Can we please drop the nonsense of ‘tax payer’s money’?

Can we please drop the nonsense of ‘tax payer’s money’?  The phrase is just political advertising, intended to manipulate us in to accepting cuts and constraints which are not good for us or the economy.   (Christopher Bacon explains why it’s a nonsense in his article ‘The Myth of Tax Payer’s money’ which is copied below.)

However, like all successful advertising slogans, the phrase ‘tax-payer’s money’ invokes what psychologists call a schema…. a whole body of emotions, experiences and knowledge which mediate our response.

Hence, ‘Tax payer’s money’ is intended to create a direct link between government spending and the individual.  You are invited to visualise your hard-earned pennies being frittered away unwisely ……. which is hugely convenient for a politician intent on running down public services, so that they can be privatised.  Also implicit in the schema is the threat that if the government spends more, you’ll have to pay out, depleting even more of your income.

And like so much of neoliberal-speak, it is contaminated by deliberately confusing government spending with household spending.  The phrase ‘tax-payer’s money’ comes from the same stable as ‘maxing out the credit card’ or ‘mending the roof when the sun is shining’. It is bunkum.  Government is not like a household.

And of course, you know that really, when you actually think about it …. Government spending is nothing like our own.  But as Drew Weston wrote in ‘The Political Brain:  The Role of Emotion in Deciding the Fate of the Nation’, …..‘the nature of political campaigns are where “rational minds collide with irrational thinking”

Drawing from the fields of psychology and cognitive neuroscience, Weston, a clinical psychologist and political strategist, demonstrated the extent to which candidates’ speeches and political ads, are emotionally laden with words and images designed to provoke strong feelings…. And by re-writing the actual speeches using alternative wording, he was able to illicit a very different set of responses.

Weston explains that these messages activate networks in the brain and become the avenues down which true or false political messages travel, connecting to the unconscious emotions of the voter in a nano-second and involuntarily triggering us to react emotionally and without ‘thinking’.

So let’s keep ‘thinking’ and not allow the Right to infect our minds with their manipulative false analogies….  and can we please drop the nonsense of ‘tax payer’s money’.

 

The Myth of tax payer money Christopher Bacon

We are told, time and time again, that the government should spend taxpayer money wisely, efficiently, and sustainably.  Often these pronouncements are followed by promises to use taxpayer money well by cutting government spending and making efficiency improvements.  There is an assumption behind these statements that is utterly inaccurate and dishonest, however.  Namely, that there is such a thing as “taxpayer money.”

Not only is there no such thing as taxpayer money, it is not the case – ipso facto – that the government spends taxpayer money.  To see how this is so, assume that taxpayer money exists and assume that the government spends it.  As we shall see, these assumptions actually lead to a paradox.

In this world, where the government spends taxpayer money, the following situation holds. The government invokes a tax on the population – say, an income tax.  This income tax takes money from the people who qualify and adds it to the Treasury account.  The Treasury, then, takes that money and spends it on whatever the government wants to buy: a new hospital, school, submarine, or whatever.

Where does this money come from, assuming God does not randomly drop it from the sky?  Well, it is “taxpayer” money.  So the money, presumably, belongs to the taxpayers – so it must come from them (i.e. the taxpayers must issue/print it).  Well, that is all well and good, but it does not represent this world.  Taxpayers, in the UK, do not print pound sterling. That would, of course, be a criminal offense.

In order to tax someone, there must be something there to tax.  Since taxpayers do not print their own money, there is nothing there to tax.  And in order for the government to spend, the government must first tax.  But since there is nothing there to tax, the government will never collect tax and so will never spend.

Clearly, this description is not one of our world.  In this world, the government does spend, and taxpayers do pay their taxes.  Something has to give – our initial assumptions must be wrong:  there is no such thing as taxpayer money and/or governments do not require taxes to spend.

If we jettison the second assumption, then it turns out that the government must spend before it collects taxes.  This is because if it does not spend, then there will be nothing to collect – remember, taxpayers do not print their own money and it does not magically fall from the sky.  Spending precedes taxation, by necessity.  Now that we can see the money in circulation is government money – money issued by the government – it follows that taxpayers do not own it; so the first assumption is jettisoned.  Therefore, the notion “taxpayer money” ceases to have any content.

21 thoughts on “Can we please drop the nonsense of ‘tax payer’s money’?

  1. Pingback: Can we please drop the nonsense of ‘tax payer’s money’? | Think Left – leftwingnobody

  2. It’s rather more interesting than that. When government purchases something it *causes* taxation. In fact the only reason we earn as much as we do is because government spent something. That’s why we pay tax.

    If government spent less and taxed less, we’d earn less. Or rather some people would earn the same and lots of people would earn nothing.

    So do you feel lucky?

    Liked by 1 person

      • Aha, I now see the fallacy in Pamplemousse’s thinking. You have a fundamental misunderstanding of what money is and how it works. You think that currecy has intrinsic value, and because the gov’t prints the currency therefore it is impossible to ‘earn’ anything without the gov’t first printing it and then somehow making it available to you. That is not how money works. Money is intrinsically worthless, it is only a proxy for labour. It is entirely possible to trade with someone directly without currency (I build a chair for you, you clean my windows). That is ultimately how you ‘earn’ wealth -by labouring on something and trading it with somebody else.
        Currency is simply a way of allowing a plurality of actors to trade with one another without the direct and immmediate swap of labour (which would otherwise be impossible in an economy of millions of people). Traditionally this was done with previous metal (some culuteres used coloured shells). It is also entirely possible to mint your own currency or a local currency, though of course this limits its appeal since all currency must return to source and not everyone wants to trade with you or your local area.Nevertheless, all you are doing is swapping labour with others; there is no essential need for the gov’t to get involved at any stage of the process. We have simply got used to the convention of gov’t printed currency, but it does not *need* to spend it on public projects to make it available. It could, for example, just hand it out in the form of a universal allowance, or even drop it from aeroplanes at random. This would not affect the labour that people do to earn, it simply alters the numbers that we attach to wealth.

        Liked by 2 people

  3. They don’t have to print the money for it to be their money any more than I need to have created my nightdress in order for it to be mine. They purchased that money by their labour. The above description is just playing with words and will make the Left look very stupid if they bandy it around!

    Liked by 1 person

    • Dear tiggysagar… I apologise that the article was insufficiently clear. However, your response exemplifies the problem that faces the Left. The continual misrepresentation of how the economy really works is a cleft stick. By continuing to pretend that tax pays for our public services, the question of ‘where’s the money coming from ?’ is inevitable …. and Labour ministers will continue to stumble over piecemeal answers like increasing Corporation Tax (which we know the TBTF multinational corporations don’t pay anyway).

      I have little doubt that (like most of us) you deserve the money that you earn…. and we certainly need taxes to be redistributed upward, with much higher rates at the top. However, the point of this post was that our personal experiences are being exploited by pretending that the government’s finances work in the same way as our household. And they don’t.

      The simplest way to see the economy is that its a bit like the ‘water cycle’ that you probably learnt in geography. Government spends into the real economy by financing schools, hospitals, new infrastructure etc. Those employed spend their wages which keeps someone else employed, they do the same and so on and on (clearly some wages may also go into savings or paying off debts). At pretty well every stage, the ‘money’ spent goes back to the govt in the form of taxes …. and they have to because if the gov’t keeps spending without a drain, the economy would be awash with too much ‘money’ and we’d get inflation. The point is that tax can only be paid after the govt has spent into the real economy. In other words, the gov’t talking about being constrained from funding public services because there isn’t enough tax payers’ money, is an outright lie. These are political decisions. It is the Right who have decided to run down the welfare state and to tax you too much. And the phrase ‘tax payers’ money’ is a way of the Tories deflecting their responsibility for asset stripping our public services.

      Like

  4. AN interesting philosophical questioning and answering that goes round in circles with the rich getting richer and the poor getting poorer – so those making large profits and can avoid paying tax, some evading altogether because they have access to an accounting system that does not really exist are probably quite happy and so conscience cleared – whatever political allegiance, conscience or care for others?

    Like

  5. I don’t pretend to be particularly smart but, all the BS spoken of above, is just pure semantics and seems to me to be a way for BOTH right, and leftists, to pull the wool over the eyes of the electorate and basically shaft us all. The only ones who gain out of this are those in control and those who make the rules by which, the poor, (pun intended), electorate must live their lives. They unfortunately have neither the wisdom or the where with all to get out from under just as the rich have already done.

    Like

  6. This article rests on the laughable notion that because the state prints the currency therefore all money always belongs to the state, and really it just ‘lends’ it to us temporarily. This is so childishly false I hardly know where to begin. The concept of sterling comes from precious metals -paper money was originally a proxy for this, hence ‘I promise to pay the bearer’. It is entirely possible to have a currency based on raw metals, coloured shells, or indeed money printed by, for example, private banks. And the government would *still* tax it. If there were no currency at all the state would merely take a portion of whatever you produce, just as barons and landowners used to. So yes, it IS taxpayers money. Even the money the state borrows is taxpayer’s money since it will have to be paid back by their labour in the future, unless something wipes it out.That we happen to use a state-minted currency does nothing to alter the enforced theft of your labour, by the state.

    Liked by 2 people

  7. Here is a website which explains the modern monetary basics, MMT and explains why we can have a better society.

    http://modernmoneybasics.com
    As I see it, we can’t afford not to invest in a better society, a greener way of living and make better use of available resources – labour, land and natural resources. We really cannot carry on the way we have done for the last thirty odd years.

    Liked by 1 person

    • The currency cranks are at it again, attempting to analyse money in a vacuum, paying no heed to the role of labour, or exchange relations, or the creation of commodities, or indeed, any aspect of the real economy within which money functions.

      Like

  8. OK SMART ASS….IF IT’S NOT TAX PAYER MONEY WHY THE FRICK DO I PAY ALL THESE TAXES????? GET YOUR HEAD OUT OF YOUR AZZ AND GET A DOSE OF REALITY….THAT’S WHAT THE “R” IN RIGHT STANDS FOR!

    Like

  9. Pingback: We can’t Afford not to Invest in a Better Society. | Think Left

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s