You can't get the rich to pay for everything, they've not got enough money

Or, perhaps, you can’t get enough money purely off the rich to pay for everything without their leaving, or working less, or running into other of those inconvenient Laffer effects. This matters, more so for some dreams than others.

Polly Toynbee starts out by insisting that we all really must be willing to pay more for the NHS. To which our answer is, as it always has been, that if the NHS is such a wondrous system, both more efficient and also more fair, then we should need to pay less for the same level of health care as other countries. The insistence that we must pay at least as much as others is, we insist, evidence that the efficiency claim cannot be true.

However, Polly then goes on:

In this forever undertaxed country the tax revenue is 33% of GDP, while the 14 EU states pay an average 39%, according to the IFS.

Would we pay that EU average?

The idea that the EU consists of 14 countries amuses - what is meant is Western Europe and also EU. The other countries of the Anglosphere have generally lower tax to GDP ratios than the UK. Whether Britain should run at tax levels determined by geography or culture is an interesting question.

However, using Polly’s own source, we are told this:

UK raises less from social security contributions……

The amount the UK raises through income taxes (a category that includes smaller taxes such as capital gains tax, as well as the main income tax) is broadly in line with international norms – it is Scandinavia that stands out, with higher income taxes than elsewhere.

The amount the UK raises through VAT is also comparable to most other developed economies….

The biggest difference between the UK and most higher-tax countries is the amount of revenue raised through social security contributions (SSCs) levied on employees and employers. In 2019, National Insurance contributions (the UK version of SSCs) raised 6.6% of GDP, compared with 12.0% on average for the EU14. The UK’s lower revenues from SSCs more than explain the UK’s below-average tax take – the UK raises more than both the OECD and G7 average from taxes excluding SSCs.

Leave aside theory and even morals for a moment and become entirely pragmatic. We’ve a globe’s worth of rich country experience here over roughly a century of Big Government. Roughly the same portion of national income is raised by income taxation, the US aside roughly the same from consumption taxation, the only way anyone gets to larger than UK taxation - and thus state size - is through the regressive social security taxation.

We can indeed have a larger state but we can’t demand the rich pay for it. We’d need to near double national insurance - not rates but as a portion of GDP which would mean a more than doubling of rates given exemptions.

And that then becomes the actual question that needs answering. Not ~”would you like a better NHS by taxing those rich people behind the tree over there?” but instead “If you want more government then you, yes you Ms. Voter, are going to have to pay not 25% of your marginal income in combined national insurance but double that.”

At which point we might well find that the decision is to run with the culturally associated slightly smaller state of the Anglosphere rather than the slightly larger of Western Europe. Possibly, maybe, but that is actually the question, isn’t it?

For that massed set of experiences of those other countries does show us that the large state cannot be financed purely by taxing the rich. If it were then someone would be doing it, given the political attractiveness of the idea, wouldn’t they?