Ha Joon Chang asks an interesting question

Surprisingly, the answer isn't quite what he assumes:

The last myth is that tax is a burden, which therefore by definition needs to be minimised. The Conservatives are clear about this, proposing to cut corporation tax further to 17%, one of the lowest levels in the rich world. However, even Labour is using the language of “burden” about taxes. In proposing tax increases for the highest income earners and large corporations, Jeremy Corbyn spoke of his belief that “those with the broadest shoulders should bear the greatest burden”.

But would you call the money that you pay for your takeaway curry or Netflix subscription a burden? You wouldn’t, because you recognise that you are getting your curry and TV shows in return. Likewise, you shouldn’t call your taxes a burden because in return you get an array of public services, from education, health and old-age care, through to flood defence and roads to the police and military.

Yes, of course they're a burden. Come along now, an economist should be familiar with the idea of costs and benefits, even cost benefit analysis. That we get Netflix is the benefit of the burden of our subscription, that we gain a scrumptious curry is the benefit of the burden of our having to pay for it. So it is with public services, the tax is the burden of the benefits which shower down upon us from Whitehall.

Further, economists are really quite certain about two other things. Firstly, that gaining maximum benefit while bearing minimum burden is what makes us all richer. Economic efficiency really is a thing. Secondly, that this is the way that human beings work. we really do try to maximise individual utility, also known as maximising bang for buck and even, whisper it gently, attempting to maximise benefit while minimising burden.

Studying how people do that is actually a fairly important part of both economics and every economics class we've ever heard of.

Tax is indeed the burden and the question is always whether it's one that's worth it for the benefits. Given the economic efficiency of the British State the answer, at the margin at least, is no.

Previous
Previous

Monty Don thinks supermarkets reduce choice

Next
Next

Super, so how do we decide Mr Jackson?