h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Good point about higher earners paying more tax. Someone earning ten times the average wage pays (roughly) eighteen times the average tax. In addition, the wealthy are more likely to use private healthcare and private education and very unlikely () to rely upon welfare - the three biggest drains on public finances.

I imagine they also purchase more and thus contribute more to the VAT take.

Three quick points:

Firstly, tax isn't punitive or a punishment. It's a necessity, because you can't have a complex, functional society without a state infrastructure providing security/law and order/civil law, transport, health, education, and a social security safety net. There can be arguments about the extent of the infrastructure required, but apart from a few libertarian loons and weirdo Randriods, no-one disputes that we need it. And it needs paying for, which leaves the question of who, and in what proportion. Taxes on the middle class are not just taxation for taxation's sake, as tends to be implied sometimes. The richer someone is, the more they personally benefit from this infrastructure and the more they can afford to pay towards its upkeep.

Secondly, to think of the those with private health insurance or paying for private education as benefiting less from the tax they pay, or taking less, is entirely wrong. Paying your taxes isn't like buying something for you to use, it's paying for civilisation as a whole. When I pay my tax, I'm not paying for *my* healthcare or *my* education, but for *everyone's* health and education. I couldn't have what I have without a society in which there's a good standard of education and of healthcare.

Thirdly, it's worth seriously questioning the view that "hard work" is what makes the difference between the better paid and the worse paid. The "hard work" (defined to include long hours as well as work that is difficult and unpleasant) line carries with it certain assumptions which we know to be false - that everyone is equally talented, that everyone is equally lucky or (better) serendipitous, that we have fair equality of opportunity, and that there's a direct correlation between the 'hardness' of the work and the salary paid. None of those things are true.

To the first point. What were the 80%-95% tax rates in the 60s and 70s if not a punishment for daring to better life for yourself and your family?
I don't think anyone is arguing against taxation - its the levels at which you are expected to pay it and how much that is under debate is it not?

To the third point - no not everyone is equally talented. But then life isn't fair and to pretend it is silly frankly. We should work towards better opportunity for everyone though that's very true.
Someone who is talented in business can benefit many more people than themself as they can provide both work and opportunity for many others. Does that not deserve reward?

In my experience from both working in factories and also working at lower management level now (amongst other things) - 'hard work' may not necessarily end when the clock ticks 5pm as it does tend to for the ordinary worker.
Also, if you leave yourself skill-less then you have no appeal for an employer except in skill-less work which nearly anyone can do. That (assuming you had proper opportunity to get skill in the past and passed it up) is rather why there no competitiveness to the job and so no related reward is it not?

And I rather think there is a corollary between hard work and reward - certainly to some extent at least.
Certainly would you agree there is a strong correlation about not working and not getting rewarded?

Otto:
>>Paying your taxes isn't like buying something for you to use, it's paying for civilisation as a whole. When I pay my tax, I'm not paying for *my* healthcare or *my* education, but for *everyone's* health and education.

Let's also add that you're paying for the state subsidies to allow you purchase (eg) a low-paid cleaner. Or any employee, if you're a company shareholder. They'd have to be paid more if they had to purchase education and healthcare or didn't have their low earnings subsidised by benefits.

Orcus:
>>What were the 80%-95% tax rates in the 60s and 70s if not a punishment for daring to better life for yourself and your family?

Let's accept, shall we, that the unusually high supertax rates of the Wilson and Callaghan governments were an anomaly? I remain unconvinced that a properly designed variable-tax regime can be demonstrated to be sufficiently disincentivising as to be dmaging to the overall economy.

It is something of a post-Thatcherism myth that taxation must constantly be decreased. It has become the orthodoxy to the extent that no party wishing to be elected can ever admit that increased taxation would be beneficial. Hence Brown's notorious 'stealth taxes': having had his degrees of freedom on direct taxation constrained, he was forced down the road of less fair indirect taxation. A second myth is 'Trickle Down' - as the rich become richer, their wealth is automatically shared between us. Well - you know what? It doesn't happen.

Hi orcus
80%-95% tax rates doesn't look very moral to most people in 21st. century, and I think quite rightly. I think they were designed to tax the super rich, but I agree the concept is deeply flawed.

>>Someone who is talented in business ... Does that not deserve reward?<<
Yes, I agree that it does. The problem is the finance. It is riddled with anomalies, and people 'playing the system' and consequently legal fraud. There's been a huge expansion of the finance business over recent years, and we're now seeing the result of corruption in a collapse of the system.
For example, what you call business, I might not. It is well-known that sales-workers in the retail sector are the worst paid of all; ~ £220 per week. And there's not a lot of prospect for substantial increase either.

>>And I rather think there is a corollary between hard work and reward<<
There certainly should be. And those that have worked hard in education also deserve a greater salary for their responsibilty and important contribution. Supply and demand are efficient and fair if not skewed by financial corruption.

Those who are not working, whether they are to blame or not, surely deserve to have a basic minimum.
ie survive + a teeny bit more

>>In my experience from both working in factories and also working at lower management level now (amongst other things) - 'hard work' may not necessarily end when the clock ticks 5pm as it does tend to for the ordinary worker.

How many additional hours does a low-paid worker have to work to become wealthy - or even comfortable? How many hours are there in a day?

I have to interject a small point - While I know that managment level work is often work involving high stress and long hours, I cannot accept that a manual worker who goes home at the end of their working day is havnig it easier, or that they are necessarily doing a job that anyone can do...

I'm a mechanic, I work with highly skilled technicians who have trained, and constantly re-train, to keep up with changes in the industry.

They work shifts, their 7.5 hours a day are not only reasonably high stress (you have to account for every minute of your day against a 'job' each job is given an amount of time you can book to it, for instance diagnosing a wiring fault, you are allowed 0.2 of an hour, 12 minutes. You have to remember all of these things and work to time etc.) but their work ravages their bodies, no matter how many tools and aids are invented and bought by the company to help.

And of course shift work is hard on the body, too. You get some renumeration for shift work, but many mechanics have little or no retirement to speak of because their bodies are damaged and they rarely, if ever, earn enough to retire early...

How it can be justified that skilled manual workers are worth thousands per year less than someone who, while in a long working day, high pressure mental job has a chance of a decent retirement with minimal body damage and, if they've been spending wisely, a decent amount of money (or early retirement), is beyond me.

Why should someone who does their best to contribute (or has done in the past) but has been rendered unable to through, for instance, illness, be forced to live on bare minimum 'plus a teensy bit more'? Is that really what we all pay taxes for? To not provide properly for others who cannot earn for themselves?

We could all be rendered unable to work, we could all be thrown on the 'mercy' of society to provide for us. Wouldn't it be nice to know that we wont be punished for that with such a low income that life has very few pleasures any more but is a constant struggle from benefit form to assessment to doctor's surgery, on top of suffering from whatever has caused you to be unable to work in the first place...

The notion that people who earn higher "deserve" it because their jobs are "high stress" or "harder" is largely a modern myth. The reason some jobs earn more and some less is all to do with a mixture of market demand, hierarchy in corporations (both state and private) and good old-fashioned luck.

Most people think their jobs are difficult and that they work hard and that people who have other jobs "have it easy" and so become very defensive if they earn more than someone else who claims to work harder than them. Fact is, though, if you work in various places you learn that wages are not linked to how difficult, stressful or even necessary your job is. I used to work in retail which I found quite a demanding job and yet for which I was paid peanuts. In my last job (administration for a private company handling government contracts) I was paid probably double (maybe more) what I'd earned in retail but the work was much easier and much less stressful. If I'd never worked in retail, though, I'd have happily told people that I earned more than retail workers because my job was more "specialised" and I'd have assumed that my job was harder (because, hey, shop staff just have to stand around chatting until customers show up and how hard can that be, right?).

Something I find interesting is that high-earning board members, when going through the pantomime of having to defend their pay (even though, on a strictly realist basis, they don't *have* to do any such thing) always come out with the argument that they take "high risk decisions". I tend to take this as an admission that being a high-up executive has a workload similar to lower-down admin staff (which is how a lot of them will have started out) - namely an inbox each day that has to be worked through and decisions that have to be made except that the decisions made have vastly more impact in the company, hence the standard explanation given.

Br. Robyn Hoode
>>forced to live on bare minimum 'plus a teensy bit more'? <<
Well, to start with, I'm saying that the state (that is society), has a duty to provide for the poor and unfortunate. Surely family and friends and whatever we, ourselves can do, also have a duty.

It is the problems of administration and financial corruption which is causing the real hardship. Why should the state give money to the poor and turn round and tell them they'll withdraw it if your friend gives you £100, say. That's not very Christian is it? The system's wrong, but we've come accustomed to it, and now expect the state to pay for everything. That's not very practical. The state is all of us, and not an endless pot of money!

The risk/reward formula clearly applies to investment and gambling. The less fancied a horse, the higher the dividend when it comes in. But should the same apply to those who are risking *others'* money or livelihoods?

In terms of personal risk, the riskiest industry by some margin is construction. How highly should builders be paid?

"I don't think anyone is arguing against taxation - its the levels at which you are expected to pay it and how much that is under debate is it not?"

It's not so much that anyone was arguing against taxation, more that it was being discussed in isolation from what it pays for. It makes no sense to talk about X's tax being too high or too low, without also saying what changes should be made to public services and/or what changes should be made to other people's tax rates.

"But then life isn't fair and to pretend it is silly frankly."

I never know what to make of this kind of view. It's true that there are things we can't affect - we can't equalise talents, we can't equalise childhood experiences, and although we can compensate for accident and illness, we can't wish away its consequences. However, a lot of what makes life unfair are things that we as a society can - and should - do something about. It's not a case of 'pretending' that life is fair, it's a case of making it fair - or at least as fair as we can. The argument that because we can't have perfect fairness, we shouldn't even try is an odd one.

"Someone who is talented in business can benefit many more people than themself as they can provide both work and opportunity for many others. Does that not deserve reward?"

Rawls' difference principle would allow this if the extra amount required to motivate people like this would make the worst off better off than they would otherwise have been. But under current conditions I don't see that rewards are linked to benefits to society in that way.

"Certainly would you agree there is a strong correlation about not working and not getting rewarded?"

I guess if someone does absolutely nothing to develop their talents or seek work, then they'll only get the social minimum - unless they're lucky enough to be born into money, that is. But I think it's more complicated than that - we'd have to wonder why someone would choose to act in that way. The fact is that capitalism requires unemployment and people on low wages and working in poor conditions. It requires unskilled workers, or at least people prepared to take unskilled jobs for little money. It's not set in stone exactly who these people will be, but it is set in stone that some people will be in that position. Capitalism is a game which only a finite number can win.

http://www.thisismoney.co.uk/news/article.html?in_article_id=429134&in_page_id=2

Back-tracking slightly to the discussion on average pay. This programme was shown last year: once you earn £46k, you're in the top 10% of earners.

I disagree that money is the only incentivising factor. Most people take a great pride in doing their job well - see some of the above posts. And if you were lucky enough to be able to choose between 2 or more jobs, would you automatically just take the higher paid one?

I'd take the one which would afford me the most flexibility, the best work/life balance *within a certain pay scale*.

Money isn't all, but I couldn't take a job paying less than, say, 17k, because I'd spiral into debt with the current payments I have to make for my past youth and inexperience (and having to get a loan for my car...) which would do nobody any favours!

>Let's accept, shall we, that the unusually high supertax rates of the Wilson and Callaghan governments were an anomaly?<

Why should we accept it? Lest it be repeated? I here plenty of people who still would like to go back to something like that.
Including my arch-lefy mother who currently has half her inherited estate from my late father in trust to my siblings and myself as a tax-minimising measure


>It is something of a post-Thatcherism myth that taxation must constantly be decreased.<

I never said it did and actually I don't agree that that is true. It takes a certain amount of money to run a state and the community that goes with it. Thatcher governments never decreased taxes at all did they - they just switched the burden from direct taxes to indirect taxes (VAT etc.). I see the current government doing much the same - the give us 2p in the pound in income tax and take it back in NI rises and duty rises elsewhere.
It's all been a scam since Thatcher and probably before (before my time - at least in terms of being interested in this sort of thing )

>>>Let's accept, shall we, that the unusually high supertax rates of the Wilson and Callaghan governments were an anomaly?<

>>Why should we accept it? Lest it be repeated?

All I mean by that is that an argument against a supertax rate of 80%-95% isn't necessarily an argument against a higher tax rate of (say) 40% and isn't an argument for a uniform tax rate. Is it?

My point about 80-95% supertax was raised because some asked about taxes and punishment.

That is a pretty good example I think of when it becomes punishment.

I think it is always good to look at extremes to see where things lie and what people's stances are.


Hence an extreme example of marketable and non-marketable skills would be a toilet attendant versus brain surgeon.

Many many brain surgeons could easily retrain to be toilet attendants. Very few toilet attendants could transfer in the other direction.

But brain surgery is highly valued by western society at least.
Hence it attracts a (much) higher salary than the job of toilet cleaner which - with a few exceptions - is a job anyone can do if they put their mind to it.


That is what I would define as a harder job.

If I can do your job given some training - but you can't do mine, no matter how much training you receive then mine is the harder job.
There are of course different skill sets too of course - I can do science but I'm not a good salesman for example.

You do of course have to look at wider society to the economic value of your job too though - 'tis true.

>The argument that because we can't have perfect fairness, we shouldn't even try is an odd one.<

That's not really what I was saying though. I think we should try.

But in my book at least - people should be rewarded for educating and improving themselves, not brought down to a poor average to attain 'fairness' in wages.

Bringing down the pay of highly skilled workers - say brain surgeons is as unfair to them as not rewarding the hard work of skilled mechanics.

Fairness can work both ways.

So the intrinsic effect of the job on the person's life outside of work has no bearing on the payments the job invites.

But should it?

I believe it should, to a degree. I'm not suggesting giving dangerous/hard physical jobs a huge premium, it wouldn't work that way, but there should be some recompense. Your average skilled manual labourer is not only a vital part of our economy, but is also massively undervalued.

And I'm not talking about someone who can whack up a stud wall or change your exhaust system, I'm talking about someone who knows how to engineer around problems, who can diagnose and repair faults... Someone who mixes both the brains and the brawn, often without even knowing they are doing it. Many people who dont test well or are academically uncomfortable are gold mines of knowledge and experience far beyond what you can learn at college, and they will do their backs in getting the job done, too! And do they get paid appropriately? Do they hell!

I guess I just don't see why a brain surgeon or someone of similar talent deserves five or six times the salary of someone who cleans toilets, if cleaning toilets or some similar role is the effective limit of that person's potential under the circumstances they find themselves in.

Further, I don't understand why the brain surgeon's children deserve to grow up in a household with four or five times the income of the cleaner's children, with all of the advantages that that brings with it.

I understand *why* in the sense that I understand why we've ended up with inequalities like this, but I don't see what the justification is.