Tax his land,
Tax his bed,
Tax the table
At which he’s fed.
Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.
Tax his work,
Tax his pay,
He works for peanuts
Anyway!
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.
Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.
Tax his cigars,
Tax his beers.
If he cries
Tax his tears.
Tax his car,
Tax his gas,
Find other ways
To tax his ass.
Tax all he has
Then let him know
That you won’t be done
Till he has no dough.
When he screams and hollers,
Then tax him some more,
Tax him till
He’s good and sore.
Then tax his coffin,
Tax his grave,
Tax the sod in
Which he’s laid.
Put these words
upon his tomb,
“Taxes drove me to my doom…”
When he’s gone,
Do not relax,
It’s time to apply
The inheritance tax.
List of UK taxes
- Income Tax
- Value Added Tax
- National Insurance
- National Insurance Employers Contribution
- Corporation Tax
- Council Tax
- Business Rates
- Capital Gains Tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax
- Inheritance Tax
- Alcohol Duty
- Tobacco Duty
- Hydrocarbon Oils Duty
- Air Passenger Duty
- Climate Change Levy
- Aggregates Levy
- Gambling Duties (Bingo Duty, Gaming Duty, General Betting Duty, Amusement Machine Licence Duty, Pool Betting Duty and Lottery Duty)
- Insurance Premium tax
- Landfill Tax
- Petroleum Revenue Tax
- Tonnage Tax
- Vehicle Excise Duty
- Vehicle First Registration Fee
“Taxes! upon every article which enters the mouth, or covers the back, or is placed under the foot—taxes upon everything which is pleasant to see, hear, feel, smell, or taste—taxes upon warmth, light, and locomotion—taxes on everything on earth and the waters under the earth— on everything that comes from abroad, or is grown at home—taxes on the raw material—taxes on every fresh value that is added to it by the industry of man—taxes on the sauce which pampers man’s appetite, and the drug that restores him to health—on the ermine which decorates the judge, and the rope which hangs the criminal—on the poor man’s salt, and the rich man’s spice—on the brass nails of the coffin, and the ribands of the bride—at bed or board, couchant or levant, we must pay.—The schoolboy whips his taxed top—the beardless youth manages his taxed horse, with a taxed bridle on a taxed road: —and the dying Englishman, pouring his medicine, which has paid 7 per cent., into a spoon that has paid 15 per cent.,—flings himself upon his chintz bed, which has paid 22 per cent.,—and expires in the arms of an apothecary who has paid a license of a hundred pounds for the privilege of putting him to death. His whole property is then immediately taxed from 2 to 10 per cent. Besides the probate, large fees are demanded for burying him in the chancel; his virtues are handed down to posterity on taxed marble; and he is then gathered to his fathers, —to be taxed no more.”
(Sydney Smith, Edinburgh Review, 1820)
Taxes in this country are too high and too complicated. Gordon Brown claimed that “the UK is best placed to weather the economic climate”, and that the recession will be over by Christmas. But in fact the UK economy is still in recession, unlike the US where the economy is now growing. (The Mirror’s ludicrous take on this is “Gordon Brown will be pleased Britain helped US out of recession”.) Japan, China, Germany and France are already growing again. Britain is now the world’s sixth largest economy. It used to be the fifth, but has been overtaken by Italy. They are still in recession too, which does not bode well for us. In 2000 the UK economy was 35 per cent larger than Italy’s. Under Labour, the UK economy has been suffering slow sclerotisation. Growth has been lower than it could have been, and as a result we are falling behind.
Yesterday I identified one factor contributing to slow growth: regulation.
Taxes are another.
Taxes disincentivise work. If you tax income, people will start to value leisure time more than work, and will work less. If you tax production (VAT), there will be less production. If you tax jobs (National Insurance), there will be fewer jobs. The left are happy to admit that taxes on tobacco and alcohol reduce their consumption, but for some reason they have difficulty accepting that this principle also applies to work, production and jobs.
Taxes make work more difficult. Taxes are a form of regulation, and have all the problems of regulations explained yesterday. You have to know them: you have to know what they are and how they work. They are fiendishly complicated. You have to navigate through a dense thicket of taxes and tax law before you can start a business. Or you have to hire expensive accountants and lawyers. All this has immense costs to the UK economy.
KPMG carried out an audit of the UK tax system in 2006. They found that its complication places immense burdens on UK businesses. “Some businesses commented that they are actually discouraged from conducting international trade because of the challenges faced by complying with Customs requirements.”; “This is a complex form (with over 54 boxes covering the different uses of the declaration; businesses only need to complete the boxes relevant to the shipment in question).”; “some businesses do unnecessary work believing that it is required.”; “government is constrained by the fact that 80% of the VAT burden is derived from EU legislation with no domestic discretion.”; “the large number of notifications and information retention requirements”; “the very complex range of schemes for particular types of business”; “the high degree of complexity in relation to the number of schemes that HMRC have made available in an attempt to make the VAT requirements simpler for small business. Small businesses must still familiarise themselves with a lot of information in order to make a decision on the best approach. Interview feedback indicates that they will often make that decision on the basis of what means least tax to pay, rather than an administrative saving”; “complexity (perceived or actual) of the various returns and supplementary pages, Income Tax returns [for businesses] are often outsourced and hence there are very high external costs”.
According to LexisNexis, publishers of Tolley’s Yellow Tax Handbook, the UK now has the longest tax code in the world. The 1997 handbook was 4,998 pages in two volumes. The 2009 handbook is 11,520 pages long over four volumes. It would have been five volumes and many more pages if they had not reduced the font size. Even the experts at Tolley’s find tax law “bewildering”.
Again, as detailed yesterday, burdens are greatest on small businesses. And we mustn’t forget the monetary burden as well as the administrative burden. Taxation reduces the profitability of ventures, so some ventures never get started in the first place.
Taxes are too complicated and too high for ordinary people, too — not just for businesses. The tax credits system creates marginal tax rates in some cases as high as over 100%. Someone with no job and a marginal tax rate of over 100% is never going to start a job even if they wanted to. It is not worth working 40 hours a week if it will reduce your income! Who would work 40 hours at a negative wage per hour? Marginal tax rates of 70% or more on the poor are common. Clearly, this disincentivises work, keeping people in poverty. So does the low level at which taxation kicks in. Even someone working only 20 hours per week, on minimum wage, still pays tax. It seems rather odd, given that the minimum wage is supposed to lift people out of poverty, that the state then taxes them back into poverty.
We can tell taxes are too high because they are not maximising revenue. As taxation increases, each additional increase raises proportionally less revenue. Once taxation gets beyond a certain point, each additional increase actually reduces revenue. The government’s proposal to raise the top rate of income tax to 50% will do this. (In fact, because of the withdrawal of the personal allowance, the marginal rate of tax is 60%.) The Institute of Fiscal Studies reckons the move will lose the government about £1 billion in revenue, even on optimistic projections. The total decrease in revenue could well be greater than that.
High taxes not only reduce the absolute amount of tax paid by the rich. They also reduce the percentage of government revenues from the rich. In the US, lower taxes have increased the percentage paid by the rich as well as the amount. The US has a more progressive tax system than the UK. Revenue will increase if UK taxes are cut. It will decrease further if they are raised.
Taxation doesn’t just reduce revenue. It also reduces work. Read these stunning letters — so many of them — about people deciding to scale back their work because of high tax rates. Doctors deciding to treat fewer patients, for example.
Many firms are leaving the UK because of high personal taxation and high regulation. Gradual tax reductions to a flat tax of 20% with a high personal allowance could attract them back and more. Countries like Georgia and Dubai deliberately have very low tax rates to attract business. They know they will raise more revenue in the long run. Whereas the UK both encourages firms to leave the country or to spend lots of money hiring accountants and lawyers to examine whether they should leave the country.
It’s not enough to cut taxes. On its own, that would just increase the amount the government borrows. They are already borrowing over £10 billion per month, and this will probably never be paid off.
Spending must be cut too. Even if “the rich” were taxed 100%, it would still raise nowhere near enough to fund the current expenditures of the British state.
Leftism is inherently short term. They want high spending now, even if this requires huge amounts of debt and reduced long-term prosperity. Lower taxes would cause massive wealth creation and increase prosperity for a variety of reasons. And in the long run there would be more wealth for the government to tax.
If we want a dynamic economy, taxes must be cut. If we want to stop taxing the poor, spending must be cut.
Let me tell you how it will be,
There’s one for you, nineteen for me.
Should five per cent appear too small,
Be thankful I don’t take it all.
Don’t ask me what I want it for,
If you don’t want to pay some more.
(If you drive a car) I’ll tax the street;
(If you try to sit) I’ll tax your seat;
(If you get too cold) I’ll tax the heat;
(If you take a walk) I’ll tax your feet.
‘Cos I’m the Taxman,
Yeah yeah, I’m the Taxman,
And you’re working for no one but me.
