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.

15 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

  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

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