Cackling geese and taxes

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Goose hissingWhenever public funds are made available for frowned upon projects they are described as taxpayers' money. The phrase rightly suggests that public funds are collected for the good of society, and so should not be spent wastefully or arbitrarily. But the phrase is rarely neutral. Taxpayers' money is misused, thrown away, squandered, wasted or cast at its unworthy objects.

The expression also hints at something more. It invites us to think of tax payers as individuals who still have claims over the money they pay in tax even when it is aggregated in the hands of the government. It also suggests that taxation is an imposition that we can rightly feel curmudgeonly about.

When I hear the phrase roll from critics' lips, I imagine taxpayers as prune faced and laser lipped, like geese cackling and snapping when some of their grain is taken away, or like children watching with beady eyes as their mother cuts the cake, ready to howl if their slice of the cake is the smaller half by a crumb or two.

Underneath the phrase usually lies a view of life in which the market is a sacred site. The free market in which individuals can buy and sell without interference is the foundation of political freedom. The goal of human happiness and of social endeavour is imagined in economic terms as wealth and position attained by competing in the free market. The welfare of the society is identified with its wealth, regardless of the equality of distribution or the wellbeing of the least advantaged of the citizens.

From this perspective anything that distorts the free working of the market is a threat to individual freedom and ultimately to society. Taxation is seen as a distortion of the market because it limits our choice to buy and sell as we wish. So it is endorsed only grudgingly for securing things, like infrastructure, that the market cannot provide by itself. This is why the conversation about tax is often like geese hissing at the farmer who sets aside some of their grain for weaker birds.

The insult of taxation is added to by the injurious ways in which its proceeds are used. Public funding of non-profit community organisations for their work with the disadvantaged is also seen as regrettable on these premises. By definition they are less efficient than commercial organisations because the latter are disciplined by a free and competitive market. I have looked at the case of legal services in an expanded version of this article.

It is right to scrutinise government spending carefully. Governments have been known to use public funds improperly to sandbag electorates under threat, to roll out imprudent schemes and to indulge their patrons. They need to be kept accountable.

But the constant reference to taxpayers' money is unhelpful because it leads us to consider people as individuals and to define them by their participation in the market. Human beings are not isolated individuals, but are inherently social. They can develop as persons only through relationships, with the result that they grow only if others grow. Economic development and the place of the free market within it are important because they contribute to the development of society and of people within it. But it is the business of the state to guide that development, ensuring that all, including the most disadvantaged, are benefited by it.

From this perspective the phrase 'taxpayers' money' is misleading and the response evoked by it too mean. It is better to speak of public funds. Public funds come from persons who depend on their relationships to one another within society. They also have a responsibility to one another in the building of society.

Taxation is an expression of the social reality of human beings and helps them discharge their mutual responsibility. It acknowledges that the free working of the market and the prosperity of those who profit in it rely on mutual trust built by the social structures inherited from those who have gone before us. Our taxes help our society build on what we've been given for the benefit of those who follow us. It is not my money but our money.

The state can foster the development of society in many ways. It can be particularly effective to work through non-profit community groups to support the disadvantaged. The key to such work is the building of relationships, for which the altruistic people drawn to community groups often have special gifts. Strong community groups too are an index of a healthy society. They are not a distortion of the market but a blessing for the society that the market also serves. 


 

Andrew Hamilton headshotAndrew Hamilton is consulting editor of Eureka Street.

Goose image from Shutterstock

Topic tags: Andrew Hamilton, tax

 

 

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Excellent (meaning I totally agree).
Russell | 06 November 2013


Well if I am a goose then so be it .The moment that Government officials ,elected and employees ,think that they can spend taxpayer money as they think fit without seeing it as the wise stewardship of other peoples money to be allocated to the common good and to those in need then democracy has failed and we live in an autocracy .We elect government and pay public servants to spend our money as we give it for the good of those in trouble , not to do whatever wasteful project some pressure group or political opportunism seems to demand .
John Crew | 07 November 2013


Once again, thank you, Andrew, for putting into words all the things that I want to say too.
Susan | 07 November 2013


Taken to their ultimate extreme the sort of economic self-centredness and economic rationalism you describe so well will lead to a barren society with a very sharp division between haves and have nots. It is already happening in Australia and abroad with dire human consequences. Strangely enough, in America, which is one of the places these opinions are most strongly held and have, to an extent, been put into practice, there is a parallel movement for self-development and spirituality. Although some expressions of this latter movement are kooky I think they embody an unfulfilled desire for a society which is not totally materialistic. Not-for-profit institutions, or the good ones, which we once termed charities, embody a desire within us to return to a more cohesive and mutually supportive society, with all the rights and responsibilities that entails. A society based on purely materialistic principles, as ours now appears to be becoming, is doomed. Previous societies that have lasted have had far, far stronger and more cohesive foundations. Their religions, with all their faults, enunciated these principles of coherence. When we fail to grasp these principles and what is behind them we are in danger of perishing.
Edward F | 07 November 2013


This article overlooks a number of points. First, that the creation of wealth, from which taxes are drawn, is itself a community-benefitting activity. Bill Gates' billions of dollars represents millions of humans whose living standards have been greatly enhanced by his labours. Likewise, the modest profits of the humble corner store owner should be seen as an expression of approval for the benefits her work and ingenuity have brought to the local community. Anyone making a profit on the market - either as an employee or an entrepreneur- is doing so because they are benefiting someone else. So it's not just those who generate monetary profits that benefit from the market - it's those they transact with - ie make the monetary profits from - as well. The free market is a win-win scenario, something lefties fundamentally don't get. Some level of taxation is no doubt necessary, but income tax is a particularly unfortunate form, since it in effect punishes people for working to benefit others, and in a progressive tax system, punishes those who benefit others at higher rates even more harshly. Secondly, governments would do well to thus regard taxation as money to be held and used on trust. An attitude of "it's not my money but our money" unhealthily ignores basic realities about how wealth is created through the efforts and ideas of individuals working alone or together. No-one seriously says "It wasn't Leonardo's 'Mona Lisa', it was Florence's 'Mona Lisa'", "It wasn't Bradman's 344, it was Australia's 344", "It isn't Tolkein's Middle Earth, it's Oxford's Middle Earth". Equally, it IS "my money", in terms of provenance. When cackling geese lay golden eggs, it's wise for the state to respect the process.
HH | 07 November 2013


I am with John Crew. When I think of it as taxpayers' money I am concerned that it is used carefully. This is not some mean spirited view but a desire to maximise the social benefit to be derived from a finite resource. The less waste the more there is for the least advantaged of our citizens. This hissing goose resents the stereotype.
Martin Loney | 07 November 2013


Eloquently put Andrew. We are more than mere taxpayers, we are citizens in a society that should be caring for one another. Taxation is the price we pay for a civilised society.
Wayne McMillan | 07 November 2013


It really annoys me when politicians speak of "taxpayers". They are there to serve the citizens of the country, many of whom are not taxpayers at all. Also many taxpayers (corporations) are not citizens. speaking of us as "taxpayers" undermines the social contract we have to our fellow citizens.
Neil Ormerod | 07 November 2013


I think John Crew, HH and Martin Loney are missing the point. If I understand Mr Hamilton correctly, it is the selective use of the expression "taxpayers' money" that is being discussed. Mr Crew, HH and Mr Loney have all shown through their assumptions and language ("pressure group", "political opportunism", "lefties", "finite resource") that they take the assumptions of neoliberalism to be self-evident truths and that, therefore, they literally cannot see the words Mr Hamilton has put on the page.
Rod Beecham | 07 November 2013


Re: HH, 7 November, who says: "So it's not just those who generate monetary profits that benefit from the market - it's those they transact with - ie make the monetary profits from - as well." This is wonderful, HH. I wish I'd had this explained earlier, so I could have comforted my friends who lost their houses at the casino or their superannuation on dodgy CDOs. I suppose the benefit they got was in the form of a valuable lesson.
John Vernau | 07 November 2013


Thanks, JV. People who trade on the market benefit from the transaction. When Jack swaps 2 doz of his eggs for a pumpkin from Jill, both benefit from the transaction. Jack gets the pumpkin he prefers to his 2 doz. eggs. Jill gets the eggs she prefers to her pumpkin. Similarly, when Jack swaps his eggs for $5.00 from Tom. And when Bill Gates swaps copies of Microsoft Windows 8 for $150.00 from each of millions of customers, both sides likewise benefit. I'm not sure how your gambling example undermines this basic point about market transactions I was making. And "dodgy" CDOs - because fraudulent? Well then, not a voluntary market transaction in any shape or form, but a species of coercion.
HH | 08 November 2013


Good to see that HH is all in favour of the entrepreneural street walker - she has something to sell and the customer is willing to pay - 'a win-win scenario'. Or do we have to take into account more than the simple transaction? Climate change is a perfect example of the failure of the free-market to address one of the most important public policy issues facing us. Looking at wealth creation in the sort of accounting terms that HH does is profoundly anti-Christian.
Russell | 08 November 2013


Thanks, Russell - good points. The "free market" is the market where rightful owners of property voluntary transact. So that excludes transactions where a person doesn't own the goods they are selling. Thus for example, a contract to kill is not a truly free market transaction, as it involves the coercion of a third party (the victim). Neither, I would argue, is a contract to abort a baby. Likewise I don't have proprietal rights to parts of my body - I am a kind of steward of my body and don't own it in the sense that I own my piano. So I don't have the right to amputate my left arm and sell it (Of course, if it had to be amputated for medical reasons anyway, that changes things.) A prostitute, likewise, has no right to sell her body for sex - sex is for married couples only. So her transaction is also not a "simple" market transaction but a purported market transaction. (Though, as St Thomas points out, the purchaser is bound in justice to hand over the money he promised.) Global warming (if it exists) is not an example of free market failure. Just like the oceans and rivers, the atmosphere is effectively owned by the world's states, not by private individuals (though there's no reason why it couldn't be, and managed more efficiently, I believe), so any failure to police it in the interests of their subjects is their fault, not the free market's.
HH | 08 November 2013


Oh HH ..... can we talk? As a recycled bush Methodist, I have learned to listen well to various conflicted social and ethical viewpoints. Through banking and accounting; clinical psychology in the trenches with several of the more marginalized groups in modern Oz;; pastoral care with the Uniting Church and the USA Methodists and a strong appreciation of the benefits of wise investment (individuals and communities), I have grown weary of those who cannot appreciate that much is expected of those to whom much has been given. The barely disguised, self-serving reductionism (all about the money) and rhetorical distortion of the views of those with whom you or I might disagree do not make for a compelling case. Sad also that you, HH do not see fit to identify yourself. Grace and Peace to you Andy for rich theological integrity and sharp societal observation. (Rev Dr) Wayne Sanderson
Wayne Sanderson | 09 November 2013


HH wrote: "A prostitute, likewise, has no right to sell her body for sex - sex is for married couples only".HaHa. Seriously HH if you feel free to exclude whatever transactions you like from the market, so can the rest of us. Food is meant for nutrition, not for pleasure, hence all those junk food manufacturers have no place in the market etc etc. Climate change is a perfect example of the free market being geared up for exploitation, but unable to account for the damage that it does. Since you deny the overwhelming scientific consensus on the issue, look instead at something like the 'pea-souper' fogs that used to kill so many in London. Nothing prevented people from buying the cheapest, dirtiest coal to burn until government regulation solved the problem - a lot of people then didn't have to die of market failure.
Russell | 11 November 2013


Thanks, Rev. Sanderson, but I fail to see how the points you make are relevant to my critique of Fr H's post. Much indeed is expected from those to whom much is given. Yes, but how does that gainsay what I'm asserting here? I'm pointing out (inter alia) that on the free market (ie, in the absence of force, fraud or coercion) to make a lot of money, you have to sell something that is valued highly by customers. If you're one of these people, you have already benefited society even before it comes to the question of your taxes. (Which is not to say other people don't also benefit society in other ways not easily understood as market transactions.) Fr H's phrase "the prosperity of those who profit in (the free market) ... " in the context of taxation is what I'm focusing on. As I put it, EVERYONE profits in free market transactions. If it's a money-based system, then some monetarily (Bill Gates), others psychically (his customers). Yet it's primarily the MONETARY profiteers that are taxpayers, as if they're the SOLE profiteers/winners in the system - to the disadvantage of everyone else - and thus should be the ONLY ones expected to have their benefits creamed off. Not fair, I say.
HH | 11 November 2013


Very confusing HH. Are you upset about taxes on profits/incomes? Would you prefer a wealth tax? (I'm guessing not). You claim that "to make a lot of money, you have to sell something that is valued highly by customers." Not necessarily - all those currency traders and the like, practically gambling really. And "EVERYONE profits in free market transactions". Obviously not - how did the speculative madness in residential housing benefit the generation that now can't afford to buy a house? Friends of mine recently had to sell up and move away from a nightclub that was allowed to extend its hours which has resulted in even more disturbance and vandalism than they had from it before. Can I recommend that you visit some of our neighbouring countries to see how a booming free-market has benefited EVERYONE in those countries?
Russell | 11 November 2013


Russell, thanks, but too many (good) questions for detailed answers. But 1. London pea soupers: product of judicial decisions in nuisance law at start of industrial revolution, over how to allocate rights in the (state-owned) airspace. It can't be a free market failure where a free market is prevented from allocating property (as in state-owned air, rivers, oceans). 2. Night club noise is the same problem: the STATE has granted the night club owners the right to make disturbing noise with impunity. That's not a free market transaction. (Moreover, it's the state that claims ultimate responsibility for policing disturbance and vandalism.) 3. Currency speculation is just that - speculation. Something we all do every day. ie: we take risks. And in currency, and trade in general, it has an important role - eg, arbitraging. 4. When I say "everyone" I'm referring to all who buy and sell in a market transaction. Why would I willingly enter a transaction if I prefer what I have to offer to what I'm being offered? 5. Which countries? India and China are gradually developing market economies. As a consequence, global poverty has come down over the last decade at an unprecedented pace (according to the liberal Brookings Institute). Hong Kong, Singapore, Taiwan, S. Korea all leapt from underdeveloped to world ranking economies via market economics. 6. I'm not opposed to some taxation, as I've said above. I'm just against the idea that taxpayers owe something to the community, as if they haven't already benefited it, by their very income-earning/wealth creating activities.
HH | 12 November 2013


HH wrote: "I'm just against the idea that taxpayers owe something to the community". You haven't yet written about the benefits the wealth creators got FROM the community - quite possibly from their birth in a public hospital, through public schooling .... and all the publicly provided roads, trains, policing, infrastructure, educated workforce etc etc. You also fail to point out their Christian duty to others. Re India, China and the rest - I think you'll find that some people benefit from a free market and others don't - it depends on who has how much power. Your first and second points are avoiding the issue - there is no totally free market - a free market can only exist within legally defined boundaries that set the terms, terms that can be enforced by the state. The free market provided the opportunity for the sale of dirty coal that people burnt that caused the pollution that killed people - only state regulation could solve the problem. In my friends case it was exactly an explicitly stated pro-free enterprise market ideology that allowed the nightclub to open longer leaving them with only the option to move away.
Russell | 12 November 2013


Russell, in the early 19th c, had the state through the common law courts respected the natural right of everyone not to have their private property sullied by the dumping of solid, liquid or gaseous waste by others, then individual polluters would have been justly fined or jailed for invading the rights of others. The state/courts mistakenly chose to look the other way for decades, thus allowing non-free market - ie, coercive, deeds by profit-seeking polluters. Similarly, if the state today decreed that all redheads had no right to life, then contract killings of redheads would therefore go unpunished. That wouldn't make those killings a product of the free market, which is the market where transactions are free of force, fraud or coercion for ALL concerned. The allowance of night clubs to noise-pollute residents in surrounding areas is not an application of free market theory, no matter what the implementers may imagine. (My challenge: you'll not be able to cite a single recognised free market economist/political theorist who argues or implies that blasting noise into a non-consenting neighborhood is a right of night club owners or anyone else.) It's a violation of residents' rights to enjoy their property peacably: an invasion - the very antithesis of voluntary market transactions between consenting actors. Your complaints are valid: you're just barking up the wrong tree.
HH | 12 November 2013


HH - at least you agree that the free market needs the state to control the actions of wealth creators - that they don't harm others - as they go about their win-win transactions. I don't think I'm barking up the wrong tree, just that we're on different planets. I'm hoping that someone will pop a copy of Dickens' 'A Christmas Carol' in your stocking, and that you read it.
Russell | 13 November 2013


Thanks Russell - yes, I think we'd probably both agree about a lot of activities that should not be tolerated and that a state exists to forbid them, thus upholding human rights and permitting markets to be genuinely free. Though, states have to be watched, too, 'cos they're no more infallible or impeccable than individual constituents ("Who guards the guardians?") Cheers & thanks ... from planet earth!
HH | 13 November 2013


"from Planet Earth" ... and no doubt you'll maintain it's flat! It only took the Church 500 years to admit they might have been wrong re Galileo, and it might take as long for the concept of human-caused global warming to be acceptable to them, even so, a nice copy of that 'Earth from Space' poster so popular in the 70s, will hopefully also find its way into your Christmas stocking - something to muse on.
Russell | 14 November 2013


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