“TAXMAN WANTS ALL OUR WAGES. We would just get pocket money” screamed the front page headline in the Daily Express (22 September). As the Times had explained five days earlier:
“HM Revenue & Customs is considering plans to deduct tax directly from workers’ pay packets before salaries reach their bank accounts”.
So what’s new? Income tax is already deducted before wages reach worker’s bank accounts, only this is now done by employers not the government. This in fact is one reason why we have said that, as far as income tax on wages and salaries is concerned, workers don’t even pay it. They never see the money. It’s paid by employers.
PAYE (Pay As You Earn) was introduced as part of the war-time Beveridge Plan to “redistribute poverty”, i.e. to try to ensure that the total wages bill was distributed efficiently, from a capitalist point of view, amongst the working class, so that no worker got either too much or not enough to reproduce their working skills taking into account their family circumstances.
Basically, it involved cutting the take-home pay of single workers or workers whose wife worked as they didn’t need to be paid to maintain non-existent dependants. Employers couldn’t be expected to do this themselves as their only concern was the quality of the labour power they purchased, for which they paid the going rate irrespective of the family circumstances of its seller. So it was done through the tax system
The Marxian theory of taxes and the working class is one of the most difficult concepts to get over. Sometimes it’s mistakenly expressed as “the workers don’t pay taxes”. The accurate and scientifically correct way of expressing the concept is that “taxes are not a burden on the working class”.
Even if workers don’t pay the income tax that is deducted from their pay packets before any money reaches their bank accounts”, workers do physically pay other taxes. For instance, workers in employment pay council tax in that they themselves have to pay this either in cash or by a cheque or transfer from their bank account.
Workers also pay indirect taxes such as excise duties on alcohol and tobacco and VAT on the goods and services subject to it. These, insofar as they increase prices, increase the cost of living and so the cost of reproducing labour power. This is passed on to employers as higher than otherwise money wages. It is in this sense that taxes on wages and on goods and services workers consume are ultimately a burden on employers.
We’re talking here about average expenditure. Only taxes included in expenditure on goods that enter into the general average cost of living are passed on to employers, not all the indirect taxes that an individual worker might pay. Just because a worker spends more than average on alcohol and cigarettes does not mean that economic forces will lead to their employer paying them a higher wage or salary.
So, yes, individual workers can be affected, adversely or favourably depending on their spending habits, by changes in the taxes they pay. Naturally those who end up worse off will complain, but this is not a class issue as an issue that concerns workers as a whole.
Whether income tax is deducted by employers or by the government is certainly of no concern to workers. What’s relevant is not the gross pre-tax figure that appears on their pay slip, but their take-home pay as that’s what they have to spend on reproducing their working skills. “Pocket money” is rather an apt description of this but surprising coming from a rag like the Daily Express.
ALB
1 comment:
Undeniably, the arguments that socialists advance that the working class, when it comes to taxes, has little involvement is a very difficult concept to explain, since to all intents and purposes, this is a subject that is to many. a matter of great concern; an attitude the “Daily Express” is deliberately exploiting in the article headed “TAXMAN WANTS OUR WAGES”.
While it is quite correct to assert that “taxes are not a burden on the working class” as being the scientifically correct way of expressing the concept, it has to be remembered that since the working class are responsible for the running of the capitalist system from end to end in the interests of the capitalist class, the workers are inexorably bound up in the whole shabby business. Within capitalism, taxation is the means by which the largely unprofitable aspects of the system, its protection and administration, is funded and so many workers are involved that it is difficult to distinguish the reality of that involvement from the illusion. A full understanding only comes with the perception of both what “money” really is and how it sustains the whole system of exploitation and that only surplus value can be taxed. Further more, the involvement of so many workers in those “unprofitable” aspects like the bureaucratic functions of banking, taxation and protection or enforcement means that any arguments concerning “socially” useful labour often become badly muddied as well.
In the matter of PAYE (“pay as you earn”; a brilliantly vague term left to the individual to interpret as they think fit) was it not the case that this arose from historical circumstances in the UK rather than any direct link with Beveridge? As it is understood, the circumstances were the conflict of 1939/45 where the so called “war effort” led to a considerable increase in wage levels for many, such that a lot of workers had the experience, for the very first time, of finding their increased incomes came under scrutiny for income tax. Prior to the introduction of PAYE, each year’s tax assessment had been based retrospectively on the previous year’s income. In consequence, for many, this represented both an affront and an impossibility and the government were faced with the risk of having to enforce unpopular payments at a time when there was a need for the utmost of cooperation in the expenditure of labour power.
The introduction of PAYE has served the defenders of capitalism well as a useful propaganda tool. The regular appearance on the individual worker’s payslip of their tax involvement serves as a spurious “reminder” of the “stake” they have in “their country’s prosperity”, hence the apparent seriousness afforded interest in the yearly charade of the government’s budget day.
JCB
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