February 1st, 2021


Why "Eat the Rich" Doesn't Work

Around about the dawn of the 1970s, the tax regime in the UK was blatantly confiscatory. Tax rates on top earners were around 90%, and in some cases could exceed the actual amount of earnings. This led the Beatles to write “Taxman” in protest. (“One for you, nineteen for me” referred to a rate of 19 shillings in the pre-decimal pound.) It also led them and other high-earning British artists to relocate to countries with friendlier tax laws, such as the USA.

The moral of the story is, the truly rich will always be able to avoid paying more taxes than they feel is just. This is why there are tax havens around the world and various tax avoidance schemes to invest in. And, of course, the rich can live anywhere. They can choose which government will tax them. And it’s not just evil, greedy CEOs of those awful corporations who do it; left-leaning celebrities who natter on about all the right causes don’t handle their money any differently from corporate bigwigs and politicians of all parties.

So who does the pay the price for high tax rates? Well, middle class people of all sorts, who can’t afford to relocate but are stuck bearing the load dumped on them by the government. And poor people. People who don’t pay taxes (well, income taxes, anyway) nevertheless have to pay inflated prices for everything, because the people and companies who produce what they need to live have to pay their taxes. All tax costs are eventually passed on to the consumers, and poor people’s entire incomes are pegged to consumption of basic necessities just to live.

In the fable of the Golden Goose, the stupid peasants who found their goose laid a golden egg each day imagined that if they just killed the goose, they could get all the golden eggs at once. They wound up cooking their goose, in more ways than one.