Friday, December 10, 2010

Tutition fees, the rich and Labour - red Steve rants.

My wife was in London yesterday and saw the demonstration. She mentioned that one of the main cries was "tax the rich". Weirdly, the Labour party are failing to cash in on the growing, widespread resentment against big business and the very wealthy.

Tory policies, while being dressed up as "progressive", are often only progressive re. the less well off, not the very rich. Take child benefit. That's cut for families earning over a certain amount. This is "progressive" we're told, but of course it's a way of directing cuts onto the middle classes, not the rich, who will lose the exact same amount whether they are on £42k or £2 or £20 million a year. It's a poll tax on everyone over a certain threshold.

Ditto the fees policy. The poor, for the time being, receive some help, and no one pays the loan back till they earn £21k, so it's "progressive" we are told. But only re. the less well off. The rich will just pay up front, will not accrue huge amounts of interest over decades, and most importantly, will pay the same fee as everyone else (which will be no more than they are currently paying for Lucinda and Henry's private schooling). Again, the middle classes get hit hardest, the rich the least.

The common factor with the poll tax is this: in every case, Tories act to push the costs of running the state downwards on to the majority and protect a small but very rich minority. The difference this time is that this is being dressed up as "progressive".

We are told "there is no alternative" to the current proposals. Well, here's one. Introduce a 1, 2 or 3 percent (whatever is needed) income tax increase for education levied on every graduate earning over a certain amount, with (most importantly) no upper limit or upper amount taken. This would apply to current graduates, so would not be disproportionately loaded onto the next generation leaving the current generation to get away Scot free but new grads saddled with £50k debt each. The pain would be spread fairly across society. Most importantly, it would be genuinely progressive, because the rich would pay the same proportion of their income, i.e. take the same amount of pain.

My guess is the vast majority of people in this country would say that this was genuinely fair, and certainly much fairer than loading lower middle class youngsters with 50k of debt each. I'd quite happily pay the extra tax. But it will never happen. It will certainly never happen under the Tories, because the Tories are bankrolled by the very rich (much like the Republican party is, which has just got its $700 billion tax cuts for the rich forced through in the middle of a financial crisis).

Currently, there are divisions between the middle and lower classes that are being exploited by the tabloids, with the Mail, etc. moaning about the middle classes being hit hardest while 'dole scroungers' and immigrants cash in. This is a "divide and rule" tactic - in fact the middle classes are not being hit harder than the poor, but they are both being hit very, very much harder than are the rich. Yet while middle class anger is focused on dole scroungers and immigrants, the rich will get away with it.

Actually, even the middle classes are beginning to notice the unfairness. It was middle class sixth formers, among others, who were carrying placards saying "tax the rich".

So I think Labour spin doctors should be encouraging and exploiting a different, rather more warranted, "us and them" attitude. With multi-millionaire old Etonians and Bullingdon club members destroying public services but making sure their rich friends and backers, e.g. bankers, etc. don't have to pay any more, Labour really should be making hay. It is indeed a "class war", a war that they, the Tory party, are clandestinely waging on the vast majority of us on behalf of the rich.

P.S. this is an observation about "divide and rule" strategy. I realize that the very rich constitute such a small percentage of the population that increasing the amount they pay won't have that much of an impact on the deficit. But that's irrelevant. The Tories are terrified of the public waking up to the fact that they are bankrolled by and always act in the interests of big business and the rich, and try to drown out the suggestion by loudly shouting "politics of envy", "class war", etc. the moment it crops up. They encourage us to think we should "move beyond" that old "us and them" thinking - they want us to think we are all in it together now in a "Big Society". If I were a Labour spinner, I'd be thinking now's the time to bring back class war in bucket-fulls. Just pick the right class.

There's a great deal of both working and middle class grass roots feeling about big business and the very wealthy getting away with not paying their fair share - as demonstrated by the growing demos outside Top Shop and other shops which happily trade here, yet won't pay tax here.

By getting more radical, Labour could really tap into that grass roots movement. They could present clear education funding alternatives such as the one outlined above, for example.

There are alternatives to loading tomorrow's teachers and nurses with £50k of debt each at the start of their career on which the interest grows each day.

Remember, this entire mess was caused by the greed and stupidity of certain very rich people - bankers (now back on massive bonuses, of course). Who pays for the financial carnage they caused? Not them. Your kids and mine - each of whom has just been told, "Here's a bill for £50,000. Now pay up, or forget about going to university."

13 comments:

Beth said...

This is great, Stephen. I also have noticed the 'divide and rule' tactic being used and I wrote to my MP Andrew Smith about this very issue. I also agree that this is a wonderful (and thus far, missed) opportunity for Ed Miliband, who has seemed rather ineffectual so far. Thanks, a great post! I will share it on FB. Beth Penfold.

Troika21 said...

You know, I find myself in agreement with the Economist. A graduate tax would be hard to implement.

How would it be applied to foreign students who go home after they have completed their studies?

Anyone of a sufficently internationalist pursuasion could also simply leave the country.

And will the tax apply to any graduate, regardless of where they studied? If not, then the rich could start sending their little darlings out of the country, get a education at a international university, come home and avoid paying.

People will do all kinds of things to avoid taxes.

Anonymous said...

Is it possible that Labour aren't tapping into this because they also wish to court the rich and big business?

-Cai

The Atheist Missionary said...

Your wife should have taken the opportunity to present the demonstrators with A Modest Proposal to Transition to a "Cater to the Rich" Economy: http://www.truth-out.org/a-modest-proposal-transition-a-cater-rich-economy65736

Anonymous said...

"Weirdly, the Labour party are failing to cash in on the growing, widespread resentment against big business and the very wealthy."

Possibly because Labour spent 18 years out of power when trying this, and only got voted back in when Tony Blair ditched all that class war rhetoric? Which doesn't necessarily mean that such a strategy will fail now, but being cautiout to embrace a tactic which has failed in the past isn't too "weird".

"Take child benefit. That's cut for families earning over a certain amount. This is "progressive" we're told, but of course, it's way of directing cuts onto the middle classes, not the rich, who will lose the exact same amount whether they are on £42k or £2 or £20 million a year. It's a poll tax on everyone over a certain threshold."

It's only a "poll tax" if you think of government benefits as being rightfully yours, and that any cuts to them are, therefore, taking away your own money.

Anyway, I don't see why you're against cutting benefits to people who don't need them. Given that the government has got to reduct the deficit, it's fairly inevitable that there are going to be lots of cuts, and cutting child benefit to the middle and upper classes reduces the amount that will have to be cut from the police, education, NHS etc.

"most importantly, will pay the same fee as everyone else (which will be no more than they are currently paying for Lucinda and Henry's private school tuition)."

Well they are getting the same education as everyone else, so why shouldn't they pay the same? We don't complain that it costs the same for a rich man to buy a book or magazine or something like that.

"Introduce a 1, 2 or 3 percent (whatever is needed) income tax increase for education levied on every graduate earning over a certain amount, with (most importantly) no upper limit or upper amount. This would apply to current graduates, so would not be disproportionately loaded onto the next generation leaving the current generation to get away Scot free but new grads saddled with £50k debt each."

I'm afraid I fail to see the fairness in retrospectively changing the rules like this. When people went to university, the deal was that they would get their education paid for by the taxpayer, and then, once they started paying taxes, they would in turn subsidise others' education. Changing this now that it's too late for them to change their minds seems a bit unfair, a bit like if a friend offered to let you borrow his car and then demanded that you pay for the privilege after you'd already used it.

Anyway, tuition fees operate less like a loan, more like a form of income tax which cuts out after you pay a certain amount, so to talk of people being "burdened with debt" is a bit misleading.

"P.S. this is an observation about "divide and rule" strategy. I realize that the very rich constitute such a small percentage of the population that increasing the amount they pay won't have that much of an impact on the deficit."

Hopefully the Labour Party is too honourable to advocate a policy they know won't do anything to help solely in order to get elected. Not that their past behaviour gives much ground for hope.

Stephen Law said...

Troika - I had already thought of that. Flat rate graduate tax on UK nationals, irrespective of whether it was acquired out of the country.

No system is entirely fair, but that is much fairer.

Stephen Law said...

Anonymous - no time to deal with each point right now, but notice that the effect of such changes is to shift the burden away from rich and onto the middle classes. Your view maybe - "Well, why not, that's not unfair. The rich currently pay too much." Is it?

Stephen Law said...

TAM - I like the modest propsal very much. Will tweet it.

Anonymous said...

"Your view maybe - "Well, why not, that's not unfair. The rich currently pay too much." Is it?"

More that "The rich are always going to suffer less in a recession because they've got more money to tide themselves over with, and that this is currently happening doesn't prove that the Tories are deliberately framing policy to benefit them."

And leaving aside the issue of whether or not the rich pay enough, too much, or around the right amount (I haven't made up my mind on that myself), we've already got income tax to make sure the rich contribute more. If you don't think they're contributing enough, wouldn't it be simpler (and probably therefore cheaper to administrate) just to increase income tax, rather than mess around with graduate taxes and sliding scales of child benefit and so forth?

wombat said...

Re: Graduate Tax.

The problem with this is surely that it is fundamentally illiberal as it represents a tax on who you are rather than what you have or how you behave.
Where would it end? Arguing that white people are (still) at an advantage over other ethnic groups and should be taxed more? People with musical ability perhaps? - after all they can earn a bit more by busking.

Anonymous said...

Like it or not the super rich are already paying way more than their "fair share" of tax.

This is straight from Tim Harford:

"the top 5 per cent of UK earners take in a quarter of the country’s income and pay almost half of all income tax; the top 1 per cent make 12.5 per cent of income, and pay over a quarter of all income tax"

It seems this truth is forgotten by those who wish to increase taxes for high earners - I guess it's an uncomfortable truth.

Stephen Law said...

Anon

Well, full marks for selective use of statistics to Tim Harford. We all know what people pay, depending on income. The first £7k or so is tax free, then there are tax bands. Because very many people earn not that much, they pay very little tax. That explains the distribution to which you refer.

Now that arrangement might strike you as "not fair" if it results in the top 1 percent 25% of total tax in 12.5 of total income (assuming these stats have not themselves been cherry picked to exclude VAT, tax on fags and booze and petrol, etc.). So what would be fair? Everyone paying, say. 35% of their total income?

Thank you by the way on correcting me about what the top 1 percent pay. I suggested it was so little as proportion of total tax take that not worth bothering with, but it's actually over 25%! Great! They ARE worth bothering with, then!

Stephen Law said...

By the way I was suggesting increasing the tax burden on rich. I was suggesting increasing it across the board by same proportion, e.g. 1 percent.