We live in a society in which progressive taxation in unavoidable. So we expect and accept that higher earners should pay more tax than lower earners. Currently higher earners, who are one percent of taxpayers, pay 27 per cent of taxation. And, being relatively few in number, the personal load is very high. Interestingly this proportion has increased markedly since the bad old ‘high taxation’ days of Old Labour (which may very well become New Labour.).
So what? These high earners can afford it. And so many of them make their money through questionable activities, and tend to protect their ill-gotten gains through questionable ways.
But, when we look at the reasons for promoting higher taxation rates for the rich other questions come to mind. The majority of high earners, like most of us, are paid what they are worth. Employers are not inclined to pay over the odds gratuitously. If they are not worth the money they will be replaced by those who are. Of course this is a rough and ready principle, but by and large it preserves a balance. Like democracy it can produce odd results on occasion, but, like democracy, it is the least worst way of doing it.
No one seriously objects to taxation. By benefiting from being in a state, in effect we enter a contract to pay for the offices of the state. It is less easy to defend the state’s right to impose higher rates on the more successful people. Said plainly, the state puts its hands into the pockets of the high earners and removes what is not theirs. Perhaps we should have a single tax rate applied to all income. The rich would still pay more but it would then be proportionate and not confiscatory.
Don’t bother to tell me that this wouldn’t work, for a variety of reasons. The system we use is broadly the most practical. But, and it’s a very large but, anyone who favours the system out of envy is unjust. Those who delight at increased taxation for the successful are guilty of supporting theft. Those who live with it (rich or poor) because there is no alternative, should always regard any increase in tax rates focused on the successful as a matter of regret.
We must accept that the ability to maintain a just and fair society rests on our prosperity. And prosperity depends on a successful economy which, in turn, depends on its successful contributors. And a refusal to reward success is, as Marxist societies have shown, a sure way to impoverish all. “It’s the economy, stupid” And always will be.