Saturday, April 09, 2005

Mock Liberal-Economic Soup

I have been delighted to see a defence by An Englishman In Philly of my rebuttal of an article he originally wrote on tax cuts. He was generous enough to promise to "try to refrain from minor snipes at the slips in the piece," a generosity I shall extend back, as I dissect his counter-rebuttal.

Yes, some on the right become obsessed with reducing tax for the sake of it and for any cost. They are wrong. There is a role for taxation. Nevertheless, despite that minority, I know that many of those who Richard seeks to tag as "ideologically blinkered" are not committed to reducing taxation come what may. They are committed, quite rightly, to taking as little as possible for those goals we want to achieve, and for ensuring before it is taken that it is spent wisely. This is the only way the public can get value for money.
Well, I do think that it is ideologically blinkered to work from the principle that we should set taxes at 45% or 40% or 35% and work backwards from there. I did take care- perhaps it was dismissed, though, as a "slip" -to happily concede that there were levels of taxation where you could not go, for purely pragmatic macro-economic reasons; largely because you'd shut down growth and generate less revenue than you'd imagine. I also happily admit that the aim of taxation is to take what we need and not a penny more-- and that government spending is a sacred trust in which there is a moral duty on the part of the state to dispose of this common fund in the most benificent and efficient way possible.

My objection is at the way around you are approaching tax cuts. The key has to be to identify the long-term efficiencies you can make, and to be vigilent for them, whilst always working from a first principle of identifying the service you intend to provide as your first job. Then, having worked out what you need to fund that, you begin a balancing act with the economic reality of taxation and the basic principle of saving taxpayers' money.

At the root of this all lies a key question, however. Do you think that where possible Government should not take peoples' money? Or do you think that the Government has a right to peoples' money so therefore ought to take more while it can? Despite his rhetoric about being a liberal I see very little desire from Richard for the state only acting where necessary. Any real liberal must surely ask whether any given level or type of public expenditure is good enough to exhaust the duty of trust owed to the person from whom it was taken, to outweigh the wrong of taking what belongs to someone else. Useless public expenditure, or public expenditure which returns no gain or has a negative effect cannot ever justify money being taken by threat of coercion. For this reason we must exercise caution and be certain that greater taxation is the only way.

These are all good points, but we are playing the cypher-politicians' trick here in asserting something nobody would disagree with. I take as my first principles all these points, but suspect we disagree on the utility of some areas of public spending, and the ability of the private sector to perform certain functions. But in that debate, we are discussing how to divide the pot at least-- which is what I have been driving at. We must always start from the services' cost and work back to tax cuts, if they really are the best use for efficiencies, not start with the tax cuts and begin chasing reforms.

I sincerely apologise if, as accused, I have created a straw man. But it rather seems that has been exactly my fate. My key contention is merely the way around you approach tax cuts, rather than any assumption of public rights to the private property of individuals.