Thursday, 6 December 2018

Are the motives for taxation to blame for poverty?

Government needs revenue to do the things that governments do. And, without getting into the slightly loopy world of magic money tree beliefs, the only source for that money is the taxpayer. This, not the stuff about austerity or ridiculous arguments about 'punishing the poor', is why lower taxes are desirable. Only a relative few anarchistic folk actually believe that there shouldn't be any tax (or government for that matter) and this means we have to put up with politicians making decisions about who to tax and how much to tax them.

It's also true that in the UK's modern liberal democracy part of that taxation is intended to relieve poverty. And this is right and proper - the criticism of the very bad report by some law professor from New York wasn't that there's no poverty but rather that the chap seemed to think poverty was deliberately created by an evil government (I paraphrase his risible 20-odd page report). The report also ignored the self-evident fact that the reasons for poverty are not entirely external economic, fiscal or environmental forces acting on individuals. Simply using taxation for redistribution does not resolve the problem - P J O'Rourke, in 'All the Trouble in the World' pointed out that, when you add up the poverty (the gap between what people have and what we think they should have) and subtract from it the money spent by government on relieving that poverty, there is no poverty in the USA.

The same goes for the UK - we spend over £100 billion every year on projects and programmes intended to alleviate poverty and for some reason this has failed to get rid of that poverty. It could be that £100 billion isn't enough (I doubt this) but it is more likely that, as with a great deal of what government does, that money is badly spent - we give money to people who don't need it (wealthy pensioners, for example) and take money away from those who probably do (homeless young men maybe). We behave like the operators of Victorian workhouses towards some groups (those unemployed young men again) punishing them for minor mistakes, disorganisation and oversight whilst we lavish money without question on others (middle class mums perhaps).

It seems to me that the problem here isn't simply that government is bad at spending money efficiently (it probably is) but more that the motive of the people levying the taxes and managing the handouts is about punishing wrong behaviour or choices not the effective collection of the cash needed to provide the services and support people require. It's like this:
The avowed point of the taxes, according to Macron, is not just to subsidize environmental programs, but to force people to "change habits" by making fossil fuels more expensive.
Now you might be nodding and saying "absolutely, climate change y'know" but the reality is that this is the same mindset as that which asks the benefit system to withdraw cash from some 30 year old recovering drug addict who forgets an appointment. It's a short journey from nudge to freezing in a tatty sleeping bag in a Manchester shop doorway. Government really does believe that its purpose is to shape us into better people - thinner, less drunk, without nicotine-stained fingers, quietly employed. In the civil servant's (and too many politician's) mind we should be Mr Potter's 'thrifty working class' living in homes kindly rented from grand organisations, municipalities and supposed charities. Look at the great and good of local government as they get all excited at the prospect of building more council houses to cram the poor into - a new generation dependent on the state for the roof over their head. It may be better than Potterville's slums but it's not inclusive, optimistic or aspirational.

It makes me angry that conservatives don't say this, choosing instead to treat most of the poor as Mr Doolittle - the undeserving poor to be controlled or managed rather than people who, given better incentives, will stop being 'undeserving' and become the sort of aspirational citizens government keeps telling us they want ! The motives for taxation - changing bad habits as often as raising revenue - are the problem and government needs to focus its efforts on actual social outcomes rather than on vain attempts to create the perfect man through fiat, order and direction.

Poverty is a scourge but, given the money we (supposedly) put towards its relief, it should not persist. That it continues isn't a failure of capitalism or the market, it is entirely the failure of government - bad policy, misplaced priority and the inevitable buying of votes by promising free stuff to people - wealthy pensioners, middle class mums, public school kids heading to university - who really don't need it. The sad truth is there's no votes in eliminating poverty, no incentive to get rid (what would the growing poverty industry of think tanks, 'campaigning' charities and consultants do?) of its curse, and every incentive to carry on blaming the poor for being poor rather than government for putting its efforts into looking like it cares rather than seeing less poverty as a measurable, achievable outcome from over £100 billion in public spending.



Curmudgeon said...

Yes, when you start trying to use the taxation system for social engineering rather than simply raising revenue, it all starts to go wrong.

Bucko said...

Also, the way poverty is calculated is a big problem. It's not about feeding and clothing yourself, or access to clean drinking water and medical care, it's about your household income based on average household incomes
By this definition, if everyone in the country were to receive a £1000 per week pay rise, 'poverty' figures would not change
Call me cynical, but there's a lot of money to be made from helping the poor. But only as long as you can demonstrate that some people actually are living in poverty