Marxism and Taxes

[btpound]

Whenever I talk about Marxism or Socialism to anybody, I am typically bombarded with misguided criticism, as I'm sure my comrades are. Though I am a new Marxist, I don't have much trouble answering the more common questions that we hear all the time. However, i thought of something that I didn't have an answer to. When I talk to people about socialism, I tell them that it stands for, among other things, a minimum wage of at least $12/hr, a figure I got from the SA pamphlet. My question is, what does a higher minimum wage mean if there is, as Marx put it, "A heavy progressive or graduated income tax."? Wouldn't a heavy tax negate the higher minimum wage and bring the working class back to square one? And where do these taxes go toward? If you nationalize the water company, for example, do these taxes pay the wages of the people who work at the water company? Thank you in advance for your reply.

[Oneironaut]

Well, Marx was writing in a time when a "progressive or graduated income tax" didn't exist. A graduated income tax is what we already have to a certain extent. This tax entails that the more you make, the more taxes you pay. In your context, workers would pay the least amount of taxes, if any at all, and the more rich you are, the higher percentage of your income will go to taxes. Like I said, this tax has been implemented already but to different extents in capitalist countries. This is the crux of a lot of the confusion behind the Republican party claiming to be anti-tax and typically the party runs on a campaign of lower taxes. The general public is fed the idea that this will also pertain to them, their taxes will drop, but what has been the case is that this is applicable only to the rich. The rich end up being the only ones to pay less taxes.

[Luisrah]

I suppose that the part of the heavy taxes is that instead of getting a big income, and using a part of it to pay the water, electricity, school books, and other basic things, you get a heavier tax and you are given those things.

So you are sort of working and recieving goods and commodities that are equally distributed instead of recieving a salary which you use to buy those things.
This (and the progressive taxation) ensures that everyone has food on the table, light in their bulbs, and water in their plumbs no matter their salary.

Please explain if I'm wrong. I'm here to learn too.

[bailey_187]

In Albania when it was Socialist, the Marxist government abolished income tax.

[fidzboi]

I suppose a 'Marxist' approach to the question of tax would have two clear dimensions. What we advocate in the present, and what we advocate in the future. That means that a 'Marxist' approach to the question would argue in favour of more progressive income taxes and greater wealth distribution within the confines of present society, but then obviously advocate the abolition of tax as we know it along with money and all other symptoms of capitalist economics with regards a post revolutionary society.

The SA document sounds quite old, and as others have pointed out, the whole progressive tax thing has been and gone. Most ideas about some kind of state managed protracted transitional stage have been abandoned and/or discredited. And likewise I don't know if you'd see many modern socialists talking about 12 bucks an hour, though again in the here and now, 'Marxists' would support wage increases.

To be honest, and not wishing to cause any form of offence, your question seemed quite 'old fashioned'. However that doesn't automatically make it bad, indeed I think the idea of a class programme with specific demands within the here and now, is something to cherish. And with many seeing capitalism as not being capable of any more meaningful reforms, they've abandoned the idea of having specific demands; but I think specific demands, even if not implementable, are a good way of articulating what revolutionaries are for.

[Kwisatz Haderach]

The "heavy progressive or graduated income tax", like most of the measures in the list at the end of the Communist Manifesto, should be completely ignored. That list was the product of the political situation in 1848, and it was already hopelessly outdated by the time of Marx's death - let alone today. Marx himself renounced it later in his life, if I recall correctly.

Having said that, notice that Marx talked about a progressive (or "graduated") income tax, which means that it would be very high for the rich and very low for the poor.

Such taxes would be an improvement compared to the current situation in most capitalist countries, of course. But they would be an improvement within capitalism, not a radical change to a different economic system. In fact, taxes (as we know them) would not exist at all in socialism. Think about it: If all the means of production are publicly owned, then the workers receive their income from the state (or whatever entity runs the economy on behalf of the people). If they had to pay taxes, that would mean giving back some of their income to the entity that paid them in the first place. The state would be giving you some money and then taking it back in the form of taxes - a completely pointless exercise.

[Die Rote Fahne]

Taxation need only occur during the dictatorship of the proletariat.

Once the state withers away, so will capital and class.

People will work to keep society going. Everyone meeting their needs and then some. No need to tax since money no longer exists.

[blake 3:17]

My question is, what does a higher minimum wage mean if there is, as Marx put it, "A heavy progressive or graduated income tax."? Wouldn't a heavy tax negate the higher minimum wage and bring the working class back to square one?

A higher minimum wage creates an upward pressure on wages more generally, both helping those making the minimum and those above it.

A progressive tax takes a greater percentage of earnings the higher up you go. Neo cons have tried to get rid of this with flat taxes or poll taxes. And sometimes when wages increase the take home is the same (happened to me recently...)

Related to this are creating, defending and promoting universal social programs, regardless of income. When services are only available to the wealthy or to the very poor, unfair hardships are imposed low income workers as well as more privileged workers. You probably see these clearest in health care in the US or pharmaceutical and dental care here.

There was recent case in Ontario where a family with a very low income took home a few hundred dollars more than the previous year and the subsidies they'd been recieving to care for their disabled daughter were cut.