Date: Sat, 26 Feb 2000 15:19:59 +1100 (EST)
From: billbartlett-AT-vision.net.au (Bill Bartlett)
Subject: Re: AUT: Tax and wages was Re:  Why students are part of the	 working class?


Andrew Flood wrote:

[...]

>I would have thought this was obvious but lets spell it out slooowly
>- for the _most_ part the state depends on taxation to receive
>it's 'income'

Agreed. And it doesn't hurt to go slowly, I am a bit of a slow learner.

>- in Ireland and most other countires I've seen figures for
>the bulk of this taxation comes from the PAYE and hence
>the working class in the broadest sense of the word.
>  Here 86% of total taxation is paid from Pay As You Earn

Again, that isn't what's at issue, though I'm happy to take your word for
it. I'm not sure how that compares to other state jurisdictions, which
could be relevant to this analysis (in that the mix of income and other
taxes are a matter of vital importance to different sections of the
capitalist class.) Can anyone help by giving a rough estimate in other
countries?

You see, some sections of the capitalist class have interests which
conflict with other sections. The mix of PAYE, Consumption and corporate
tax affects different sections of the employing class differently, so they
are always trying to shift the mix of taxes in their own favour. If one
capitalist sector can get political support for their cause from their
wage-slaves, or pro-capitalist trade unions that are loyal to the industry
sector they serve, they aren't too proud to do so. This happens all the
time, most obviously in transport, where trade unions representing truck
drivers vigorously insist that it should continue to be subsidised by
general taxation revenue (in other words, other sections of the capitalist
class).

You may have been sucked into this inter-capitalist rivalry?

>- the services the state provides are largely ones
>that individual bosses would have to pay for, at
>least in western economies where certain levels
>of education and health are necessary to the boss.
>The again the polices, army, courts etc also fill
>obvious roles in this regard.

Again, not disputed.

>This is quick and simple, you could write reems
>on what the state is exactly but on the
>issue of taxation part of its role as a conduct
>by which the bosses recover some of the wages
>they are forced to pay out.

I dispute that analysis of course. I am unable to dispute the logic by
which you arrived at your conclusions though, you haven't revealed any
reasoning.

>>If the cost of welfare is actually coming out of the pockets of workers, as
>>you and the bosses' press seem to agree, then why on earth would the
>>bosses have any objection to social welfare? How is it a "concession", they
>>aren't giving us anything, according to you?
>
>I think your problem here is an overly simplisitic approach
>that seeks to find some sort of iron law.  A few
>points to consider
>1. Social welfare also has a use for the bosses in maintaining
>an educated, healthy workforce.  Depending on circumstances
>they may be willing to apy a bit themselves for this.  It
>can also be used to 'buy off' opposition.  This is the reason
>why social democratic parties can normally count on the
>financial support of at least a section of the boss class.

Social welfare is also a very effective form of social control, in that the
way it is administered is consciously designed to enforce the relationships
of different sections of the population to the labour market. Government
(and also government-funded charitable and community) welfare agencies are
in that sense the "poverty police".

But we're drifting off-subject a bit.

>2. On the other hand social welfare is also something that
>workers have forced the bosses to concede at partciular
>periods.

Of course. Social welfare is definitely a concession, though the ruling
class have cleverly attached sophisticated strings to the concessions that
have the effect of strengthening their control. That is a very long story,
going back to the very earliest days of capitalism. Even back to the Roman
empire "bread and circusses".

But we digress. It is the source of state revenue we are discussing, not
how it is spent.

>3. There is no iron law of who pays - rather this is contested.

I'd even agree with that. But for the reasons stated, I say that the
contesting is between different elements of the capitalist class.

>We obviously would prefer a social welfare system where
>the bosses paid 100%.  They would obviously prefer one
>where they paid nothing.  The relative levels depend
>on the expression of the class struggle rather then
>some iron law.

I'm afraid you'll have to do better than that. The above is not analysis or
reasoning, it is merely bald assertion. I have repeatedly provided a
reasoned basis for my analysis, either address my arguments or come up with
some of your own. Don't just repeatedly assert something.

>>Sounds like the workers in Ireland are under no illusions that an increase
>>in take-home pay is an actual increase in wages. Have they been fooled do
>>you think? According to your theory, since their gross pay (including the
>>part they never actually got) hasn't actually increased, no actual increase
>>in pay has occurred.
>
>Since the late 1970's campaign against taxation have been central
>to working class politics here both in the unions and in
>the communities.

You skirt the issue again, but I find that news very depressing. It
explains why you so staunchly defend your notion that income tax is paid by
wage-earners.

This only illustrates the point I made at the beginning of the debate
though, about how dangerous a strategy based on a faulty analysis is. From
what you told us earlier, the trade unions have been successful in that
campaign, income taxes are lower. But workers are not any better off, they
got the pay rise they wanted, the pay rise they were certain to get anyhow.
But they will inevitably have to pay for it, you warn, via future
reductions in the "social wage".

Of course it is always possible that the state might be forced to reduce
expenditure on the security apparatus, instead of cutting welfare. But that
will take a fight, a fight which might be beyond a misguided left and a
misled trade union movement.

A misguided left and a misled trade union movement that has apparantly
spent the last twenty odd years propagandising that workers pay the taxes
that pay for social welfare. Dear God! How *very* depressing!

Be careful what you wish for, it might come true!

>  Such campaigns have never called for
>an abolition or reduction of tax, rather for the
>transfering of the tax burden from the PAYE sectors
>to other sectors.  Popularly expressed as 'tax the
>rich'.  If it was in fact irrelevant who paid the
>tax as you claim then these mobilisations, non
>payment campaigns and even strikes would be
>a waste of tiem.

Indeed. And from all you have told us so far, they *have* been a waste of
time, even though they are partly successful.

[...]

>As explained far from seeing taxation as an irrelevancy it has been
>central to working class organisation.

You mean the trade unions? Well one would hardly expect a strategy based on
class analysis from the trade union movement. Clearly the trade unions have
been campaigning for wage rises (which, given the "booming" economy would
be inevitable anyhow) to be funded out of a reduction in taxation.

In this way, employers' total wage costs will not actually increase as a
result of the wage increases that are inevitably dictated by an increase in
the demand for labour. So the effect of the campaign being successful is
not a wage rise, that would have happened anyhow to some extent. The effect
is to protect the employers from suffereing any consequent reduction in
profit.

It's an old trick. You've fallen for it, hook, line and sinker.

>  This rather obviously suggests
>that changes in the level of taxation are to the benefit or loss
>of the workers rather then the bosses.

Of course, that's what I said, a reduction in income tax increases real
wages. But in this instance you admit that the reduction in income tax was
merely a substitute for a rise in nominal wages. Are you so blinded by
wishful-thinking? How can you not see that, in the circumstances, this is
an outcome that benefits only the bosses?

>>It isn't in our interests to allow employers to increase profits by
>>reducing social welfare, I agree. But if the future reductions in social
>>welfare expenditure (and other government expenditure) will actually
>>benefit profits, as you seem to concede, then surely you can see that taxes
>>are really a cost to surplus value, not workers wages?
>
>Ehh but such reductions don't benefit profits  if they involve
>reduction in the amount of PAYE tax.

It is a fundamental flaw to use your conclusion (that income taxes are paid
by wage-earners) as a basis for your conclusion. Let alone the *sole*
basis. That is what you have done here. You obviously want to believe it so
much that it has become a dogma.

A reduction in PAYE taxes paid by employers means less tax the employer has
to pay to the government. If the corresponding increase in workers
take-home pay is a substitute for a wage rise, as you freely admit, then
the employers reap the entire benefit.

And it always *is* a substitute for a wage rise. Employers don't pay their
workers more than they need to, not if they want to stay in business.
Employers pay no more than the minimum dictated by the iron laws of supply
and demand.

>  They obviously benefit
>profits if they involve a reduction in corporation tax, DIRT
>tax etc.  PAYE reduction may actually hurt the bosses in the
>future where they undermine education and so force the
>bosses to directly pay for training.
>
>Hope this clears the mud a little, some useful URL's on
>what has happened here include
>
>The fight against the Water Charges  (local tax)
>http://flag.blackened.net/revolt/water_wsm.html

I've read that and recommend it.
>
>Massive Trade Union protests (1979) against PAYE
>http://flag.blackened.net/revolt/siptu/f6_tax_march.html

Haven't read that. I'd better check it out.

Bill Bartlett
Bracknell tas.




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