A New Way To Balance the Budget

I read through all the manifesto’s last week. Well, I glanced at them. Ok, I saw the headlines about them. My conclusion, based on this detailed analysis? They all cost a lot of money. Which invites the question ‘How do we raise such a lot of money?’

The standard approach seems to be through taxation.  Basically, you charge people for the services that they benefit from, in return for which they get access to those services and the right to vote. Sounds like a plan to me. Except within that there seems to be an untested mantra that those who have more money should pay more. Now I’m the one who used to take a copy of Socialist Worker into the Insurance Broker that I worked for and have never voted for anyone further right than a Lib Dem. But this strikes me as not well thought through. Maybe it's one of those things that we’ve all heard said so often that it becomes received wisdom.

But why? Would this be reasonable anywhere else? If I go to Asda (reopening soon, hurrah) and buy the same items as the person next to me, how would they react if they were charged more, simply because they had more disposable income than me? If they want a better product, they are free to choose to go to Waitrose and spend some of their disposable income there. But why should they have to pay Waitrose prices for Asda quality, just because they have the money?

The well-off don’t receive better education if they use the state school system or better health care through the NHS, nor are they better defended by the Army, just because they are rich. Of course they can buy private education or health-care and they may buy security by paying for insurance or a nice living location. But in making those choices and not using public services, they reduce the burden on them, freeing them for others to use. In which case an equally sound (ie not very) argument could be made that those choosing to spend their money in that way should pay lower, not higher, taxes.

Now, I know some will bridle at such a thought, because it seems unfair. The rich can afford to make those choices, the poorer cannot. But that is an argument about whether the rich deserve their riches or not, it’s a “We don’t have as much as those rich ***** so we’ll find a legal way of redistributing the wealth”. But this lacks integrity. If the problem is inequality, then justify that position and spell out policies that address it, don’t hide behind the urban myth that it is intrinsically right for those who have more to pay a disproportionate amount more than those who have less. (The argument “those who have more should contribute more” is entirely sensible – but they already do, even if they are taxed at the same rate.)

There are other pragmatic considerations too. Not just that the rich will push off to somewhere friendlier, but also for those who stay. If a company has 110 employees, 10 of whom are on the higher tax rate, then in order to give everybody £75 more in their pocket requires the company to increase the pay of the higher tax payers by more than that of the lower paid. (£125 vs £100) For the same outlay, if everyone was on the same tax rate, all the employees would receive a £77 after-tax increase, £2 more than they would otherwise have received. Given a fixed budget, most employees lose out by having some on a higher tax rate, even if the company is seeking to be egalitarian!

A thought then on how we might fund the manifestos: Each party starts a crowd-funding page via Facebook. The party that gets the funding for their policies first, becomes the government. Not only does it solve the shortfall, it could replace the election entirely.

Genius, I think.