Do not give them their "fair dues"

“S’not fair” is the rallying cry of children everywhere but it is not a sensible strategy for tax and spend policies

What's 'fair'?
Simon Miller
On 20 April 2012 09:15

This summer an athlete will run faster, jump faster or swim faster than another and win gold. Over in Eastern Europe one team will score more than another and win the European Championship.

Now, on that particular day – in those 90 minutes or nine-or-so seconds – they will win. And yet most people will not complain about it being elitist or unfair.

There seems to be a strange dichotomy to today’s society where someone who can kick a ball or run fast is acceptable but lo betide any person who happens to have worked hard or is intelligent but happens to work in finance for a living.

Does a diving, £100,000-a-week footballer actually make anything? Is he a producer? Does he contribute to society? Doesn’t he, and in turn  his club, take money off punters  through tickets and merchandising with little return for that money except at some emotional level if he scores a good goal or lifts a cup?

Certain footballers last year were reported to have saved over £600,000 in tax over two years, paying instead £28,000, and yet you don’t see ‘Occupy Old Trafford’ (well except for certain non-fans of the Glazers).

Why does this level of acceptance happen for tax-dodging strikers but not to those in the finance industry?

The current argument ignores the monies made for pension funds, the taxation paid to the government, the auxiliary jobs created around finance centres. It ignores the fact that these “fat cats” are in reality a small percentage of what consists of The City.

But, you hear the cry: “it’s not fair that these people earn money”.

In this age of economic infantilism and emotional incontinence, fairness has become the rallying call. Inevitably, the definition of fairness comes from the yoghurt weavers on the left, bleating on breakfast TV sofas that a tax policy isn’t fair or a cut in benefits to the equivalent of £26,000 isn‘t fair.

Well fine, if you think fairness is a valid argument, I don’t think it’s fair that a worker who earns £26,000 has nearly £6,000 taken by the tax man. I don’t think it’s fair that out of that £20,000 left, the worker still has to find somewhere to live, to eat, pay bills and survive, especially in London and the South-East whilst still holding down a job.

It is an argument that inevitably descends into someone wanting to spend someone else’s money for their own benefit.

What we are seeing is not an issue of fairness; it is an issue of jealously. “That man earns a lot of money and I don’t like it.” “Why shouldn’t I benefit out of his labour?” “Why shouldn’t he be punished because I can’t find a job?”

Fairness is a subjective and pejorative term which should never be colonised for a sensible taxation or spending debate. Fairness can never be fair. For a winner in these terms, there will be a loser. For every person arguing about benefit cuts being unfair, there is a rich person moaning about the unfair charity tax.

In taxation, the debate must never be about “fairness” it should be about end goals and how to achieve them.

The questions should be: Why does a government spend? Is that spending done in the most efficient manner possible for the desired (and hopefully voted for – hey, somewhere there’s a democracy) outcome? Is that outcome achieved? Does current taxation policy maximise return? Is there a better method of taxation? Is the taxation balanced to maximise return?

You see I mentioned balance, not fairness. An unbalanced taxation system will inevitably lead to lower returns as people seek to maximise their personal returns, or a company can no longer afford to employ someone, for example.

Fairness can never decide an outcome. Take the charity relief proposal. Apply the questions above to it. Will the government’s goals be achieved? Does this fit in with the idea of increasing charitable donations? If the answers are no then it is a bad policy. Fairness should never come close to taxation policy.

As in sport, as in life, there are winners and losers, and mid-table mediocrity. The role of the government is to uphold law, maintain security of the nation and act as a safety net (not as a career choice) to maintain social cohesion – and in my ideal world it would be done with as little interference as possible to the individual or his pay packet. That is the compact that has developed over the centuries.  

“It’s not fair” is a cry that I hear from my daughter when we stop her watching the latest brain-rot from the mouse corporation or she is sent to bed. “It’s not fair” should never be a valid economic or political argument when it comes to taxation and spending. If a government actually thinks it does, then eventually we will take America’s lead, and start withholding the pocket money.

Simon Miller is a Contributing Editor to The Commentator and the Editor of Financial Risks Today. He tweets @simontm71

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