Arbitrary Lines: Poor People Don’t Pay Tax

As an election looms, class warfare has once again come to the fore, as have the talking points. Firstly, that the rich should pay more tax, and then the predictable rebuke that the rich are the only people actually paying tax, such as this provocatively titled article by Adam Creighton, No, the rich don’t pay a ‘fare share’ of tax. They pay all of it.

I don’t contest either claim. The burden must fall on those of means, as shaking a pauper will never produce the required funds to build a nation. The greater problem, however, is the framing of the response. I am sure the statistics are accurate, but their presentation is only half the story, and no amount of quoting amounts or percentages of tax contributions will ever equate to an adequate portrayal. The situation can certainly be expounded as the wealthy paying all the tax, but if that is the argument, it must also be said that they have made their own bed.

In broad strokes, there are two components that once combined evaluate the economic equality – and general compassion – of a society. One is taxation, but in the rampant quoting of statistics a bewildering neglect befalls its counterpart; wages. Higher taxation provides services that reduce the out-of-pocket costs to the underprivileged, allowing for a lower living wage. Alternatively, higher wages empower people to be self-sufficient, reducing the need for government services and the subsequent tax burden. In the end these are one and the same, all that changes is the path of the money-go-round. Nothing is ever ‘free’.

Where these arbitrary lines are drawn, and the resultant discrepancy between the top and bottom rungs of society, speaks to the values of said society – with America at one extreme and the Scandinavian countries at the other. Neither factor can be considered on its own. The real measure is one of balance. When balanced – regardless of the figures – the change is not one of outcomes, but perceptions.

The extremes convey the futility of these perceptions. Workers could be treated as slaves – be obviously exploited, yet pay no tax – and so by the taxation argument would still be portrayed as worthless free-loaders. Alternatively, workers could be excessively remunerated and contribute vast taxes. In this case the taxation figures would laud their contribution, but the corporate class would forfeit their profits to wages leaving less for themselves or other more highly paid workers. Discussions over who pays how much tax are therefore completely irrelevant to the issue at hand.

Unfortunately for Australia’s most disadvantaged, the balance has not been struck. As incomes have soared, the minimum wage has been in relative decline, and this has been the trend for decades. Meanwhile many of our largest bills have been increasing at alarming rates. Houses and rent, insurance and utilities, health and education are all stretching the budget more than ever before and those most affected are the ones with the least to spare. Meanwhile we have seen the introduction of a regressive GST that disproportionately affects the poor. By most measures the poor are going backwards and it is due to the dictates of a deliberately distorted system. Elites fight against wages that would enable people to fend for themselves, then wish to vilify those same people for requiring assistance. It is self inflicted.

More progressive taxation or wage increases for our lowest paid workers both address the discrepancy, but the ‘poor not paying their share’ can only be addressed by correcting income inequality at its source. Psychologically, more adequately remunerating the working class would be the most beneficial course for all involved. Workers would gain a sense of self worth from being able to afford the necessities and contribute their taxes to the public purse, rather than the face the insult of being dubbed as a burden on society. Likewise, the wealthy would lack the misleading statistics that represent them as the exploited hosts of parasites.

This simplistic approach would doubtless throw the economy into upheaval, drive massive inflation and devalue the currency. It appears we are stuck with the taxation route, consigning us to divisive and inconsequential nonsense such as that put forth by Creighton. The only response is to understand the complexities and not fall for misleading, incomplete statistics and related talking points.

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