Die Neue Zeit
13th September 2009, 04:57
The Abolition of Indirect and Other Class-Regressive Taxation
“Undoubtedly the victorious proletariat would also make fundamental reforms in taxation. It would endeavor to abolish all the taxes that today rest upon the laboring population – first of all the indirect ones that increase the cost of living.” (Karl Kautsky)
At the turn of the 20th century, Kautsky made the above remarks in one of his most important theoretical works, The Social Revolution. Although there is a suggestion of cynicism regarding the abolition of indirect and other regressive taxation under bourgeois capitalism, it was nevertheless a universal reform demand of the worker-class movement since 1848, when the programmatic Demands of the Communist Party in Germany called for “abolition of taxes on articles of consumption.”
Contrast that to the existence of such taxation regimes in the welfare states par excellence known as Denmark, Norway, and Sweden. Each of those states, which are derided as “socialist” by right-wing groups, has a value added sales tax rate of 25 percent on most goods and services, a rate that is comparable to what has been and is being proposed by American right-wing groups through their “Fair Tax” lobbying (replacing income taxation with a sales tax of about 30 percent, after token rebates for the poor). Proponents of indirect taxation based on consumer goods and services point towards tax collection efficiency in the form of less tax avoidances and evasions by non-workers, but who between the average worker and the more well-off non-worker spends more on consumption relative to income?
Regressive taxation does not stop at indirect taxation based on consumer goods and services. Every state that provides unemployment insurance appropriates funds for such (or for more dubious budgetary purposes, as affirmed for example by the Supreme Court of Canada) from direct taxes on workers known as payroll taxation. The notorious Social Security and Medicare payroll taxes paid by workers in the United States are merely a more extended form of payroll taxation. In European countries, Japan, and elsewhere, television licenses are levied like poll taxation upon the populace in order to fund public broadcasting. Last, but not least, state-run lotteries are a very direct and regressive form of taxation based on workers consuming bourgeois-capitalist overestimations of class mobility, as acknowledged even by right-wing “Tax Freedom Day” think tanks such as the Tax Foundation based in Washington, DC.
So, in regards to the much-needed abolition of all indirect taxation and other class-regressive taxation based on labour and on consumer goods and services, does this reform facilitate the issuance of either intermediate or threshold demands? In 1866, while preparing for the first congress of the International Workingmen’s Association, Marx wrote that “no modification of the form of taxation can produce any important change in the relations of labour and capital.” Notwithstanding the aforementioned proposal for economic rent of land being already an exception in his own time, economic developments over the past forty to fifty years have brought forth hints of another exception, and have demonstrated that not all indirect taxation is regressive. In August 1971, the United States abandoned the international gold standard known as the Bretton Woods system. In response, US economist James Tobin dealt with international currency stability by reviving a particular taxation measure suggested by the classical economist John Maynard Keynes in his The General Theory of Employment, Interest and Money (despite this tax measure eventually being dubbed the “Tobin tax”):
It is usually agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of Stock Exchanges. That the sins of the London Stock Exchange are less than those of Wall Street may be due, not so much to differences in national character, as to the fact that to the average Englishman Throgmorton Street is, compared with Wall Street to the average American, inaccessible and very expensive [...] The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States.
The adoption of this taxation proposal by the various decentralized social movements is but a mere echo of the more radical sentiments of pre-war European Social Democracy with regards to taxation, the basis of the socio-income democracy elaborated upon earlier in this chapter: that improvements in the condition of the working class could and should be attained by shifting all tax burdens currently on labour (directly or through consumption) towards capital.
Does this reform enable the basic principles to be “kept consciously in view”? Combined with socio-income democracy and with the aforementioned proposal for economic rent of land, this reform again poses the questions of transnational class struggle (namely, the concern that other bourgeois states will not implement this without a struggle) and worker control over the economy. To quote Marx, it “prompts therefore every individual to control the governing powers, while indirect taxation destroys all tendency to self-government.”
REFERENCES:
The Social Revolution, Volume II: On the Day After the Social Revolution by Karl Kautsky
[http://www.marxists.org/archive/kautsky/1902/socrev/pt2-1.htm]
[http://www.marxists.org/archive/kautsky/1902/socrev/pt2-2.htm]
Demands of the Communist Party in Germany by Karl Marx and Frederick Engels [http://www.marxists.org/archive/marx/works/1848/03/24.htm]
Instructions for the Delegates of the Provisional General Council: The Different Questions by Karl Marx [http://www.marxists.org/archive/marx/works/1866/08/instructions.htm]
Government broke law on EI financing in three years: top court by CBC News [http://www.cbc.ca/canada/story/2008/12/11/scoc-eu-ruling.html]
State-Run Lotteries as a Form of Taxation by Alicia Hansen [http://www.taxfoundation.org/research/show/1126.html]
The General Theory of Employment, Interest and Money by John Maynard Keynes
[http://www.marxists.org/reference/subject/economics/keynes/general-theory/ch12.htm]
“Undoubtedly the victorious proletariat would also make fundamental reforms in taxation. It would endeavor to abolish all the taxes that today rest upon the laboring population – first of all the indirect ones that increase the cost of living.” (Karl Kautsky)
At the turn of the 20th century, Kautsky made the above remarks in one of his most important theoretical works, The Social Revolution. Although there is a suggestion of cynicism regarding the abolition of indirect and other regressive taxation under bourgeois capitalism, it was nevertheless a universal reform demand of the worker-class movement since 1848, when the programmatic Demands of the Communist Party in Germany called for “abolition of taxes on articles of consumption.”
Contrast that to the existence of such taxation regimes in the welfare states par excellence known as Denmark, Norway, and Sweden. Each of those states, which are derided as “socialist” by right-wing groups, has a value added sales tax rate of 25 percent on most goods and services, a rate that is comparable to what has been and is being proposed by American right-wing groups through their “Fair Tax” lobbying (replacing income taxation with a sales tax of about 30 percent, after token rebates for the poor). Proponents of indirect taxation based on consumer goods and services point towards tax collection efficiency in the form of less tax avoidances and evasions by non-workers, but who between the average worker and the more well-off non-worker spends more on consumption relative to income?
Regressive taxation does not stop at indirect taxation based on consumer goods and services. Every state that provides unemployment insurance appropriates funds for such (or for more dubious budgetary purposes, as affirmed for example by the Supreme Court of Canada) from direct taxes on workers known as payroll taxation. The notorious Social Security and Medicare payroll taxes paid by workers in the United States are merely a more extended form of payroll taxation. In European countries, Japan, and elsewhere, television licenses are levied like poll taxation upon the populace in order to fund public broadcasting. Last, but not least, state-run lotteries are a very direct and regressive form of taxation based on workers consuming bourgeois-capitalist overestimations of class mobility, as acknowledged even by right-wing “Tax Freedom Day” think tanks such as the Tax Foundation based in Washington, DC.
So, in regards to the much-needed abolition of all indirect taxation and other class-regressive taxation based on labour and on consumer goods and services, does this reform facilitate the issuance of either intermediate or threshold demands? In 1866, while preparing for the first congress of the International Workingmen’s Association, Marx wrote that “no modification of the form of taxation can produce any important change in the relations of labour and capital.” Notwithstanding the aforementioned proposal for economic rent of land being already an exception in his own time, economic developments over the past forty to fifty years have brought forth hints of another exception, and have demonstrated that not all indirect taxation is regressive. In August 1971, the United States abandoned the international gold standard known as the Bretton Woods system. In response, US economist James Tobin dealt with international currency stability by reviving a particular taxation measure suggested by the classical economist John Maynard Keynes in his The General Theory of Employment, Interest and Money (despite this tax measure eventually being dubbed the “Tobin tax”):
It is usually agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of Stock Exchanges. That the sins of the London Stock Exchange are less than those of Wall Street may be due, not so much to differences in national character, as to the fact that to the average Englishman Throgmorton Street is, compared with Wall Street to the average American, inaccessible and very expensive [...] The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States.
The adoption of this taxation proposal by the various decentralized social movements is but a mere echo of the more radical sentiments of pre-war European Social Democracy with regards to taxation, the basis of the socio-income democracy elaborated upon earlier in this chapter: that improvements in the condition of the working class could and should be attained by shifting all tax burdens currently on labour (directly or through consumption) towards capital.
Does this reform enable the basic principles to be “kept consciously in view”? Combined with socio-income democracy and with the aforementioned proposal for economic rent of land, this reform again poses the questions of transnational class struggle (namely, the concern that other bourgeois states will not implement this without a struggle) and worker control over the economy. To quote Marx, it “prompts therefore every individual to control the governing powers, while indirect taxation destroys all tendency to self-government.”
REFERENCES:
The Social Revolution, Volume II: On the Day After the Social Revolution by Karl Kautsky
[http://www.marxists.org/archive/kautsky/1902/socrev/pt2-1.htm]
[http://www.marxists.org/archive/kautsky/1902/socrev/pt2-2.htm]
Demands of the Communist Party in Germany by Karl Marx and Frederick Engels [http://www.marxists.org/archive/marx/works/1848/03/24.htm]
Instructions for the Delegates of the Provisional General Council: The Different Questions by Karl Marx [http://www.marxists.org/archive/marx/works/1866/08/instructions.htm]
Government broke law on EI financing in three years: top court by CBC News [http://www.cbc.ca/canada/story/2008/12/11/scoc-eu-ruling.html]
State-Run Lotteries as a Form of Taxation by Alicia Hansen [http://www.taxfoundation.org/research/show/1126.html]
The General Theory of Employment, Interest and Money by John Maynard Keynes
[http://www.marxists.org/reference/subject/economics/keynes/general-theory/ch12.htm]