George Osborne, a man who sometimes struggles with his public image, thinks he’s found a way to strike a chord with the British people. His public pronouncements suggest that he thinks that there is a minority of people, those who claim social security benefits, who are parasitically living off the employed population. He asks us; "where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next-door neighbour sleeping off a life on benefits".
Leave aside for a moment the fact that since the financial crash most unemployment has not been voluntary, and that most welfare spending actually goes to people in work in the form of tax credits. There is a very significant section of the population who do agree with Mr Osborne’s analysis, and it certainly is galling to feel that you work hard to support those who do not bother. Most people think they are a striver, while very few would honestly see themselves as a skiver.
The thing is, in cash terms, most of the working population fails to pay their way. The unemployed pay tax in the form of VAT, but it doesn’t cover the cost of their state support. That’s what annoys the working “strivers”. The same charge could be made of most of the working population. Over the course of our lifetimes, we take a huge amount of state support. We are born in an NHS hospital, we spend years in the state education system, we ride state subsidised railways or drive on state built roads, we are protected by state funded police and armed forces, we retire and claim a state pension, then enjoy state funded medical attention until we pass on. Do you think you pay enough tax to cover all this? I’m afraid that’s unlikely, as we shall see.
According to these admittedly crude calculations from the Taxpayers Alliance (a right wing pressure group), you have to be in the top four fifths of earners to pay more tax than you use in services. That’s top four fifths by income, not population size. Did you know that according to the impartial Institute for Fiscal Studies the top 10% of earners pay over half of all the income tax collected? When you think about it, they pay much more in other forms of tax as well. You pay more VAT on a Bentley than on a moped. Yes, they have better accountants, but the crude fact is that a small percentage of high earners is actually providing the public spending which the rest of the working population relies on. Imagine you are one of these high earning individuals. Who is the ‘skiver’ now? You are supporting the average worker as well as those who have no job.
I’m very much in favour of this progressive taxation system. I think it is morally justified that the rich should pay a greater share of their income for the common good. But I also feel that this reality needs to be understood by everyone in the system. The uncomfortable fact is that George Osborne’s hypothetical shift worker is also taking more from the state than they contribute, they just don’t realise it. This must change if there is to be an honest debate about public spending.