“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?”

The whole of the Critique is devoted to opposing the idea that workers should make themselves dependent upon the state, as the Lassalleans and Fabians proposed, rather than building their own self-government. Marx favoured curtailing the size of the state, and curtailing the levying of tax to that end. In the programme he wrote for the First International, he wrote,

“No modification of the form of taxation can produce any important change in the relations of labour and capital.”

And he favoured a progressive income tax, only because it was more transparent in showing how much the state was robbing from the workers, and thereby facilitated the workers opposing it. He wrote,

“Direct taxation prompts therefore every individual to control the governing powers while indirect taxation destroys all tendency to self-government.”

Marx favoured such self-government, including in the provision of social insurance and welfare provision by the workers themselves, via their trades unions and friendly societies rather than allowing the state control those spheres. As Engels put it in his Critique of the Erfurt Programme, opposing the idea of National Insurance, and a welfare state,

“Here I want to draw attention to the following: These points demand that the following should be taken over by the state: (1) the bar, (2) medical services, (3) pharmaceutics, dentistry, midwifery, nursing, etc., etc., and later the demand is advanced that workers’ insurance become a state concern. Can all this be entrusted to Mr. von Caprivi? And is it compatible with the rejection of all state socialism, as stated above?”

Both Marx and Engels saw taxation as being necessary only for the cost of running the state itself, not for the state taking over the provision of goods and services, including welfare. Engels, for example, continues,

“Progressive... tax to cover all expenditure of the state, district and community, insofar as taxes are required for it. Abolition of all indirect state and local taxes, duties, etc.”

And Marx, noting this fact, and the bourgeois nature of the demands over taxation, wrote in the Critique of the Gotha Programme,

“Taxes are the economic basis of the government machinery and of nothing else. In the state of the future, existing in Switzerland, this demand has been pretty well fulfilled. Income tax presupposes various sources of income of the various social classes, and hence capitalist society. It is, therefore, nothing remarkable that the Liverpool financial reformers — bourgeois headed by Gladstone's brother — are putting forward the same demand as the program.”

Unknown said...

To the people who keep saying £50k is rich, £100k isn't rich - bear in mind that the median salary in this country for those on full-time salaries is about £26k, or less when you factor in those who are on part-time contracts.

I fully agree, it is the very richest who are 'the problem' (e.g. those with off-shore wealth etc.).
Nevertheless, when I hear people saying those earning between two and four times what I earn are not rich / affluent / well-off, it is a bit of an insult, and it irks.

DFTM said...

“Boffy spouts on about self government and the self activity of the working class and then uses his time to defend the BBC and the unfree press!

I claim that self activity is an impossibility while ever people swallow what the mainstream media has to say.

This is why the left should be day and night documenting and explaining why the media are hopelessly bias and pure propagandists.

Boffy by defending the BBC and the so called free press does everything in his power to block the self activity of the working class.”

Here is Engels on the attitude to the middle classes (1890’s):

“We are still in need of technicians, agronomists, engineers, chemists, architects, etc., it is true, but if the worst comes to the worst we can always buy them just as well as the capitalists buy them, and if a severe example is made of a few of the traders among them — for traders there are sure to be — they will find it to their own advantage to deal fairly with us. But apart from the specialists, among whom I also include schoolteachers, we can get along perfectly well without the other “intellectuals.””

Here is Engels on state ownership (1890’s):

“To my mind, the so-called “socialist society” is not anything immutable. Like all other social formations, it should be conceived in a state of constant flux and change. Its crucial difference from the present order consists naturally in production organized on the basis of common ownership by the nation of all means of production. To begin this reorganization tomorrow, but performing it gradually, seems to me quite feasible.... Once we have a sufficient number of followers among the masses, the big industries and the large-scale latifundia farming can be quickly socialized, provided we hold the political power. The rest will follow shortly, sooner or later. And we shall have it all our own way in large-scale production.”

So Boffy’s Marx quote about relying on Mr. von Caprivi is irrelevant because it isn’t the intention that he holds the power! The intention is that state ownership or if you like nationalisation is carried out as part of the self activity of the working class!

This is Marxism abc, and Boffy is a revisionist.

Boffy said...

I treat the ravings of DFTM/BCFG.CAAC/Chris/Dvae/Brian B/The Sentinel or whatever other pseudonym he chooses to use in the same way as I treat the ravings of Trump, i.e. best not to risk your brain cells by listening to it.

But, having caught just the opening words of this latest load of bullshit, I couldn't help laughing at the fact that he had posted under his DFTM moniker, the rantings he had previously spounted some time ago using his BCFG moniker.

Still I suppose that if you have that many split personalities inside your head, its difficult keeping track of them all, and who you had say what load of crap to try to provoke a response.

Boffy said...

To Pleb James,

If I was a train driver earning £50,000 a year I would feel a bit irked that just because you only earn the average wage, that makes you somehow feel that I am affluent, let alone rich, or that the fact that I am getting paid the market rate for my labour-power, somehow is the cause of your low wages, and a reason for me to be penalised for your unfortunate situation, as though your bad fortune could in some way be mitigated by imposing misfortune on me!

That's hardly a basis for working-class solidarity is it. It sounds more like all those people who complain about local government workers and civil servants getting "gold plated" pensions, and who seem to think that just because they have failed to defend their own pension schemes their situation would somehow be improved by also forcing local government workers etc. to also have to accept worsre pensions.

DFTM said...

Boffy resorts to insults in place of arguments. This is a well known trait noted by many comrades over many years.

“If I was a train driver earning £50,000 a year I would feel a bit irked that just because you only earn the average wage, that makes you somehow feel that I am affluent”

If you are not affluent mate and you are earning double what I earn what does that make me?

“or that the fact that I am getting paid the market rate for my labour-power, somehow is the cause of your low wages,”

It is not your market rate that is the cause of my low wages but the fact we live in a system of market rates for wages. Will you join me Mr Train driver in calling for the end of the wage slave system and the markets that go with it? All in the name of solidarity you understand!

“That's hardly a basis for working-class solidarity is it”

What that one member of the working class earns double what another member earns? I would say solidarity is difficult in those circumstances yes. Boffy wants to even lump in those who earn over £100k, on that basis solidarity is impossible. As Engels say all you can do in the short term is buy them off and not even attempt solidarity with these ‘traders’, because that is what they are!

Boffy even wants us to pretend that Oprah Winfrey (net worth 2.7 billion) is not wealthy, he used a Chris Rock comic sketch to outline his ‘reasoning’ for this!

Yes based on what Boffy says working-class solidarity indeed has no basis!

Boffy doesn’t even think we should bother to bring large scale industry etc under common national ownership

“Its a strange commitment to democracy otherwise that privileges the votes of around 1.5 million dead voters, who voted for Brexit in 2016”

I know Boffy has turned Marxism into a middle class movement but this is taking that to the extreme! Working class people die younger than middle class people. So is Boffy saying people over a certain age should not get to vote and if they are working class this voting age should be lower because they die younger? If Boffy is saying we should reduce the voting age, then to what? 12, 8, 4 years old?

So Boffy is saying,

Let’s just leave large scale industry, banking and retail in the hands of the class enemy shall we!

Or lets just leave it up to the workers in those individual enterprises to determine what they want to do, because we really want to make planning difficult for ourselves don’t we! And make the transition as painful as possible!

Tmb said...

I'm not taking sides here, but I've noticed on left wing sites there are always people trying to pretend to be on the left, but are obviously on the right. I'm guessing that if there are any popular right wing sites, any left wing views will be deleted, whereas left wing sites tend not to censor, in spite of the view that lefties are more likely to censor than the righties.

I'd suggest that censorship comes from the right, and the privileged 'left liberals' who are neither left or liberal but cuckoos in the nest.