Debate on Low-Tax and Small Government Flares yet Again

Recent Claims by Joe Hockey that Australians pay about half their income to the Government through the tax system has once more spurred a broader debate about tax reform - and the falsehoods spread by the Conservatives and Economic Liberals to rationalise their Ideology.

Tristan Ewins

January 25th, 2015

 

Recently  debate has arisen once more about rates of tax in this country.  Again Joe Hockey has come out with totally unfounded claims that individuals on average pay half of their income in tax.

 In response ACOSS chief executive Cassandra Goldie has argued that in fact middle income earners pay only 11 per cent of their income in personal tax, and higher income groups only about 20 per cent.  

Peter Martin of ‘The Age’ further explains how:  “ACOSS [arrived] at the figures by including all household income in its total, including untaxed or lightly taxed…Income washed through superannuation, family trusts and negatively geared properties.”

Martin also explains how:

“The bottom one-fifth of households pay 3 per cent of their income in personal tax, the next group pays 7 per cent, middle group 11 per cent, the second-top group 15 per cent and the top group 20 per cent…

But [this] progressivity vanishes when other forms of tax are included. Including the goods and services tax and other consumption taxes such as petrol and tobacco excise, the lowest earning household pays 24 per cent of its income in tax and the highest earning household only a little more at 28 per cent.”

So the existing system is also barely progressive when taken as a whole; and the Conservatives want to dilute or reverse this even more!

And today Gareth Hutchens of ‘The Age’ has also questioned the facts surrounding Joe Hockey’s claim that increased taxation through bracket creep is ‘the only alternative’ if Labor does not support the Conservative government’s austerity agenda. 

Crucially: improper reliance on bracket creep and increases in the GST and other regressive taxes and charges – including user pays mechanisms - are not the only alternative.

The Liberals’ offensive against any and all forms of progressive  redistribution rests upon their commitment to a classical liberal economic philosophy which naturalises the inequalities in wealth, income and power that arise under capitalism. Employers rather than workers are seen as ‘the real wealth creators’.  Workers are seen as freely entering into contracts with employers.   Their bargaining power as relates to skills in the marketplace are recognised; but the influence of trade unions in improving that bargaining position of workers is not. Differences in recompense based on demand and supply in the labour market are also ‘naturalised’.  Because of this ‘naturalisation’ government intervention in the economy is rejected outright – except for instance in cases where this paradigm is enforced – for instance through impositions against the industrial liberties of organised labour.  Hence the Conservatives and economic libertarians press for ‘simpler’ tax and lower tax because that means less redistribution.

There is also the question of peoples’ own liberties in their capacities as consumers. This issue is raised by the Conservatives and economic liberals and deserves a considered response.  There is the question of whether or not we are better off to determine our own ‘needs structures’ freely through consumption.

Very few socialists today would aspire to abolishing ‘the market’ in its entirety. Most socialists today would recognise the place of ‘the market’ as a medium by which workers and citizens in their capacities as consumers hold corporations accountable through the play of market signals.  Importantly, though, this entails the organisation of people in their capacity as consumers – both to improve the quality of information they can access as consumers – but also improving their market power through collective bargaining as consumers.

But there are problems with this ‘market utopia’.  Information is not perfect. Consumers are not sufficiently organised.  There are monopolies and oligopolies which minimise the effective role of competitive market forces and signals. And there is the possibility of consumers prevailing to the expense of the more poorly organised  workers. That is: the prospect of more – not less –exploitation.  

ALSO where there is intense competition there is the problem of investment in ‘the means of production’ growing so disproportionate compared with recompense through wages that the market is no longer able to absorb these costs – or provide sufficient consumption power to absorb what is produced.

But if all this is true what are the alternatives?

Firstly Labor should support a progressive restructuring of the tax system as a whole.  That must mean winding back superannuation concessions for the well-off – a good proportion out of about $50 billion in total by 2016-17. In total superannuation concessions  cost about as much the entire aged pension budget. It could also mean partially withdrawing dividend imputation (tax breaks ostensibly to negate ‘double taxation’) - justified on distributive grounds – and with exemptions for ‘small investors’.  

Further – it could entail an active restructuring of the income tax system – as opposed to ‘passively’ waiting for bracket creep to ‘do its work’. ‘Passive’ reliance on bracket creep for lower and middle income tax thresholds would have a regressive distributive effect. (which is why Hockey is willing to consider it despite his preference for ‘ever smaller government’) But restructuring and altering income tax scales and rates could allow bracket creep to work for higher income earners, delivering billions while actually reducing income tax for those on low incomes. A new top income tax rate could also be established for the millionaires.  Restoration of a robust ‘resource rent’ tax for mining could deliver billions; as could ‘super profits’ taxes in crucial areas such as banking. Finally: with modest increases in corporate tax we could signal our desire to end the ‘race to the bottom’ that results in effective ‘corporate welfare’.

If an incoming Labor Government succeeded in raising at least $45 billion in new Commonwealth revenue (in today’s terms) through these and other measures in its first term upon retaking government it would be in a strong position to deliver on Australian taxpayers needs in education, health, transport, communications, welfare and more.  Specifically it could fund big initiatives such as the National Disability Insurance Scheme progressively; And could also provide for another area of critical need – for a National Aged Care Insurance Scheme. Without austerity.

In response the Conservatives and economic libertarians would insist that public provision ‘rejects the market’ which is the proper arbiter of all goods and services.

 But Labor must reject such claims for several very practical reasons; as well as for the sake of economic justice.

Firstly ‘collective consumption’ as taxpayers can often secures for us ‘a better deal’ than in our capacities as isolated private consumers. Private infrastructure means user pays – which hits low and middle income citizens hardest.  It also involves higher rates of borrowing – with the cost structures passed on to consumers.  Finally it  means private profit margins and dividends – which demand that as much income be extracted from consumers as is possible. And in the case of private toll roads, for instance, can mean the exclusion of public transport investment to artificially support the particular private investors.

Competition in place of ‘strategic and natural public monopoly’ also passes on increased underlying cost-structures to consumers.  A ‘hybrid’ economic system which delivered those efficient cost structures on would mean more consumption power – not less.  Business actually gains from this. Both through cheaper infrastructure and services – but also through the increased consumption power of workers and citizens.

Hence there is ‘the bottom line’ that tax-payers would have more to spend in the areas where choice is most important as a consequence of strategic ‘collective consumption’; including ‘social insurance’ for instance.  And frankly ‘market forces’ do not necessarily make enough of a difference when it comes to roads and rail; or in the provision of water and energy; or in areas that are properly the reserve of ‘natural public monopoly’. (eg: energy, water, communications, and transport infrastructure)  Often it all comes down to a contest as to which provider can most efficiently fleece consumers with unintelligible deals and plans foisted upon people who would much rather take ‘the basics’ for granted.  And in areas like Education – ‘market choice’ just sorts us out on the basis of our capacity to pay.  That is, on the basis of class. And that is unfair.

But if ordinary people secure a ‘better deal’ through collective consumption in these areas that frees up more money for determining our needs structures in the areas where that really counts.  For instance, including but not limited to the consumption and other participation in culture, sport, fitness, social activity and art.  

The time has come to question neo-liberal shibboleths around ‘small government’ and ‘the market’.  An alternative is possible which delivers a better deal for the general public in our capacities as workers, citizens and consumers.  But which has also learned from the mistakes of the old socialism which thought it could supersede ‘the market’ entirely.

 

Andrew Bolt on ‘Charlie Hedbo’ and Free Speech: A Response

 

 

The arguments about free speech are often complex.  But freedoms and liberties must be defended

 

Tristan Ewins, Jan 11th, 2014

Andrew Bolt has fired another salvo against the Australian Left (Heald-Sun, Jan 10^th 2015); this time accusing the Left – and what he ironically calls ‘the ruling classes’ of this country – of ‘giving in’ in the face of Terror.  He argues that the French satirical publication ‘Charlie Hedbo’ was “almost alone” and that this emboldened the killers.   He argues that ‘the Left’ is hypocritical in the sense of constantly satirising, attacking and mocking Christianity – while claiming Islamophobia in response to critiques of Islam.  For Bolt censorship and self-censorship mean ‘the Terrorists have won’.   Bolt also condemns the racial vilification laws which he claims led to the ‘banning’ of two of his articles.  Bolt complains of ‘mainstream’ journalists ‘celebrating’ this decision; though surely this is a bit ingenuous given his claim to be ‘Australia’s most read columnist’.      He also attacks Australia’s migration program in so far as it welcomes “mass immigration from the Third World”.  Finally he claims Islam’s claim to be ‘a religion of peace’ is false in light of Koranic scripture urging the deaths of those who mock the Prophet Muhammed.   

Where do we start in responding to Bolt?  

On the matter of Left hypocrisy I personally sometimes cut a lone figure in requesting respect and sensitivity towards the Christian faith in the face of sometimes-hateful attacks.   The Christian emphasis on ‘turning the other cheek’ perhaps suggests a certain acceptance even in the face of criticism.  Rational (not hateful) criticism, indeed, is welcome – and has informed a shift in Christian thinking over recent decades to made an accommodation with liberalism.  Though in earlier centuries some church leaders were complicit in repression and Terror.  

There are liberal Muslims just as there are liberal Christians.  Though in the West liberal Christianity is more prevalent. There are relatively rare Christians who still advocate an unreformed interpretation of Scripture. But most today have turned from ‘Biblical literalism’ in areas such as Creationism for instance.  (instead Genesis is held by some  to be a parable containing a mystery which few understand; Though this should not mean we close our minds to the prospect of mysteries as yet not understood – for instance free will and consciousness itself)

The shift towards liberalism; of ‘turning the other cheek’; and the rejection of literalism has moderated what social conflicts may have arisen between liberalism, secularism and Christianity.  These tendencies in Christianity reveal  the falsehoods in many hostile caricatures of the faith.  We have had ‘Piss Christ’ and ‘The Last Temptation of Christ’, and yet many Christians accept that even while this may be hurtful, it is part of the liberal pluralist order we live in.

But where does Islam stand?   Just like there is liberal Christianity and Reform Judaism, also there are liberal movements within Islam.  There have been attempts to moderate the message of Islam.  Greater gender equality is promoted as well as pluralistic and individual interpretations of the Koran.  There is respect for democracy and human rights; slavery is rejected.   Yet arguably if one looks around the world today, both Shia and Sunni regimes – from the Saudis to the Iranians – these regimes have been reticent in adopting a liberal/reform orientation.   There are barbaric instances of corporal and capital punishment; women are often second class citizens; sexuality is stigmatised. Yet in a throwback to an earlier time self-proclaimed Christians in Uganda have sought to criminalise homosexuality as well – with potential life sentences for those practicing their sexuality.   

In response to Bolt it is fair enough for a democracy to hesitate before welcoming any who do not share basic precepts when it comes to liberal and human rights.  To welcome refugees is an exception – as there is the global responsibility to provide refuge for the persecuted.  And often the wars which refugees flee are proxy conflicts – the consequence of ‘Great Power’ interventions. 

It ought be noted that in the past similar arguments have been deployed to prevent communists and other left radicals from being accepted into our society. But while in the past many were deluded about the reality in ‘really-existing’ communist regimes, their orientation was nonetheless progressive when it came to defending liberal rights at home; as well as the rights of women, indigenous peoples, those of queer sexuality, the industrial liberties of workers and so on.  But anti-modernist radicals – whether they are Sunnis from Saudi Arabia, Shia from Iran, or Christians from Uganda – pose a potential threat to liberalism if ever their challenge to Modernity reached the critical point.  That is for example in Australia: if ever they comprised so formidable a bloc as to hold decisive political and cultural leverage

Against this – Despite some peoples’ over-blown fears, those of Islamic faith comprise only two per cent of the Australian population.  And well-intentioned engagement between liberals and Muslims could result in many more Muslims shifting into the liberal camp. Much as occurred with Christianity.  An uncontrolled influx could change this; but that is not the situation.

Yet that engagement is threatened by the ‘culture war warriors’ who would preach a message of civil conflict on religion rather than engagement.  Bolt is sceptical of Muslims claiming that theirs is ‘a religion of peace’.  But we would do well to remember it was not all that long ago that religion was cited as a rationale and a justification for centuries of colonialism and Imperialism of various European Great Powers.  Today strategic interventions and proxy wars are also justified on the basis of liberal and democratic Ideology.  But beneath the surface a more complex picture emerges.  Great Power bases in Syria and Qatar; fears over an Iranian bomb; attempts to isolate Iran through destabilising its Syrian ally (with over 200,000 dead!); the Syrian intervention backfiring with the rise of Islamic State – and yet even Islamic State could be could be seen by some as a counterbalance to Iran in the region. It is often very cynical. (the previous balance of power was wrecked through George Bush’s Second Gulf War, which ironically for the time was supported by Israel).

Finally we come to Bolt’s cries of censorship.

Censorship is a difficult question, and interestingly today it is self-proclaimed right-libertarians who advocate unmitigated and unmoderated free speech in the face of suggestions from others on the Left that speech be regulated – whether through state interference in the monopoly mass media, or through enforcing stronger racial discrimination laws.  

There is a lot to be reviled in the American settlement when it comes to their threadbare social security and welfare safety net; the neglect and rescission of workers’ liberties; oppressively low minimum wages; tolerance of homelessness on a mass scale…  But despite the hypocrisies of McCarthyism in times past for instance, ‘free speech’ is enshrined in the American Constitution and as part of American identity.  This notion of ‘absolute’ and ‘inalienable’ rights gives the far right conditions under which they can organise.  But it also provides a vital protection for the Left which could be utterly crucial, perhaps, in the future.  Without the argument of ‘free speech’ Doc Evatt would most certainly have failed in his defence of the liberal rights of Australian Communists.

In Australia we face similar dilemmas.  Andrew Bolt’s comments about indigenous Australians were hurtful, offensive and I believe they were cynical. Indigenous identity is about more that the colour of ones’ skin.  And preferential assistance through Abstudy, for instance, is intended to ‘close the gap’ when it comes to educational opportunity. Arguably ‘Closing the Gap’ needs to be a core aspect in a future Treaty.

Though Justice Bromburg, who decided on the Bolt case, insisted that he was not banning Bolt from sincerely debating the issue of indigenous identity.  And Bolt-critic Chelsea Bond argued that Bolt was not actually a racist.  Yet Bond argues that Bolt’s approach: “reveals his own anxiety toward the dilution of the 'coloniser's' identity, power and privilege.”   Bolt was exploiting these anxieties for cultural and political gain; and to this author therefore his endeavours were cynical in nature. 

There are important arguments here – for instance the need for a cultural settlement which reconciles the plurality of Australian identities – including that of pre-multi-cultural and Anglo identity and culture – as a means of ‘heading-off’ grievances, far-right organisation and irrational conflicts into the future.  (Although there never was a ‘mono-cultural’ Australia; and a past-world of Anglo/Irish tension is forgotten now by many)  Rejection of an ‘older’ Australian identity could drive many into the arms of the Reaction.

But should Bolt’s cynical comments have literally been BANNED? Certainly Bolt himself appears intolerant of any place for radical progressive speech in this country. His depiction of the ABC as a mouthpiece of the Left plays up to a now familiar Right-discourse around supposed Left-cultural-elites’ versus ‘the ordinary people’ – ‘the masses’.  This perspective was developed by Constitutional Monarchist and Conservative David Flint.  It is intended to remove any and almost all space available for the ‘genuine Left’ to be heard.   The ABC appears to feel it needs to prove ‘it is not radical’.  And at the same time the ABC increasingly leans towards ‘Centrist’ and ‘Centre-Right’ commentary.

This discourse on ‘Elites’ is deployed in order to play to cultural anxieties; while at the same time downplaying the class interests of the great majority of working people, as well as the marginal and the working poor.  American author Joe Bageant has compellingly written in his “Deer Hunting with Jesus” book how in the United States how ‘the white working poor’ are increasingly propagandised by right-wing Ideology; and how this process is inflamed by ‘class based putdowns’.  (indeed: we could also raise such language such as ‘white trash’ – which at once vilify on the basis of class AND race)  American liberalism’s de-prioritisation of social class as an unifying issue inflames the problem further; and the Labor Party in Australia might be seen as falling into a similar trap. 

The answer is not to ban conservative speech. Though perhaps there are exceptions such as Holocaust Denial – which could lead to ‘a culture of forgetting’ – and in the long term even a rehabilitation of fascism. (or even fascism’s worst historical manifestation, Nazism)  But every time we make an exception to free speech and weaken its absolute nature we potentially provide our enemies the very weapons that could be turned against us into the future.   Also – while perhaps an impossible ideal, Jurgen Habermas’s ‘Perfect Speech Situation’ is such an ideal as to be worth questing after in many respects.  Along with pluralism and acceptance of mediated conflict engagement is also a potentially core-foundation for liberal democracy. 

The problem is that on the Left we simply do not have the resources to be heard and considered alongside the cacophony of right-wing viewpoints.  So we are far from a ‘Perfect Speech Situation’.  Censorship is not the answer;  but the articulation of a broad new historic bloc is.  What is needed is a united front against domination and injustice.  That is to mobilise the necessary resources to bring about what Austrian Social Democrats once called ‘growth from within’ – but on a broader basis -  amidst disciplined solidarity.  There is scope for ‘asymmetrical cultural struggle’ with the rise of the internet.  But also a need to promote REAL pluralism via public and community media; involving an inclusive exchange across the entire spectrum – save for the far right.  The same inclusive pluralism must guide reform of school curricula also.

But none of this demands the silencing of Andrew Bolt.  Rights might not be absolute – especially in the midst of extreme circumstances.  But we all have a duty to avoid the escalation of civil conflict to the point where brute repression and Terror become reality. We can challenge Andrew Bolt without banning his speech.  And we can show solidarity with Charlie Hedbo by confronting the associated issues openly and open-mindedly – but avoid an escalation of rhetoric which would only polarise our society along religious and ethnic grounds.  And we must learn the lessons of past interventions – for instance in Iraq – which created the conditions for the war in Syria, and also the rise of the Islamic State movement.

Finally – without supressing speech – a discourse on ‘responsible’ speech should aim to avoid language of extreme escalation and polarisation on the grounds of religion or race. 

We must be uncompromising in defending rights of speech, assembly, association, conscience, as well as other liberties. (eg: industrial liberties)  The mass rallies in France and Australia demonstrate that Charlie Hedbo is now far from alone: Hundreds of thousands have mobilised to support free speech; and to reject intimidation through Terror.

But ideally freedom should be balanced with honest self-criticism. This may seem to go ‘against the spirit’ of Charlie Hedbo.   But it might be a precondition for the engagement which could promote long-term harmony between religion and liberal rights in this country.