Daylight Robbery – why tax is everything
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BY DOMINIC FRISBY
The trope of many a zombie movie is the idea of Patient Zero. Patient Zero is where this deadly virus that is about to wipe out mankind began. If our hero is to save the human race, he has to get to Patient Zero. Either to destroy it or to get the antidote.
One of the things I am trying to impress upon people in my book Daylight Robbery – How Tax Has Shaped the Past And Will Change The Future – is that a society has its own Patient Zero. That is its system of tax.
You design a society by the way you tax it. A society’s destiny – whether its people will be rich or poor, free or subordinated – is determined by the way it is taxed. Indeed, the way a society is taxed speaks volumes about that society. In ancient Greece, many taxes were voluntary. At the other extreme, in authoritarian or totalitarian societies such as Soviet Russia or North Korea, people have virtually no ownership of their labour, their produce or their profit. Government takes it all.
The developed world today sits somewhere in the middle of those two extremes. Excluding inflation (itself a form of tax), in the UK roughly 45% of everything you will ever earn is taken from you in taxes.
Taxes, like death, are inevitable. There has never been a civilisation without taxation. But there have been good systems and there have been bad systems. Get your system of tax right, and a healthy and happy civilisation, even a great one, could follow. Get it wrong and you get no end of problems, for history is littered with examples of injudicious or inequitable taxation having terrible consequences. It lurks near the heart of virtually every great revolution or revolt.
So many of our problems today, not least the enormous wealth gaps between rich and poor, and between generations, can be traced back to our systems of tax. We tax labour constantly and heavily, and the worker finds it very difficult to better his lot. Not only is the worker taxed heavily, he is paid in money that loses its purchasing power, thanks to zero interest rate policies, Quantitative Easing, dubious measures of inflation and all the other means by which governments debase money and levy what Milton Friedman called the inflation tax.
But other assets which encounter much lower levels of taxation — equities, land, houses and so on. Meanwhile they actually benefit from the debasement of currency, as they appreciate in price. One lot pays, the other benefits.
We have a tax code with more words in it than most people will read in their entire lifetime. The UK tax code is 21,000 pages – 10 million words – of largely unreadable jargon. Some have the resources to find the loopholes – of which there are many – most of us don’t, and so pay more on a relative basis.
If a politician really wants to change the world and make it better, they should focus all their efforts on tax reform. That is one of the few areas where they really can effect some change. Imagine if all the political effort that went into stopping Brexit and fighting over it had instead gone into reforming tax, how much better a place would Britain be in?
I hear the new Boris Johnson outlining all sorts of spending plans on infrastructure and the NHS. I hear little talk of how it will be paid for. More taxes, more inflation, more debt (a tax on the future) is the answer.
But I don’t hear a single minister proposing meaningful tax reform.
Dominic Frisby is a financial writer from London. His books are Life After the State, Bitcoin: the Future of Money? and Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future. He’s also a comedian famous for his song about Brexit – 17 Million F**k-Offs
Daylight Robbery: How Tax Shaped Our Past And Will Change Our Future, Penguin Business, £20. Audiobook on Audible.co.uk. Signed copies are available at dominicfrisby.com