I recently read Douglas Carswell’s book The End of Politics. I think Carswell had a lot of interesting things to say, particularly about people becoming more consumerist with government-provided services. However his main thrust is about how the state has become far too large overall and – crucially – has become too large because of progressive income taxation.
Carswell’s point about tax seems to be that because income tax is extremely progressive, most people feel comfortable voting for spending increases because they never expect to pay for it. I don’t fully buy this. I think reaction to the current “austerity” measures show that Carswell isn’t quite right: people are pretty pissed off about measures that don’t directly affect them.
I think the issue is more subtle than this. I think people are generally perfectly happy to pay their “fair share” for the public services and subsidies they believe they are entitled to receive. I think the issue is that they don’t realise what poor value their taxes offer for the services and subsidies they actually do receive. The way that levels of taxation are totally separated from the spending on services means that people cannot properly scrutinise whether they are getting good value or not and whether their tax money is being spent wisely or not.
An example from my current world: I keep getting Section 20′d by my landlord. Because I’m presented with an actual bill that I have to budget for I scrutinise the notices, I argue against estimates, I ask difficult questions about contractors, I ask questions about governance and the decision-making process. My tax bill, which is significantly larger, I just pay. I am under precisely the same obligation to pay both.
I wonder if we each received an itemised bill we might take a bit more interest in what our money is being spent on. For example if I had to pay for the police service by monthly direct debit might I take a bit more interest in whether the local Safer Neighbourhoods Team ever showed up on my estate? More importantly, might others take a bit more interest? If we knew precisely how much of our individual hard-earned was being distributed to subsidise our neighbours’ rent might we be able to form a more considered view on whether the welfare and benefit rules are fair? If prisons were costing me Z pounds a year and the war in Afghanistan was costing me Y pounds a year, might my view on the relative merits of such state spending be more informed?
I am not taking a view on whether the level of taxation we pay should be determined by our gross income or size of house or inside leg measurement, but once the appropriate fraction has been allocated to us, what if we were presented with an itemised bill and an annual repayment schedule? Might we not take a bit more interest and involvement in our society? Might that not be quite healthy for “democracy”?