John McDonnell and Arbitrary Taxation - 7 comments

An honest, democratic tax system - to me - is one where the tax rules are set out in advance, and Governments do all they can to raise money based upon the strict application of those rules. If revenues are substantially different from what the Government expected, that suggests either a failure of collection - for which Governments must be held accountable - or that the taxation has prompted a change in economic behaviour (this is, itself, interesting, but a topic for another day). The results should be factored into the plans for the next Budget. Trying to meet a shortfall by taxing something after the event - that is to say, taxing something that an individual didn't expect to be taxed, or at a rate they couldn't have foreseen - represents an abuse of Government power, if you want my view, and not something you expect in a democracy, whether the taxes come from people who can't afford it, or who probably can. "The rule of law", I believe, is the term.

This is just what John McDonnell is proposing here, with an arbitrary tax on Christmas bonuses. Yes, clearly in some sectors of the economy they're huge, but that's no justification for what borders on theft by the State. There's no good reason that I can see why Christmas bonuses, per se, ought to be taxed, and at least in the banking sector, they're also unpredictable, making them not a source one can depend upon for funding public spending, or reducing taxes elsewhere. Now, I certainly don't think such a windfall would do much harm; the money even be put to good use, but that doesn't justify the policy, and the proceeds from any windfall should not be wasted, or simply raise expectations that would have to be met out of general taxation when the apparent bounty doesn't materialise (insert - 19/12) in subsequent years.

John invites us to contrast news of these huge bonuses with reports of new efforts to coax the long-term unemployed back into the jobs market. By contrast, he means, of course, to imply a relationship without needing to - or being able to - state what that relationship is. The implication is, presumably, that those bonuses - shared out - would solve the problem of long-term unemployment, saving us all that silly debate about skills, apathy, migration, competition, benefit traps, and marginal tax rates; also that one reason for long-term unemployment is just that the right 5-6 figure salary just didn't come along for those people. Perhaps the issue is one of education (though this doesn't seem to hold many traders back), or application, or interest, or not living near London, or not wanting to work 60-hour weeks, or preferring a stress-reduced life to the salary benefits. There are plenty of reasons why that career might not work out for people, but it's hardly the point: we need to be trying to equip people for some kind of plausible career, because I certainly don't think the kindest or most liberal approach is to allow someone to degenerate, wasting the skills they have. Everyone should care about that, it just so happens that Governments care more, it being other people's taxes.

John's quite right to talk about the need to tackle inequality, but in terms of ideas, he evidently has nothing new to offer, just a pat, simplistic approach that is designed to invigorate his supporters, woo potential supporters, and avoid making any difficult choices. Now, I did hear once that he supported the Citizen's Income, though I haven't find any evidence yet. Is this true? And if it is, why doesn't he talk about that, and help get it on the agenda, rather than all this "fantasy politics" stuff?