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John Simkin

Progressive Taxation

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By any chance, were these the two gentlemen George Harrison immortalized, albeit "tongue-in-cheek", in his song, "Taxman"?  Mr. Wilson, and Mr. Heath?

Yes. Harrison, like other stars, suffered from high-rates of income-tax under Wilson and Heath. Both these men used progressive taxation to redistribute wealth in the UK. It worked and inequality was reduced dramatically between 1964-1979. Margaret Thatcher, John Major and Tony Blair reversed this policy. Heatb was one of the first politicians to point out that Blair was in reality a Tory. Despite the statistics (the gap between rich and poor is wider today than at any time since the 19th century) some people, mainly members of the Labour Party, still see Blair as being on the left. Yet on every issue, he is to the right of the Ted Heath government in the 1970s.

Yes. Harrison, like other stars, suffered from high-rates of income-tax under Wilson and Heath. Both these men used progressive taxation to redistribute wealth in the UK. It worked and inequality was reduced dramatically between 1964-1979. Margaret Thatcher, John Major and Tony Blair reversed this policy.

...and we know the results of this. This mirror very well what happened in Sweden. As a cornerstone of the Swedish welfare politics was progressive taxation. To reverse this system was the target of the conservative over the years. Still the country and most of the population experienced a period (from the 1940's into the 1970's) of continous progress. The result of progressive taxation was well distributed and the differences between rich and poor became much less. Sweden went from being a poor agricultural country in the beginning of the 20th century to a well respected modern industrial country, a role model.

In the late 70's and early 1980's we start to see a change. Under the pressure from the capital (wealthy conservative and dominant private enterprises), who had been able to build up their strength within this system(!), the economic politic started to change. The deconstruction of the welfare state had started. Today we don't recognize the "old" Social democratic economic politics. It's economical policy is more conservative than the ideas the conservative party presented in the 50's-70's. The rift between rich and poor has become much wider, the general difference between rich and poor is much bigger, the executives gets these fantasy wages and benefits, the well established companies move their business abroad and the left-over of the old welfare state gets weaker and weaker.

This is a most disturbing development... :offtopic - I know, but when John showed this development in Britain I had to show that this was a development that took place in other countries as well...

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I would be interested to hear if the same thing has happened in other countries. It is a subject that is rarely discussed in the media. Can understand why. The vast majority of the population were in favour of this "progressive taxation" policy. That is why Heath left it alone when he took over from Wilson. He feared that if he did, he would lose the next election. He was therefore amazed when Thatcher got away with it in the 1980s. I have also been amazed with the way Blair has got away with it. The main way is that New Labour refuse to discuss this issue. A cabinet minister, Peter Hain, was threatened with the sack when he raised this topic a couple of years ago.

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An extract from an article in The Nation article (February 21, 2005 ) 'Taking the Offensive on Wealth' by Gar Alperovitz.

It's time for progressives to launch a comprehensive challenge to America's extreme concentration of income and wealth. This is not only morally and economically right; a number of developments suggest that it is also one of the areas where progressives can aggressively take the political offensive. As time goes on, the difficulties created by the Bush Administration's deficit-driven economic policies are likely to make this a winning strategy.

America has experienced what economist and New York Times op-ed columnist Paul Krugman calls "tectonic shifts" in income and wealth in recent years. The top 1 percent now claim more income each year than the bottom 100 million Americans taken together. An only slightly larger elite group, the top 5 percent, own just under 70 percent of financial wealth and more than 80 percent of unincorporated business assets. The economist and Nobel laureate Paul Samuelson has regularly dramatized what the general patterns mean. In the 1948 version of his widely used textbook, Samuelson wrote, "If we made...an income pyramid out of a child's play blocks with each layer portraying $1,000 of income, the peak would be far higher than the Eiffel Tower, but almost all of us would be within a yard of the ground." By the end of the century, Samuelson found that although there would be some modest alterations at the bottom, the world had changed so much the peak would be as high as Mount Everest.

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  I would be interested to hear if the same thing has happened in other countries. It is a subject that is rarely discussed in the media. Can understand why. The vast majority of the population were in favour of this "progressive taxation" policy.

It's very interesting to see so many parallels between Britain and Sweden. In Sweden we have the same problem - the fact that we are going away from the progressive taxation and make it possible for people with higher incomes to get away from their social responsibilities is hardly ever an issue in the media (which happens to be owned to nearly 100% by the established parties that support this development (conservative, liberals and the Social Democrats)). The result of this change is less money for hospitals, schools, old care, pensions, etc... The few times this issue is brought up in media (which as I said is very rare) it's described as a healthy economical development!

What was behind this development? Several of the bigger executives in the private sector had for years threaten to withdraw their companies from Sweden if the taxation rules did not change. This threat was repeated when we voted for the membership of the European union. Sweden changed their tax policies and joined the union. What happened then - Several of the companies still moved their business abroad... which once again shows how naive it is to see big private buinesses take any social responsibilities.

I very much recent this development. It's an unfortunate thing that our ex. socialist party (Social Democrats) has so completely changed character and now works as a supporting party for the rich establishment. Our ancestors who build up the Swedish welfare state must rotate (or more propeller) in their graves. This is not only serious - it's a betrayal!!! :offtopic

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  I would be interested to hear if the same thing has happened in other countries. It is a subject that is rarely discussed in the media. Can understand why. The vast majority of the population were in favour of this "progressive taxation" policy.

It's very interesting to see so many parallels between Britain and Sweden. In Sweden we have the same problem - the fact that we are going away from the progressive taxation and make it possible for people with higher incomes to get away from their social responsibilities is hardly ever an issue in the media (which happens to be owned to nearly 100% by the established parties that support this development (conservative, liberals and the Social Democrats)). The result of this change is less money for hospitals, schools, old care, pensions, etc... The few times this issue is brought up in media (which as I said is very rare) it's described as a healthy economical development!

What was behind this development? Several of the bigger executives in the private sector had for years threaten to withdraw their companies from Sweden if the taxation rules did not change. This threat was repeated when we voted for the membership of the European union. Sweden changed their tax policies and joined the union. What happened then - Several of the companies still moved their business abroad... which once again shows how naive it is to see big private buinesses take any social responsibilities.

I very much recent this development. It's an unfortunate thing that our ex. socialist party (Social Democrats) has so completely changed character and now works as a supporting party for the rich establishment. Our ancestors who build up the Swedish welfare state must rotate (or more propeller) in their graves. This is not only serious - it's a betrayal!!! :tomatoes

John and Anders,

This has also occurred in Australia. Our party of the left (the Australian Labor Party) has changed character and merely supports the wealthy while professing to be the champion of the working class. It seeks friendship and funds from the big corporations while mouthing platitudes about the plight of the poor and does nothing for its original constituency when it is in power--as it was from 1983 to 1996. The ALP here in Australia is worse for the poor than the conservatives, IMO. In addition to failing to tackle the main infrastructure problems ie. funding of schools, hospitals, adequate aged care etc, the ALP has pioneered insidious new forms of predatory taxation:

1. Gambling. This is heartily encouraged by Governments (especially Labor) and people who visit Australia from abroad are amazed at the constant television and radio advertising encouraging people to paticipate in lotteries, lotto, scratchies, footytab and horse racing. Betting shops are open 7 days a week and also facilitate and encourage betting on all domestic and overseas sport eg. golf, cricket, tennis, baseball, basketball, motor racing, soccer etc. Betting shops (TABs) are also strategically placed in most drinking establishments so people who have lost their sobriety and judgement can also lose their money. It's cynicism at its worst and the practise of placing TAB's in bars was pioneered by a former Labor Premier of the state of New South Wales, Neville Wran. The TAB in NSW is run jointly by the Government and private interests. In addition to all this, almost every bar in this state has dozens of poker machines where people can watch their money disappear at any time, night or day. On top of this, all Australia's major cities have a casino. These casinos, also a joint Government/Private sector enterprise, never close.

2. Traffic and parking violation revenues. What started as a disincentive to breach road rules has blossomed into an industry of its own. Like junkies, all state Governments in Australia and many local Governments have become addicted to this revenue. Minor traffic and parking violations can bring penalties of up to $300, a real knockout punch for people on low incomes but a mosquito bite for millionaires. The problem here is one of equity. Why should a person on a low income be penalised half his/her salary for a minor offense when a person earning 5 million a year suffers no financial hardship when committing exactly the same offense? A recent proposal to make financial penalties for such offences commensurate to the offendor's financial circumstances was pilloried in the tabloid media but it seems to me that the fine structure allows mega-wealthy people to breach the rules with no financial penalty.

These are examples of what Governments will resort to when starved of financial resources by those who should rightly be providing them. The income tax regime doesn't need to be harsh or overly punitive to those on high incomes--it should merely require that all should contribute, commensurate to their incomes. Allowing those at the top of Paul Samuelson's pyramid to escape their responsibilities by the use of cleverly designed discretionary family trusts and allowing the Corporations they own to avoid tax through devices such as transfer pricing and tax havens is a serious breach of a Government's responsibilities. To restsate the obvious, the mainstream media will never focus on these injustices (which are very damaging to society) because, of course, the media is owned by the very same people who employ such tax avoidance tricks. The media have forged an alliance with compliant Governments, elected by us. Most Governments discover that they must comply with this duplicity because they fear that failure to do so will result in them being destroyed by the media. In the absence of a strong willed Government, the media will control the Government and the ordinary working person will be crushed at the bottom of the pyramid.

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This has also occurred in Australia. Our party of the left (the Australian Labor Party) has changed character and merely supports the wealthy while professing to be the champion of the working class. It seeks friendship and funds from the big corporations while mouthing platitudes about the plight of the poor and does nothing for its original constituency when it is in power--as it was from 1983 to 1996. The ALP here in Australia is worse for the poor than the conservatives, IMO. In addition to failing to tackle the main infrastructure problems ie. funding of schools, hospitals, adequate aged care etc, the ALP has pioneered insidious new forms of predatory taxation:

1. Gambling. This is heartily encouraged by Governments (especially Labor) and people who visit Australia from abroad are amazed at the constant television and radio advertising encouraging people to paticipate in lotteries, lotto, scratchies, footytab and horse racing. Betting shops are open 7 days a week and also facilitate and encourage betting on all domestic and overseas sport eg. golf, cricket, tennis, baseball, basketball, motor racing, soccer etc. Betting shops (TABs) are also strategically placed in most drinking establishments so people who have lost their sobriety and judgement can also lose their money. It's cynicism at its worst and the practise of placing TAB's in bars was pioneered by a former Labor Premier of the state of New South Wales, Neville Wran. The TAB in NSW is run jointly by the Government and private interests. In addition to all this, almost every bar in this state has dozens of poker machines where people can watch their money disappear at any time, night or day. On top of this, all Australia's major cities have a casino. These casinos, also a joint Government/Private sector enterprise, never close. 

2. Traffic and parking violation revenues. What started as a disincentive to breach road rules has blossomed into an industry of its own. Like junkies, all state Governments in Australia and many local Governments have become addicted to this revenue. Minor traffic and parking violations can bring penalties of up to $300, a real knockout punch for people on low incomes but a mosquito bite for millionaires. The problem here is one of equity. Why should a person on a low income be penalised half his/her salary for a minor offense when a person earning 5 million a year suffers no financial hardship when committing exactly the same offense? A recent proposal to make financial penalties for such offences commensurate to the offendor's financial circumstances was pilloried in the tabloid media but it seems to me that the fine structure allows mega-wealthy people to breach the rules with no financial penalty.

These are examples of what Governments will resort to when starved of financial resources by those who should rightly be providing them. The income tax regime doesn't need to be harsh or overly punitive to those on high incomes--it should merely require that all should contribute, commensurate to their incomes. Allowing those at the top of Paul Samuelson's pyramid to escape their responsibilities by the use of cleverly designed discretionary family trusts and allowing the Corporations they own to avoid tax through devices such as transfer pricing and tax havens is a serious breach of a Government's responsibilities. To restsate the obvious, the mainstream media will never focus on these injustices (which are very damaging to society) because, of course, the media is owned by the very same people who employ such tax avoidance tricks. The media have forged an alliance with compliant Governments, elected by us. Most Governments discover that they must comply with this duplicity because they fear that failure to do so will result in them being destroyed by the media. In the absence of a strong willed Government, the media will control the Government and the ordinary working person will be crushed at the bottom of the pyramid.

Very interesting account. Of course, the Australian government is also a supporter, along with Blair, of George Bush’s adventures in Iraq. It is not a coincidence that all these policies have been fully supported by another Australian, Rupert Murdoch. He of course has tremendous media power in the US, UK and Australia. Murdoch owns 179 newspapers worldwide. All of them supported the invasion of Iraq. Murdoch admitted in an interview in the Guardian that he had ordered all his newspapers to support this war. The main reason for this was his belief that the invasion would result in lower oil prices. This in turn would increase share prices and would help the economies of both the US and UK before Bush and Blair went to the polls. He was wrong about the price of oil and the stock market but with his help, Bush and Blair won their elections.

It is no coincidence that right-wing extremists like Murdoch now supports so-called left of centre organizations like the Labour Party. This strategy began after the war when the OSS and later the CIA used Marshall Plan funds to bribe left-wing politicians in European countries. Tom Braden, who was head of a CIA fronted organization, International Organizations Division (IOD), admitted in a television interview in 1975 that it was vitally important in the fight against communism to “turn” the leaders of left of centre political parties in Europe (they were particularly active in France, Italy, Greece and the UK).

In the 1980s Murdoch supported right-wing political parties such as Thatcher’s Conservative Party. By the 1990s, despite the propaganda of Murdoch’s media empire, people began to reject this right-wing agenda. By about 1996 it was clear that in the UK the British people were ready for change. Murdoch therefore had to get to Tony Blair in order to get him to follow Thatcher type policies. This has been highly successful and Blair has loyally followed Murdoch’s policies.

Murdoch of course does not work on his own. He has many allies in his successful strategy of stopping governments from employing progressive taxation and closing tax loopholes that enables people like Murdoch to avoid paying any tax at all. After all, we now live in a world of global capitalism.

A couple of years ago an article in the Sunday Times pointed out that the UK Labour Party was mainly funded by a small group of extremely wealthy businessmen. Apparently, they were concerned about what would happen when Gordon Brown replaced Tony Blair as leader. Over the years Brown had made speeches in favour of progressive taxation and closing tax loopholes. This group had been threatening to cease funding the Labour Party if Brown became leader. Murdoch, who is apparently head of this group (he does not provide money to the Labour Party but uses his newspaper empire to support its policies), had a series of meetings with Brown. It has recently been reported that Murdoch now has no problems with Brown replacing Blair.

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In 1996 the Austrian journalist Hans-Peter Martin and the German journalist Harald Schumann published a book called Die Globalisierungsfalle - Der Angriff auf Demokratie und Wohlstand (The Global Trap - The Assault on Democracy and Prosperity). This book describes some of the affects of the globalization of the economy. In an interview with the Australian "Foreign Correspondent" 1997 Hans-Peter Martin was asked the following question:

Hans-Peter Martin, why the title "The Global Trap", and why the very dramatic sub-title "Globalization and the Assault on Democracy and Prosperity"? That's a very dramatic title, to say the least.

Well, because you see exactly this happening in the world. Globalization by itself is not a trap, but there are lots of traps involved - and the biggest problem is that up until recently we were told there is only one way of globalization... globalization was portrayed to us like a law of nature - and this is simply not true. And the assault on democracy and prosperity we happening, especially in the up until now well-off nations - among them Australia and my home country Austria, where the rich are really taking off. The ones that are strong.. the ones that can hook up to each other on the internet, and are young and mobile.. they are profiting from the new globalized world, whereas more than two-thirds of the population are just staying behind. And the consequences of this growing income gap, and this growing gap of opportunities is that we see the radical seducers on the rise - be it Pauline Hanson in Australia, be it ( ? ? ) in my country, be it Le Pen in France.

This is obviously not a recent development but we now see much more the results of this economic policy. So we have three different countries; UK, Australia and Sweden, all of them with strong Labor Parties and all three have chosen the same path. They have gone away from progressive taxation, they are dominated by media that's controlled by "certain" interests and they try to give global capitalism a friendly face. That's more than just a coincidence.

It would be very interesting to hear if we have more countries that has experienced the same development.

Edited by Anders MacGregor-Thunell

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I don't know if the term "progressive taxation" is a good term. It's got those old left wing associations with 90% tax rates. Punitive tax rates are not necessary, IMO and it allows those not paying any tax to mount a defence against change.

I don't see why the top tax rate for individuals can't be capped at 50%. The important thing is that those using the corporate umbrella to shield themselves from tax obligations be brought to account.

The fact that a public debate on this issue hasn't been conducted is proof that the media can just as effectively bury stories as it can expose them. I see this "tax loophole exploitation" debate as a logical component of the whole globalisation debate. While Governments and the media lecture us about the benefits of tight fiscal policy and the importance of workplace efficiency and productivity in this new world of globalised economies, corporate accountability and responsibility recieves scant attention. The Australian Government claims that "necessary" policy reforms, like the workplace relations reforms soon to be enacted, are vital for securing "economic prosperity for future generations" to which they should add "of wealthy elites". (The reforms involve placing the workforce on contracts with all conditions open to negotiation. Boiled down, it's a simple transfer of wealth (and power) from the collective bargaining structure to corporations (our new wise leaders)).

My point is this: How can a Government which bestows on itself responsibility for securing future economic prosperity deliver the goods when it's own legislative foundation for revenue collection, essential for the effective discharge of it's duties, is riddled with anomalies, needless complexity and loopholes, all exploited ruthlessly by large corporations? It can't. It's inefficient, unproductive, redundant. It doesn't pass muster in the brave new world. The globalisation debate should stop right there and not move on until Governments resolve this problem. The taxation systems of many western countries require urgent changes to improve their appalling productivity levels.

Edited by Mark Stapleton

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This has also occurred in Australia. Our party of the left (the Australian Labor Party) has changed character and merely supports the wealthy while professing to be the champion of the working class. It seeks friendship and funds from the big corporations while mouthing platitudes about the plight of the poor and does nothing for its original constituency when it is in power--as it was from 1983 to 1996. The ALP here in Australia is worse for the poor than the conservatives, IMO. In addition to failing to tackle the main infrastructure problems ie. funding of schools, hospitals, adequate aged care etc, the ALP has pioneered insidious new forms of predatory taxation:

1. Gambling. This is heartily encouraged by Governments (especially Labor) and people who visit Australia from abroad are amazed at the constant television and radio advertising encouraging people to paticipate in lotteries, lotto, scratchies, footytab and horse racing. Betting shops are open 7 days a week and also facilitate and encourage betting on all domestic and overseas sport eg. golf, cricket, tennis, baseball, basketball, motor racing, soccer etc. Betting shops (TABs) are also strategically placed in most drinking establishments so people who have lost their sobriety and judgement can also lose their money. It's cynicism at its worst and the practise of placing TAB's in bars was pioneered by a former Labor Premier of the state of New South Wales, Neville Wran. The TAB in NSW is run jointly by the Government and private interests. In addition to all this, almost every bar in this state has dozens of poker machines where people can watch their money disappear at any time, night or day. On top of this, all Australia's major cities have a casino. These casinos, also a joint Government/Private sector enterprise, never close. 

2. Traffic and parking violation revenues. What started as a disincentive to breach road rules has blossomed into an industry of its own. Like junkies, all state Governments in Australia and many local Governments have become addicted to this revenue. Minor traffic and parking violations can bring penalties of up to $300, a real knockout punch for people on low incomes but a mosquito bite for millionaires. The problem here is one of equity. Why should a person on a low income be penalised half his/her salary for a minor offense when a person earning 5 million a year suffers no financial hardship when committing exactly the same offense? A recent proposal to make financial penalties for such offences commensurate to the offendor's financial circumstances was pilloried in the tabloid media but it seems to me that the fine structure allows mega-wealthy people to breach the rules with no financial penalty.

These are examples of what Governments will resort to when starved of financial resources by those who should rightly be providing them. The income tax regime doesn't need to be harsh or overly punitive to those on high incomes--it should merely require that all should contribute, commensurate to their incomes. Allowing those at the top of Paul Samuelson's pyramid to escape their responsibilities by the use of cleverly designed discretionary family trusts and allowing the Corporations they own to avoid tax through devices such as transfer pricing and tax havens is a serious breach of a Government's responsibilities. To restsate the obvious, the mainstream media will never focus on these injustices (which are very damaging to society) because, of course, the media is owned by the very same people who employ such tax avoidance tricks. The media have forged an alliance with compliant Governments, elected by us. Most Governments discover that they must comply with this duplicity because they fear that failure to do so will result in them being destroyed by the media. In the absence of a strong willed Government, the media will control the Government and the ordinary working person will be crushed at the bottom of the pyramid.

Very interesting account. Of course, the Australian government is also a supporter, along with Blair, of George Bush’s adventures in Iraq. It is not a coincidence that all these policies have been fully supported by another Australian, Rupert Murdoch. He of course has tremendous media power in the US, UK and Australia. Murdoch owns 179 newspapers worldwide. All of them supported the invasion of Iraq. Murdoch admitted in an interview in the Guardian that he had ordered all his newspapers to support this war. The main reason for this was his belief that the invasion would result in lower oil prices. This in turn would increase share prices and would help the economies of both the US and UK before Bush and Blair went to the polls. He was wrong about the price of oil and the stock market but with his help, Bush and Blair won their elections.

It is no coincidence that right-wing extremists like Murdoch now supports so-called left of centre organizations like the Labour Party. This strategy began after the war when the OSS and later the CIA used Marshall Plan funds to bribe left-wing politicians in European countries. Tom Braden, who was head of a CIA fronted organization, International Organizations Division (IOD), admitted in a television interview in 1975 that it was vitally important in the fight against communism to “turn” the leaders of left of centre political parties in Europe (they were particularly active in France, Italy, Greece and the UK).

In the 1980s Murdoch supported right-wing political parties such as Thatcher’s Conservative Party. By the 1990s, despite the propaganda of Murdoch’s media empire, people began to reject this right-wing agenda. By about 1996 it was clear that in the UK the British people were ready for change. Murdoch therefore had to get to Tony Blair in order to get him to follow Thatcher type policies. This has been highly successful and Blair has loyally followed Murdoch’s policies.

Murdoch of course does not work on his own. He has many allies in his successful strategy of stopping governments from employing progressive taxation and closing tax loopholes that enables people like Murdoch to avoid paying any tax at all. After all, we now live in a world of global capitalism.

A couple of years ago an article in the Sunday Times pointed out that the UK Labour Party was mainly funded by a small group of extremely wealthy businessmen. Apparently, they were concerned about what would happen when Gordon Brown replaced Tony Blair as leader. Over the years Brown had made speeches in favour of progressive taxation and closing tax loopholes. This group had been threatening to cease funding the Labour Party if Brown became leader. Murdoch, who is apparently head of this group (he does not provide money to the Labour Party but uses his newspaper empire to support its policies), had a series of meetings with Brown. It has recently been reported that Murdoch now has no problems with Brown replacing Blair.

It's shameful that the British Labour Party can't independantly choose a successor to Blair without Rupert Murdoch's imprimatur. It's dazzling proof that funding of political parties must be closely regulated otherwise Governments are corrupted from the start.

Of course Murdoch supported the war in Iraq. It sells newspapers and boosts ratings for his Foxtel network. Iraq and the war on terror are great moneyspinners for this global parasite. If there's harmony in the Middle East and less crime at home ("war on drugs"), then who needs to be glued to Foxnews 24/7?

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This has also occurred in Australia. Our party of the left (the Australian Labor Party) has changed character and merely supports the wealthy while professing to be the champion of the working class. It seeks friendship and funds from the big corporations while mouthing platitudes about the plight of the poor and does nothing for its original constituency when it is in power--as it was from 1983 to 1996. The ALP here in Australia is worse for the poor than the conservatives, IMO. In addition to failing to tackle the main infrastructure problems ie. funding of schools, hospitals, adequate aged care etc, the ALP has pioneered insidious new forms of predatory taxation:

1. Gambling. This is heartily encouraged by Governments (especially Labor) and people who visit Australia from abroad are amazed at the constant television and radio advertising encouraging people to paticipate in lotteries, lotto, scratchies, footytab and horse racing. Betting shops are open 7 days a week and also facilitate and encourage betting on all domestic and overseas sport eg. golf, cricket, tennis, baseball, basketball, motor racing, soccer etc. Betting shops (TABs) are also strategically placed in most drinking establishments so people who have lost their sobriety and judgement can also lose their money. It's cynicism at its worst and the practise of placing TAB's in bars was pioneered by a former Labor Premier of the state of New South Wales, Neville Wran. The TAB in NSW is run jointly by the Government and private interests. In addition to all this, almost every bar in this state has dozens of poker machines where people can watch their money disappear at any time, night or day. On top of this, all Australia's major cities have a casino. These casinos, also a joint Government/Private sector enterprise, never close. 

2. Traffic and parking violation revenues. What started as a disincentive to breach road rules has blossomed into an industry of its own. Like junkies, all state Governments in Australia and many local Governments have become addicted to this revenue. Minor traffic and parking violations can bring penalties of up to $300, a real knockout punch for people on low incomes but a mosquito bite for millionaires. The problem here is one of equity. Why should a person on a low income be penalised half his/her salary for a minor offense when a person earning 5 million a year suffers no financial hardship when committing exactly the same offense? A recent proposal to make financial penalties for such offences commensurate to the offendor's financial circumstances was pilloried in the tabloid media but it seems to me that the fine structure allows mega-wealthy people to breach the rules with no financial penalty.

These are examples of what Governments will resort to when starved of financial resources by those who should rightly be providing them. The income tax regime doesn't need to be harsh or overly punitive to those on high incomes--it should merely require that all should contribute, commensurate to their incomes. Allowing those at the top of Paul Samuelson's pyramid to escape their responsibilities by the use of cleverly designed discretionary family trusts and allowing the Corporations they own to avoid tax through devices such as transfer pricing and tax havens is a serious breach of a Government's responsibilities. To restsate the obvious, the mainstream media will never focus on these injustices (which are very damaging to society) because, of course, the media is owned by the very same people who employ such tax avoidance tricks. The media have forged an alliance with compliant Governments, elected by us. Most Governments discover that they must comply with this duplicity because they fear that failure to do so will result in them being destroyed by the media. In the absence of a strong willed Government, the media will control the Government and the ordinary working person will be crushed at the bottom of the pyramid.

Very interesting account. Of course, the Australian government is also a supporter, along with Blair, of George Bush’s adventures in Iraq. It is not a coincidence that all these policies have been fully supported by another Australian, Rupert Murdoch. He of course has tremendous media power in the US, UK and Australia. Murdoch owns 179 newspapers worldwide. All of them supported the invasion of Iraq. Murdoch admitted in an interview in the Guardian that he had ordered all his newspapers to support this war. The main reason for this was his belief that the invasion would result in lower oil prices. This in turn would increase share prices and would help the economies of both the US and UK before Bush and Blair went to the polls. He was wrong about the price of oil and the stock market but with his help, Bush and Blair won their elections.

It is no coincidence that right-wing extremists like Murdoch now supports so-called left of centre organizations like the Labour Party. This strategy began after the war when the OSS and later the CIA used Marshall Plan funds to bribe left-wing politicians in European countries. Tom Braden, who was head of a CIA fronted organization, International Organizations Division (IOD), admitted in a television interview in 1975 that it was vitally important in the fight against communism to “turn” the leaders of left of centre political parties in Europe (they were particularly active in France, Italy, Greece and the UK).

In the 1980s Murdoch supported right-wing political parties such as Thatcher’s Conservative Party. By the 1990s, despite the propaganda of Murdoch’s media empire, people began to reject this right-wing agenda. By about 1996 it was clear that in the UK the British people were ready for change. Murdoch therefore had to get to Tony Blair in order to get him to follow Thatcher type policies. This has been highly successful and Blair has loyally followed Murdoch’s policies.

Murdoch of course does not work on his own. He has many allies in his successful strategy of stopping governments from employing progressive taxation and closing tax loopholes that enables people like Murdoch to avoid paying any tax at all. After all, we now live in a world of global capitalism.

A couple of years ago an article in the Sunday Times pointed out that the UK Labour Party was mainly funded by a small group of extremely wealthy businessmen. Apparently, they were concerned about what would happen when Gordon Brown replaced Tony Blair as leader. Over the years Brown had made speeches in favour of progressive taxation and closing tax loopholes. This group had been threatening to cease funding the Labour Party if Brown became leader. Murdoch, who is apparently head of this group (he does not provide money to the Labour Party but uses his newspaper empire to support its policies), had a series of meetings with Brown. It has recently been reported that Murdoch now has no problems with Brown replacing Blair.

It's shameful that the British Labour Party can't independantly choose a successor to Blair without Rupert Murdoch's imprimatur. It's dazzling proof that funding of political parties must be closely regulated otherwise Governments are corrupted from the start.

Of course Murdoch supported the war in Iraq. It sells newspapers and boosts ratings for his Foxtel network. Iraq and the war on terror are great moneyspinners for this global parasite. If there's harmony in the Middle East and less crime at home ("war on drugs"), then who needs to be glued to Foxnews 24/7?

The complete collapse of our economies was guaranteed and solidified with the election of the Reagan/Thatcher Alliance. Their concerted deregulatory policies, aka assault on the federal government's power to rein in corporate greed and plunder, merely served to complement the "voo-doo" economic paradigm shifts implemented during their terms in office. The greatest mistake, as a populace, is to buy into the materialistic lures, employed through the use of sound bytes, about how much more buying power one has due to the deregulation of government, or by "getting big government off of the backs of big business" sloganeering, which is the biggest crock of crap being swallowed by the masses today. Sure, you can buy anything your want, albeit without the caveat emptors in place to assure quality, reliability, or any reasonable degree of warranty beyond the span of 2 months. And besides, where does all your purchasing power go when your job has been lost and outsourced to the third world, due to this exciting, new concept of "global economy" constantly being shoved down our throats? NAFTA, CAFTA, AFTA? Free trade for whom? The corporate giants, gobbling up every small company, putting "Mom and Pop" stores out of business by narrowing the playing field to suit the big "chain" stores, all the while outsourcing labor to China and India? Where do the manufacturing and industrial bases of the U.S. and the U.K., France, Sweden, Australia, figure in this scheme of things? NOWHERE.

In the past twenty years or so, I've witnessed more homelessness than I've ever seen in my entire life, mainly because the only homelessness I ever saw while growing up, consisted of a couple of drunks lying on the subway grates, on the sidewalks of New York, presumably too inebriated to seek shelter anywhere else. And, there definitely were't any homeless camping out on the stretches of grass above Santa Monica Beach in the 60's, or the 70's that I can recall. No, only after 1980, after Reagan "the tired old man who they elected king", did this begin to materialize and become a blight to the communities. But, what's even more insidious is the fact that by one stroke of complacency on the part of the American electorate, those citizens who elected the conservatives into POWER, [which BTW, is the only thing they understand]. By that one stroke of complacency, our fate has been sealed, ad infinitum. The damage has been wrought and allowed to cement itself into the very fabric of society.

Nothing short of physical revolution by concerned masses of humanity will budge this cancer, eating away in the guise of a bastardized version of the republican-democratic, one party-two branches, form of government it's been allowed to morph into, today. The majority are too hypnotized by their plasma screens, or too cowed by what they insist on believing verbatim, and emanating from the mouths of their all too familiar icons, the talking heads of multi-media's "clear channel" broadcasting, to even begin to think for themselves. And, I'm not holding my breath in anticipation of anything being able to turn this around in the very near future, either.

Edited by Terry Mauro

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Well put, Terry. Things might come to a head sooner than we think anyway. I think the looming oil price crisis has the potential to wreak havoc in western economies. The price shocks in the early seventies caused by OPEC making cuts to production caused inflation to temporarily run out of control here in Australia although the overall oil price rise was only about 20%. Today, some experts predict the price may double over the next 12-18 months.

If this occurs, questions need to asked:

1. Why haven't preparations been underway for the widespread alternative use of biomass fuels?

2. Have the oil companies bribed western politicians into ignoring the looming oil crisis?

3. Why have our leaders allowed our economic health to become wholly dependent on a dwindling non-renewable resource?

I was listening to a doco about oil on the radio last week. One thing really shocked me. An oil expert from Texas who has been in the oil import/export business for 30 years said that, based on all relevant factors such as supply, demand, replaceability etc, the price of a barrel of crude should be $500--not $65 as it is currently.

If, as I suspect, the oil crisis causes major dislocation in western countries then we'll get the political changes you were discussing. Under the current system, political leaders are only accountable to their sponsors--those who provide them with funds--but a major economic crisis caused by oil would be rightly seen as an inexcusable breach of trust by those entrusted to run the economy. It would require a change to the political system to ensure transparency and accountability.

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What gives government the right to extract a higher percentage of a rich man's income than mine?  You lefties seem to think that everyone's income belongs to the government.  Even at the same tax rate, the rich will still contribute a much higher percentage of the federal revenues.  Moreover, as was first demonstrated by the tax cut proposed by JFK, when the marginal tax rate is decreased, tax collections actually increase.

Tim, Tim, Tim.  Your right-wing rant is the stuff of nightmares.  Your attack on the progressive income tax is incredibly short-sighted. "It's not fair."  Step outside your world and consider reality for a second.

1. Government is not the natural order of things.  It is a creation of a society, and is essentialy an agreement made among its members. A social contract.

2. While everyone is an equal participant in this contract, not everyone is an equal beneficiary.  Those who hold stock in business, hold more stock in society, and reap more of its benefits. Those who own more property reap more benefit from the government's protection of their property.

3. It is therefore only right that they pay more for this government than those whoe benefit less.  It is also practical.  To tax men evenly is to make men carry an equal load, independent of their comparative strength, by claiming that loads should be allocated based on how many legs one has, and not by how much one can carry.  This leads to the collapse of weak men, while strong men scratch their heads and feel better than them.  This is not how a social contract that supposedly benefits everyone should function.

4. The fact is that, when sales tax, cigarette tax, and gas taxes, are considered, the poor in the U.S. pay more taxes in percentage of income than the rich, even when one takes into account the progressive income tax.  To try and set up a flat tax would then be to effect a mass re-apportionment of wealth to the already rich, which could not possibly promote the health of an already dangerously-sick society.  Your President believes that giving more money to the wealthy will lead to increased investment and increased entrepreneurship.  This was proven false in the 80's and is being proven false today.  The majority of wealthy Americans do not use government give-away money to invest in America, they buy expensive foreign goods and vacation homes in exotic locales.  The ideal of the American upper-class is no longer to own your own company and have pesky employees--it is to be incredibly wealthy through investments and get rich quick schemes (quite often shady) and to never work again.  Walt Disney has been transformed into Michael Ovitz.

5.  The belief that the progressive income tax is an arbitrary give-away, and that the government's stepping in to help the poor just because it encourages a more pleasant environment is beyond its purpose, almost always fails to acknowledge that the tax laws also arbitrarily benefit Churches, holders of public stock, home-owners, married couples with children, users of public transportation, and non-smokers. The believers in a flat income tax believe that taxes need not be fair when it comes to tax laws that support them.  It's not the unfairness of the progressive income tax then that they hate, but that the taxes help those in the lower levels of society.  It is reasonable then to conclude that believers and supporters of a flat tax are actually engaged in a class war against the poor, whom they despise. Either that or they just don''t think so good.

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What gives government the right to extract a higher percentage of a rich man's income than mine?  You lefties seem to think that everyone's income belongs to the government.  Even at the same tax rate, the rich will still contribute a much higher percentage of the federal revenues.  Moreover, as was first demonstrated by the tax cut proposed by JFK, when the marginal tax rate is decreased, tax collections actually increase.

Pat has already pointed out with great clarity the flaws in your argument. I therefore want to concentrate on the morality of your position. I say that because I believe that this goes to the heart of the taxation issue.

It is clear that one of the flaws of the capitalist system is that it creates a great deal of inequality. Economists like Karl Marx have argued that this inequality will cause so much anger amongst those that have done badly out of the system that they will eventually overthrow capitalism and establish a new type of economy that will encourage the development of equality.

Others like John Maynard Keynes have argued that revolution is not inevitable. That it is possible to reform the system in order to reduce the gap between the rich and poor. Keynes believed that by manipulating the system you could also make capitalism work more efficiently.

It appears that Marx’s predictions were false. It is true that so-called communist revolutions have taken place (Russia, China, Cuba, etc.). However, these have never occurred in the places where Marx said they would (in the advanced economies). Instead they have taken place in backward economies where the masses had not developed the kind of political consciousness or mass political movement that was necessary for a complete change in society. In Russia, China and Cuba revolutions took place because of a small group of dedicated revolutionaries who took advantage of a country in crisis. This vanguard (nearly exclusively from the middle-class) therefore became the new ruling elite. It did not take long before the revolution degenerated into a military dictatorship. Although there was some redistribution of wealth in these societies, the one thing that was not redistributed was power. In fact, in communist societies, power is less well distributed than in capitalist societies.

However, these revolutions had a large impact on the consciousness of those who run the capitalist system in advanced economies. The ideas of John Maynard Keynes become more attractive to those in power. This was especially true in the 1930s when the capitalist system was in deep crisis. These ideas were also appealing in the years following the Second World War. The war had showed that in times of severe crisis it is necessary for governments to play a much larger role in running a capitalist economy.

John Maynard Keynes believed that for capitalism to survive, governments would need to increase taxation. This money would then be spent by the government in ways that would improve the health of the capitalist system. For example, government spending results in more government jobs and therefore reduces unemployment. The people in these new government jobs will have more money to spend than they had when they were employed. This spending will create more jobs in the private sector. This in itself will result in more spending and therefore more jobs. In this way, a country can go from a situation where it has mass unemployment to one of full employment.

One of the first people to employ the ideas of John Maynard Keynes was Franklin D. Roosevelt. This resulted in him being condemned by the far-right in America as a socialist. However, he was in fact the saviour of capitalism.

The reason why Roosevelt was so much hated by the right was because of his taxation policies. All politicians that want to increase government spending to improve the state of the economy have a problem. They cannot get this money by taxing the poor. They have very little money to give to the government. What little they do have, they spend. This helps the economy. Therefore, to tax the poor actually hurts the economy. There is only one option available to the government, they have to tax people with large amounts of money.

At this stage the argument over taxation is an economic issue. However, it also has a moral dimension. If the government introduces progressive taxation, in other words, the levels of taxation depends on your income or wealth, then it is possible to redistribute wealth.

This was very much the argument of the Labour Government in the UK (1945-51). A wide variety of taxes were used to take from the rich in order to spend on the poor. For example, the introduction of inheritance taxes in order to help pay higher state retirement pensions.

It is a myth to claim that those on the right like Tim are against increased government spending. Tim has no problem with government spending us such, he is only against public spending that helps the poor. As we have seen with his postings, Tim is very keen on increased military spending. He just wants the rich to pay a smaller proportion of the money needed to keep these foreigners under control.

During the 1980s the UK and the US both had right-wing leaders who claimed they were committed to both reducing government spending and reducing higher-rate income tax. Margaret Thatcher and Ronald Reagan (Tim’s hero) were highly successful at reducing the tax burden of the rich. However, they were completely unsuccessful at reducing government spending. Partly because of increased military spending and partly because their policies created a great deal of unemployment and therefore increased government spending on welfare. The result was that Thatcher and Reagan created massive budget deficits. The same thing is now happening under George Bush.

As I have said before, progressive taxation is not just an economic argument, although as John Maynard Keynes has shown, it is very good for the economy.

Progressive taxation is a moral argument. Is it morally right for a government to use the tax system to reduce inequality in society? I believe it is. In a fully functioning democracy a political party advocating a redistribution of wealth tax policy would be likely to be elected to power. However, most countries do not have a politically or economic literate population. This is especially true of the poorer members of society. We know they large numbers of them show little interest in politics and a significant proportion of them do not even bother to vote in elections.

Politicians have of course taken note of this situation. Therefore they address their message to those sections of society who vote, and more importantly, on those who influence how others vote. It is far more important for politicians to please the owner of a newspaper than the owner of a newspaper shop. For example, if Tony Blair can convince Rupert Murdoch that his government’s tax policies will benefit him, he is likely to use his newspaper to support New Labour. What is more, Murdoch and his rich friends will also be generous in donating money to Blair and his political party.

With the rich controlling the means of communication and the poor often apathetic and politically and economically illiterate, it is no wonder that over the last 25 years there has been a trend to redistribute wealth in favour of the rich.

How do individuals react to this situation. Take my own situation. I am fairly wealthy. This is not because I inherited wealth. In fact, I have not inherited any money at all. Nor is it because I have spent many years teaching. Most of my money has come from my business ventures. In other words, I have been a successful capitalist.

Most successful capitalists are opposed to higher rates of tax. They argue they have worked very hard and deserve to keep the money they have made. It is true that you have to work hard to be successful in business. But does the capitalist work any harder than the person working on a building site or call centre? As someone who spent seven years working in a factory I can firmly state that this is not the case.

Other successful entrepreneurs argue that they have obtained wealth because they are creative and intelligent. That is probably true. But does this justify them having much more money than the people who work for others? Why should entrepreneurs be financially rewarded for being creative and intelligent? Where does it come from? Was it inherited? If so, why should they be rewarded for that. Was it as a result of their formal and informal education? If so, why should they be rewarded for meeting the right people and going to a good school?

I am aware that at several stages in my business career I came close to disaster. By making the wrong decision, I could have lost it all. Although it was partly due to intelligence that I made the right decision, it was also partly to do with luck. Plenty of my intelligent and hard working friends ended up going bankrupt.

My belief is that my wealth belongs partly to me and partly to the community. That the government has the right to take some of this money and distribute it to those less fortunate than myself. However, I strongly object when they use this money to bomb and conquer those living in the underdeveloped world. I also am opposed to this money going to those richer than I am.

Percy Bysshe Shelley once said that “morality is imagination”. I think it is one of the wisest things anyone has ever said. D. H. Lawrence took the opposite position. He said “every philosopher ends at his finger tips”. I am from the Shelley school of thought. We can only make moral judgements by looking outside ourselves. We need to “imagine” what is like to live in poverty. We need to realise that people cannot get out of their situation by “working harder”. They need help. I do not mean charity. There problems will only be solved by massive government intervention. This will be an expensive process and will need those who can afford it to pay higher taxes.

I am an atheist who believes that Jesus Christ was the greatest person who ever lived. He has inspired a large number of people to do great things. For example, Martin Luther King. Unfortunately, as we can see with the Christian Fundamentalists, his teachings have been distorted in order to justify selfishness and the protection of the ruling elite. This is usually because they concentrate on reading the Old Testament rather than the New Testament.

To people like Tim I would ask this question: If Jesus Christ was alive today, what would he be doing. Do you really think he would be arguing that the rich should not be paying higher rates of tax?

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It is of course far easier to assist the poor through taxing other people's money than it is to give to charity with your own funds.

I think Jesus would be (is) more concerned with a person taking personal responsibility for the homeless and poor than he is with "limousine liberals" who salve their conscience by voting for politicians who support anti-poverty programs that often do not work anyway.

LBJ's War on Poverty, while undoubtedly well-intentioned, had unfortunate unanticipated consequences including the destruction of the black family. Daniel Patrick Moynihan was prescient in predicting this.

Programs that give poorer people a disincentive to work in the long run do them little good and may even hurt them.

I think it far better that tax policy not be so punitive as to discourage investment than it is to attempt to use tax policy to redistribute the wealth. We must remember that it tales wealthy people who are willing to risk their capital to create jobs. There is little reason for the wealthy to risk their capital if any income they produce is taxed at confiscatory rates.

When I stand before the judgment seat of Christ to answer for my actions in this life, I am confident the Lord will be more interested in what I personally did to help my neighbor than He will be in who I voted for. I think the Lord will understand differences in viewpoints on economic policies.

That being said, it is no longer my position that any "progressivity" in tax rates is inherently immoral. But I do not think the tax rates on the highest-income taxpayers should be punitive.

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John wrote:

As we have seen with his postings, Tim is very keen on increased military spending. He just wants the rich to pay a smaller proportion of the money needed to keep these foreigners under control.

Darn foreign left-wingers!!

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