More Taxation, Please:
On the Burdens of Heavy Taxation

Kenneth Jupp

[Reprinted from Land & Liberty, Summer 2001]

LIBERAL DEMOCRATS and the left socialist wing of the Labour Party would both like to see taxes raised. They want to spend more on social services including health. Their object may be laudable, but the method they suggest for getting the necessary money is deplorable. LVT campaigners suggest a better way -- the Single tax. To the man in the street, this is just as deplorable. "What, a tax on land? Although it might be a good idea to make those landowners in Scotland pay for their thousands of acres, you would hardly collect enough that way to pay the salaries of the MPs and the government ministers. And anyway, why tax the country people'.' It's the people who get their money in the City, and keep their Mercs and BMWs in their suburban homes, who arc the rich ones."

The man in the street is right. "Land" to him means rural acres. Tell him that city land can be worth millions per acre, and he will reply: "Of course it can. Those huge sky scrapers must cost millions to build". Mention urban land and he will take it to mean playing fields, gardens, and village greens. If people are to understand the Georgist message, it must be conveyed in terms that can be understood.

A person will never understand that land "includes the whole external world accessible to man. with all its powers, qualities and products..." He will find it easier to stomach the idea that land "comprises all having material form that man has received or can receive from God". The metaphysical viewpoint is so often the simplest to explain. The individual is surrounded with the rest of creation, human and non-human. The ease with which he can reach what he wants to help him with his work, determines how much he can produce for a given effort. Placed among a throng of potential customers his shop is bound to prosper. So a High Street location is ideal, and will of course be costly. On a Welsh hillside keeping a shop will be impossible. Scratching a living from sheep will usually be the best. But the land will cost him very little. This is as it should be. But the question is -- to whom should that cost be paid?

No wonder that tax is a dirty word. The burden of tax placed on employers in every kind of business today is astonishing. The employer pays direct to the revenue a tax assessed on the employee's status in the complicated income tax rules. The amount depends on whether he or she is married, has children, receives other income and so on.

The employee only receives the net amount after tax and is concerned only with what it will buy. And nothing he buys is free of indirect taxes. Most things are subject to VAT, and that is added automatically to the price. Even without VAT, there is the PAYE of all who worked to make the article. For example, the price of a loaf has to cover the PAYE of the farm workers who produce the com, the millers who turn it into flour, the bakers who make it into bread, and those who serve the loaf at the shop where the wage earner finally buys it. No government statistician has ever been asked to calculate the tax element contained in the price of bread. And, of course, the huge excise duty on motor fuel in carrying the corn to mill, the Hour to bakery, and the bread lo the shop has to be covered by the price paid by the consumer. What is true of bread is true of everything we buy.

This may be known to quite a few sensible people, even though politicians are blind to it. What is known to very few is that the wage paid by an employer has to cover these hidden, indirect taxes. So the employer pays in respect to each employee: PAYE to the exchequer; and lo the employee a wage sufficient to support the standard of living he expects, and that includes a considerable element of taxation which the employee will pay the exchequer through the various purchases he makes. If he drinks, smokes, or runs a car, which is by no means abnormal today, he will pay huge excise duly on all these things.

A recent report from the Research group of the School of Economic Science shows that for the lowest paid workers, the tax burden on employers amounts to 40% of the workers' gross pay. This rises to 90% when gross pay reaches a mere £12,000. Put another way, 90% of the nation's revenue is collected from businesses by the simple expedient of doubling the cost of employment.