Thursday, 25 August 2011

Issues of fairness

Writing in the Financial Times on 20th August 2011 Christopher Caldwell, who is against raising taxes for the rich, notes that Warren Buffet [who is mega rich & believes he should pay more tax], paid just under $7m in US Federal Taxes last year or about 17% of his taxable income. His 'back office' employees pay about 36%.

The top 400 US 'earners' [some of us question the validity of the word 'earned' in this debate]:
In 1992 made $19.9bn and paid 29.2% in taxes
In 2010 made $90.9bn and paid 21.5% in taxes

Elsewhere the same paper publishes two graphs. They show that in 1970 the top half percent of UK earners paid 40% - everyone poorer than this paid less and that was true also in about 2005.
But in 1970 the top tenth of a percent of earners paid 90% tax whereas by 2005 they still only paid 40% Moreover in 2005 the lower earners hit the 30% rate earlier.

These two sets of data are used to support the thesis that low taxes create wealth, or conversely that higher taxes inhibit wealth creation & in any case so few 'earners' are affected the amount of money raised is trivial. But surely this misses the point. The former 'Minister for Murdoch' and still Secretary of State for Culture, Jeremy Hunt, in the same FT said "This is about people who have completely lost their moral compass and exploited technology to create massive public disorder".

He was talking about rioters but his words can surely apply equally to those whose business ethics brought about the financial crisis? They have largely escaped retribution. Some have even been rewarded. It's hard to get an exact figure but by contrast it seems as though over 50000 ordinary mortals jobs have been lost in the UK Banking sector since 2008.

In the USA, since Obama came to power, 393000 illegal immigrants have been rounded up & zero bankers. [Observer 14 Aug 2011]. And it gets worse. The State of Alabama's law on illegal immigration and the punishment for employment of illegals has a clause which exempts domestic servants. The filthy rich who use and exploit illegals as maids etc are not defined as 'employers' so they're all right then. Remember the storm in Britain when the LibDems proposed an amnesty for illegals who'd been here a long time, obeyed the law, integrated & paid taxes? Of course if you have the money to buy a football club or a £140m mansion or whatever we'll not enquire too closely into your background.

The Prime Minister, Chancellor & Mayor of London at least have an insight into the mind of a hooligan. As former members of the Bullingdon Club they surely understand the excitement of trashing places even if they didn't actually take part. Naturally the damage was paid for & nothing more was said. The great majority of those MPs who made flawed expenses claims & paid the money back have escaped further retribution. These commonsense responses are not, of course, extended to, mostly young, people with unblemished records who were involved in vandalism & looting & who confessed in shame & returned their stolen goods. Now this is not to condone rioting or other bad behaviour it just points out an inconsistency.

Nor is all this stuff the politics of envy - as some will no doubt try & portray it. Throughout history the Law has been written by the rich & powerful for the preservation of the vested interests of the rich & powerful, natural justice is not usually relevant in that process, and by and large the rest of us accept it & get on with our lives. But the chasm between the tiny percent of 'definitely haves' and the rest of us is huge & getting bigger. When it takes the right wing of the Tory Party to point this out [Observer21st August] the LibDems & Labour are in deep trouble.

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