SOCIALIST VIEWS AND PROPOSALS REGARDING TAXATION AND THE NATIONAL
BUDGET
To Socialists taxation is chiefly a means for impoverishing the rich
and the well-to-do. It is their object to transfer by taxation the
wealth from the few to the many, as they believe that the
impoverishment of the rich will mean the enrichment of the poor.
Therefore they do not aim at economy in national and local
expenditure. On the contrary, they wish to spend as much as possible.
As money is to be obtained solely from the rich, "An increase in
national taxation has no terrors for Socialists."[449] Every increase
in expenditure is greeted by them with joy, and wastefulness in
national and local undertakings is rather encouraged than condemned.
"Socialists look to the Budget as a means not only of raising revenue
to meet unavoidable expenditure, but as an instrument for redressing
inequalities in the distribution of wealth."[450] Let us first look
into the financial views of the Socialists, and then into their
positive proposals.
"The purpose of Socialism is to transfer land and industrial capital
to the people. There are two ways in which, simultaneously, this
object may be carried out. The one way is by the municipal and
national appropriation--with such compensation to the existing owners
as the community may think fit to give--of the land and industrial
concerns. The second method is by taxation. Taxation has its special
sphere of usefulness in helping the community to secure some part of
its own by diverting into the national purse portions of the rent,
interest, and profit which now go to keep an idle class in luxury at
the expense of the industrious poor."[451]
"The existence of a rich class, whose riches are the cause of the
poverty of the masses, is the justification for the Socialist demand
that the cost of bettering the condition of the people must be met by
the taxation of the rich. The Socialist's ideas of taxation may be
briefly summarised as follows: (1) Both local and national taxation
should aim primarily at securing for the communal benefit all
'unearned' or 'social' increment of wealth. (2) Taxation should aim
deliberately at preventing the retention of large incomes and great
fortunes in private hands, recognising that the few cannot be rich
without making the many poor. (3) Taxation should be in proportion to
ability to pay and to protection and benefit conferred by the State.
(4) No taxation should be imposed which encroaches upon the
individual's means to satisfy his physical needs."[452]
"To the Socialist taxation is the chief means by which he may recover
from the propertied classes some portion of the plunder which their
economic strength and social position have enabled them to extract
from the workers; to him, national and municipal expenditure is the
spending for common purposes of an ever-increasing proportion of the
national income. The degree of civilisation which a State has reached
may almost be measured by the proportion of the national income which
is spent collectively instead of individually. To the Socialist the
best of Governments is that which spends the most. The only possible
policy is deliberately to tax the rich, especially those who live on
wealth which they do not earn; for thus, and thus only, can we reduce
the burthen upon the poor."[453]
The Fabian Society suggests the following reform of national taxation:
"In English politics successful ends must have moderate beginnings.
Such a beginning might be an income-tax of _2s. 6d._ in the pound.
Unearned incomes above _5,000l._ a year would pay _2s. 6d._ in the
pound, below _5,000l._ a year _1s. 8d._ in the pound. The estate duty
might be handled upon similar principles. Estates between _500,000l._
and _1,000,000l._ would be charged twelve and a half per cent, instead
of seven and a half, and estates exceeding _1,000,000l._ fifteen per
cent, instead of eight."[454] The Fabian Society does not disguise its
aim in proposing the foregoing: "These suggestions are doubtless
confiscatory, and that is why they should recommend themselves to a
Labour party. But even so, the confiscation is of a timorous and a
slow-footed sort. The average British millionaire dies worth about
_2,770,000l._, on which the death duty would be _415,500l._, leaving
the agreeable nest-egg of _2,254,500l._ to the heirs. Even if we
assume that the inheritance passes to one person only, so as to be
subject to the highest rate of duty, it would not be until five more
lives had passed that it would be reduced to a pitiful million. The
most patient Labour party might not unreasonably demand something a
trifle more revolutionary than this."[455]
According to the above proposals the income-tax would return
_47,600,000l._ per annum. This sum seems far too moderate to most
Socialist writers. Councillor Glyde, for instance, gives in a widely
read pamphlet elaborate tables in which the produce of a graduated
income-tax is carefully calculated. The Fabian Society would make "a
moderate beginning" by taxing large incomes _2s. 6d._ in the pound.
Councillor Glyde would begin by levying a _3s._ income-tax on them.
Taxation of incomes in accordance with his proposals would bring in
_70,281,839l._ per annum.[456]
Mr. Smart, of the Independent Labour Party, gives lengthy details of a
taxation reform scheme in which figure a foundation-tax, a special
property-tax, and a super-tax. Large incomes would have to pay 17-1/2
per cent., or _3s. 6d._ in the pound, and his property and income tax
would bring in _78,000,000l._ per annum.[457]
Mr. Philip Snowden, M.P., submits a different scheme of taxation.
There is to be an income-tax of _1s._ in the pound and a graduated
super-tax up to _6s._ in the pound. Whilst the three authorities
mentioned so far propose to take from the large incomes _2s. 6d._,
_3s._, and _3s. 6d._ in the pound as a "moderate beginning," Mr.
Snowden would, presumably also as a "moderate beginning," take _7s._
in the pound from them. He is quite touched with his own generosity
and magnanimity, for might he not demand at once _17s._ or _20s._ in
the pound? "To console the possessors of incomes in the higher grade,
say _50,000l._ a year, to the payment of an income-tax of _1s._ in the
pound, we may remind them that they still retain _33,500l._ a year,
which is a very generous payment by labour to them for the privilege
of seeing them exist in gorgeous splendour and sumptuous
idleness."[458]
The proposals regarding the estate duty to be charged also vary. The
Fabian Society proposes a maximum of 15 per cent. Mr. Smart would be
satisfied with a graduated estate duty with a maximum of 25 per cent,
instead of the present maximum of 8 per cent.[459] Mr. Snowden
proposes a scale of duties which ranges from 1 per cent, up to 50 per
cent.[460]
Besides the very greatly increased income-tax and estate duty, there
would be, according to Mr. Snowden, a land value tax of a penny in the
pound of its capital value, which is equal to 10 per cent. annual
value. It is to be the small beginning of the policy of taxing
landowners out of existence, to be speedily followed by confiscation.
"The annual value of land being _250,000,000l._, the produce of the
land value tax would be _25,000,000l._ a year."[461] The author
justifies the creation of that tax as follows: "Liverpool, London,
Glasgow owe their existence and their prosperity to their respective
situations, which are natural advantages and which ought not in
justice to be enjoyed solely by those who live upon the sites. Every
town and village in the country contributes to the prosperity of every
other part. The nation is a unit; its resources and its obligations
should be mutually shared."
"Land values are so obviously not created by individual effort that
the justice of taking the increment for the use of the community
appeals to those who may have some difficulty in grasping the working
of the 'unearned increment' in commercial concerns, where, however, it
operates just as truly though not so obviously. The imposition of an
Imperial tax of one penny in the pound on the capital value of the
site would be a beginning, but by no means the end, of the process of
diverting socially-created rent of land into the public exchequer.
Taxation will do something towards that end; but taxation would be a
long, irritating, and untrustworthy way of trying to secure the whole
annual value of the land for the community."[462] "The taxation of
land values is not a land reform. To get the full usefulness and the
full value of the land for the community there is no way but for the
State to own the land."[463]
The contemplated reform of taxation will not be limited to taxing the
rich and the well-to-do out of existence. Relief will be afforded to
the masses by the repeal of all duties on food, and, indeed, of all
indirect taxation. "The reforms which the Labour party will endeavour
to obtain from the Government, in which it believes it will be
expressing the democratic sentiment of the country, are:
1. Repeal of the duties on foods.
2. A minimum wage of _30s._ to all workers in Government employ or
working under a contractor for the Government.
3. Old-age pensions of _7s._ a week for persons over sixty."[464]
Practically all Socialists agree that all indirect taxation should be
abolished. "Indirect taxation has nothing whatever to recommend it to
an intelligent people, however advantageous it may be to the
well-to-do. Indirect taxation violates every principle of sound
economy."[465] "Its maintenance is excused on the ground that indirect
taxation is the only means by which the working class can be made to
contribute to the cost of national government at ah. The poorer
working classes should not be taxed by the Government at all."[466]
"Under a just system of taxation all indirect taxation for revenue
purposes would be abolished."[467] "With 43 per cent, of the working
classes living in poverty, with an average wage over the whole working
class not sufficient to provide themselves with the standard of
workhouse comfort, it becomes a crime to tax them for the protection
of their property and the enjoyment of their privileges"[468]--Is it
true that, as Mr. Snowden, M.P., writes, the whole working class of
Great Britain is so badly paid that it cannot provide for itself the
standard of workhouse comfort? How then can he reconcile with that
assertion the following statement which he gives in the same book a
few pages further on: "Experts assign the proportion of the total
annual drink bill of the United Kingdom contributed by the
wage-earning classes at _100,000,000l._ A committee of the British
Association, reporting on the 'appropriation of wages,' in 1882 said
that 75 per cent, of the total consumption of beer and spirits, and 10
per cent. of the wine bill, might be assigned as the shares of the
working class."[469]
As a matter of fact experts estimate that the British working men
spend even more than _100,000,000l._ per year on drink, and that they
spend about _50,000,000l._ on betting. It is really very inartistic
for a professional agitator to tell us that the British workers are
too poor to pay any taxes, that it is a "crime" to tax them at all,
and then to remind us that the same starving ill-used workers can
afford to spend more than the amount of the whole nation's Budget in
drink and betting, that about one-sixth of the workman's wages are
spent at the public-house, that many workmen spend the larger half of
their income in drink, and that the British nation is the most drunken
in the world, although drink is far more expensive in Great Britain
than in any other country.
With part of the money taken by means of extortionate taxation from
the rich, whole sections of the population are to be bribed into
supporting Socialism. "Two objectionable heads of revenue would find
no place in a Socialist national balance-sheet--the profit from the
Post Office and the stamp duties. Improvements in the wages and
conditions of labour in the lower grades of the postal service would
absorb a considerable part of the present annual profit of
_5,000,000l._ and the rest might, with benefit, be utilised for
cheapening the cost to the public of postal rates and services."[470]
Mr. Snowden, in promising in one phrase the repeal of stamp duties and
cheapening of postage, very likely thought that that step would
relieve the poor. He apparently imagined that duty stamps were
identical with postage stamps. If he had known that stamp duties are
largely derived from Stock Exchange transactions and the sale of every
kind of property on a large scale, from legal documents, &c., he would
probably have proposed that they should be increased tenfold in order
to strike another blow at private property, not that they should be
abolished. Even the policy of confiscation requires an elementary
knowledge of facts.
Furthermore, "The Socialist Budget would provide for a very
considerable increase of the grants-in-aid, retaining for the central
Government just sufficient control or inspection over the expenditure
as would not interfere with the reasonable freedom of the local
authority."[471] "Control which would not interfere" is at present
illogical and impossible, because the one excludes the other. It may
be possible in the Socialist State of the future, because logic will
have to be abolished in it. At all events it seems clear that Mr.
Snowden wishes to secure the support of the local authorities by the
same curious means by which he strives to secure the support of the
Post Office servants.
The foregoing extracts should suffice to show that the Socialists mean
to ruin the owners of property of every kind by indirect confiscation
in the form of extortionate taxation, which is to be constantly
increased and which may be followed by direct confiscation, and that
they rely upon force for achieving their aim. Capitalists may leave
the country, but they must leave their capital behind, and their
disappearance, Socialists assert, will be no loss. "The vast majority
of our employers are routineers, who could no more contribute an
intelligent statement of their industrial function to this paper than
a bee could write the works of Lord Avebury. Routineers can always be
replaced, and replaced with profit, by educated functionaries.
Consequently when the employers threaten us with emigration, our only
regret as to the majority of them is that it is too good to be
true."[472] "Supposing those who have the money were to threaten to
leave the country and to take their money with them, would not that
upset your plans? Money is not wealth. You would have cause to
rejoice. So would the country which was fortunate enough to see its
capitalists emigrate."[473]
According to the Socialist teaching, the workers maintain the
capitalists. The brain is mightier than the hand, though the brain
requires the hand. In reality it rather seems that the capitalists
maintain the workers. It cannot too often be pointed out that those
countries which have many wealthy capitalists are highly civilised and
prosperous, and their workers are well off. On the other hand, those
countries which have few or no wealthy capitalists are little
civilised and poor, and their workers are exceedingly badly off. The
masses may conceivably rob the capitalists of their property, and try
to manage the national capital themselves, but whether they will
benefit by spoliation remains to be seen. Lacking direction,
foresight, unity, organisation, discipline, and thrift, the masses
will probably quickly waste the national capital, and national ruin
and distress and starvation will be the consequences of wholesale
robbery.
The confiscation experiment has often been tried in the past, and it
has always failed. The last time it has been tried was at the time of
the French Revolution. The money secured by robbery was recklessly
squandered. Production was neglected, and the people became poorer
than ever. In the country agriculture came to a standstill, weeds grew
where corn had been growing, gardens became a natural wilderness, and
wolves roamed in thousands.[474] The great manufacturing towns were
dead, manufacturers in Paris who had employed sixty or eighty men
employed but ten.[475] The people in town and country were starving.
Many lived on roots and bark. Many of the poor in Paris waited outside
the slaughter-houses and lapped the blood from the gutters like dogs.
Private capital has existed in all countries and at all times, because
it is a plant of natural growth. One can destroy it, but it will ever
grow again.
FOOTNOTES:
[449] Snowden, _Socialist Budget_, p. 1.
[450] _Ibid._
[451] Snowden, _The Socialist's Budget_, p. 2.
[452] _Ibid._ pp. 7, 8.
[453] _Socialism and Labour Policy_, p. 4.
[454] _Ibid._ pp. 4, 5.
[455] _Ibid._ p. 5.
[456] Glyde, _A Peep Behind the Scenes on a Board of Guardians_, pp.
28,29.
[457] Smart, _Socialism and the Budget_, pp. 14,15.
[458] Snowden, _The Socialist's Budget_, pp. 78, 79.
[459] Smart, _Socialism and the Budget_, p. 8.
[460] Snowden, _The Socialist's Budget_, p. 81.
[461] _Ibid._ p. 82.
[462] _Ibid._ pp. 82, 83.
[463] Snowden, _The Socialist's Budget_, p. 84.
[464] Smart, _Socialism and the Budget_, p. 15.
[465] Snowden, _The Socialist's Budget_, p. 15.
[466] _Ibid._ p. 31.
[467] _Ibid._ p. 16.
[468] Snowden, _The Socialist's Budget_, p. 17.
[469] _Ibid._ pp. 21, 22.
[470] Snowden, _The Socialist's Budget_, p. 71.
[471] _Ibid._ p. 59.
[472] G.B. Shaw in the _New Age_, November 30, 1907.
[473] Wheatley, _How the Miners are Robbed_, p. 12.
[474] Vandal, _Avenement de Bonaparte_, 1903, vol. i. p. 25.
[475] Schmidt, _Tableaux de la Revolution_, vol. iv. p. 383.