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Burning down the house of inequality



If you want to look for the logic behind cutting taxes and flattening out the tax system, look no further than this formulation of individualism by former Liberal federal MP Bronwyn Bishop: 'Individualism means you make laws so that the individual can prosper and reach their maximum potential and that they are free to use that skill to the best of their ability.'

Malcolm TurnbullIt is against this frame that we need to analyse the urgent desire for tax cuts that occupies and colonises our political imagination. But before we can talk about tax cuts we need to talk about tax, and before we talk about tax we need to talk about the role of government.

If you accept the tenets of individualism, you are going to struggle to see why we should have anything but the most minimal level of taxation, and you certainly wouldn't hold that taxation should be progressive in order to be fair.

On this logic you would welcome the government's massive ideological reframing of the taxation system, significantly flattening it out, disproportionately rewarding those who already have much, and taking from those who have little via cuts to social security, social expenditure and penalty rates. You would also accept the deeply offensive proposition that inequality is caused by a purported lack of aspiration on the part of those who bear its brunt.

You wouldn't, in fact, see the reduction of inequality as a reasonable objective for a society through its government. You would probably see inequality as a measure of effort or, in the unforgettable words of one commentator earlier this year, 'a measure of freedom'.

Inequality is a political failure; not a personal one.

As the commons were being enclosed in 17th century England, an anonymous poet wryly observed: 'The law locks up the man or woman / Who steals a goose from off the common / But leaves the greater villain loose / Who steals the common from under the goose.'


"This is not just about having the resources to support those who bear the brunt of extreme inequality. It is about the value of a society collectively achieving for everyone that which we hold to be essential for a decent life."


It is the 'commons' that are the greatest collective means of actually ensuring that everyone does get to prosper and be able to use their abilities while also meeting their needs.

If we were serious about addressing inequality we would acknowledge that its growth is the result of the ongoing and ever-innovative theft of the commons, including the remarkable framing of housing as a speculative sport rather than a human right, alongside the dangerous slide towards the extreme commodification of both health and education.

But so cleverly is this concealed that we are presented with a narrative that successfully convinces people that the thieves are not those who actually profit from the theft of the commons but those who most acutely suffer the consequences of this theft.

So people who have been locked out of paid employment are framed as stealing tax-payers' hard-earned dollars while people in low-paid or insecure employment are framed as being greedy for penalty rates and minimum wage levels that are 'punitive' to businesses, while the unions that collectively seek to protect their rights are demonised and derided.

Social expenditure is framed as being a gigantic theft while the minimisation, avoidance and reduction of tax, especially on high wealth individuals and corporations, is framed with a pious reverence for the rights of the hard-working wealthy.

This is not just about having the resources to support those who bear the brunt of extreme inequality. It is about the value of a society collectively achieving for everyone that which we hold to be essential for a decent life: a place to live, a place to work for those who are able to work, income adequacy for those who can't, a place to learn, and a place to heal.

The message of the market is that you either personally pay the premium or you go without. And the more you pay the better the quality of the service or product. The collective approach, on the contrary, is based on the principle that you should contribute what you are able and use what you need (as per, for example, the idea of universal health coverage).

US economist Mark Thoma, writing in The Fiscal Times about the downwards envy that characterises debates about equality and social spending, observed: 'Rising inequality and differential exposure to economic risk has caused one group to see themselves as the "makers" in society who provide for the rest and pay most of the bills, and the other group as "takers" who get all the benefits.'

You couldn't really get a better paraphrase of the Menzies axiom that 'we're a nation of lifters, not leaners'.

Thoma continues: 'We have lost something important as a society as inequality has grown ... our sense that we are all in this together. Social insurance is a way of sharing the risks that our economic system imposes upon us. But growing inequality has allowed one strata of society to be largely free of these risks while the other is very much exposed to them.

'The upper strata wonders, "Why should we pay when we get little or none of the benefits?" Even worse, those at the top begin imposing a virtue and vice story to justify their desire to stop paying the taxes needed to support social insurance programs. Those at the top did it all by themselves. Those at the bottom ... are essentially burning down their own houses just to collect the fire insurance ...' 

According to this absurd logic: people choose to be poor, to be unemployed, to be underemployed, to be insecurely employed, to be low-paid. They choose this way of life because they want to steal from the hard-working rich by forcing them to pay grossly unjust taxes to fund grossly unfair and overly generous social spending.

Our problem is not idleness. Our problem is inequality. People are forced underground by inequality. They resurface in our prisons or on our streets. They're forced to hock their furnishings, their personal possessions. They seek consolation in the arms of loan sharks and payday lenders. Charity may well tide them over until their next crisis. It is justice, only justice, however, that will fulfil their long-term dreams.

The role of government is to achieve the collective dreams of the many. Not pander to the desires of the already wealthy few. Inequality is a political choice. How do you increase inequality and rip the guts out of what remains of a redistributive system? By cuts to taxes for the wealthy alongside cuts to services for everyone else.

Well-targeted social spending, regardless of the screams of blue murder from those who have more than enough, helps build greater equality. But to make sure we can provide for all, we need a fair, solid and progressive tax system. When a government starts hacking away at the system we've got, you know that inequality is going to escalate and you know who is going to pay the price.



John FalzonDr John Falzon is Chief Executive of the St Vincent de Paul Society National Council.

Topic tags: John Falzon, tax cuts, Malcolm Turnbull, Scott Morrison



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Existing comments

Thanks John! "How do you increase inequality and rip the guts out of what remains of a redistributive system? By cuts to taxes for the wealthy alongside cuts to services for everyone else." And that is just what the Turnbull Government is aiming to do at this time!

Grant Allen | 28 June 2018  

Bronwyn Bishop's statement quoted in the first paragraph stunned me. It is virtually identical to the Jesuit ethic applied to education of the youth in their schools. I never associated Bishop with such insight! Perhaps she should have added after "...the best of their ability" the phase "and for the good of society at large, if necessary without monetary reward".

john frawley | 28 June 2018  

Great piece of analysis, John. Thank you once again for standing up for the victims of our greedy system

Tony | 29 June 2018  

Marxist socialism has been repetitively shown to be an abject failure. It doesn't work. While money replaces the bartering system as currency for living, work is essential and its value (probably sometimes both over- and underestimated) will determine personal "wealth". Taxation should always collect less from the low earner and more from the higher earner as it does with the envisaged tax rates. The real problem lies in tax evasion through deductions and off shore money havens at the upper end and removing these is the only effective reform which will bring justice.

moderate capitalist | 29 June 2018  

Excellent article - thanks John

Anne | 29 June 2018  

An excellent analysis. It should be shouted from the roof tops

Sheelah | 29 June 2018  

I wasn't taught that in my Jesuit school, despite the ameliorating addition that you append, John Frawley. Instead I was taught very explicitly that, first and foremost, the goods of the Earth belong to all. I'm not sure that Senator Corey Bernardi attended a Jesuit school or not, and while I admire his opposition to enforced contraception of and for the poor on Q&A this week (attributed by another member of the panel to his Catholicism), it soon became obvious that it wasn't the enforcement that was the problem but that the state should pay for it. I was appalled too by his assertion that individualism is the hallmark of human progress. That many Catholics whom I know think this is a measure of how little they know of Catholic Social Teaching, whether they attended a Jesuit school or not. I suspect that such an attitude reflects an uncritical acceptance of their class position, which might also explain why John Falzon's article - crafted with crystalline clarity - has attracted so few comments.

Michael Furtado | 05 July 2018