The politics of taxation – or how to convince people to part with their money

We might be ambivalent about taxation because it challenges our sense of ourselves as individuals – and we may not trust governments to spend it properly. Shutterstock

Treasurer Scott Morrison’s recent struggle to hone a credible message on tax reform speaks to a far deeper set of issues than bad PR. Plumping for tax increases while promising tax cuts is a deeply cynical gesture, premised on the amenability of only one part of our nature – the part that always wants to know “what’s in it for me?”

But humans are complex creatures. Another side of us can, with a little effort, imagination and sensitivity, be appealed to in just the right circumstances.

The public’s attitude to taxation is admittedly nothing if not fickle, but simply presupposing its antagonism to all tax hikes – unless placated with assurances of tax cuts elsewhere – would be as politically naive as assuming we’re all bottomless pits of altruism.

An old chestnut

The idea that taxation represents an oppressive exercise of state power is not new. In the 20th century, Robert Nozick famously declared that:

Taxation of earnings from labour is on a par with forced labour.

Nozick was in his day only the latest in a string of political thinkers from John Locke onwards who expressed similar views.

The phrase “taxation is theft” is about as catchy as Pierre-Joseph Proudhon’s anarchist slogan that “property is theft”, and certainly no less difficult to evaluate. Unlike Proudhon’s quip, however, it does have an initial air of plausibility.

The antipathy that taxes arouse is not hard to explain. No-one likes having their hard-earned money forcibly taken from them (albeit under cover of law). Yet time and again polls show that people are willing to pay higher taxes if the money is earmarked for public goods and essential services.

We may baulk at taxation in the abstract. But when taxes are tied to specific and concrete proposals that provide clear benefits to society (for people with disabilities, flood relief, education and so on), our mood-rings visibly change colour.

Society and the individual

Why are we so ambivalent about taxation? I think we’re dealing with at least two complementary phenomena.

On the one hand our ambivalence is symptomatic of a more general ambivalence about ourselves. We are trained in the Western ideal of self-assertiveness and independence. This culture objectifies the self as an autonomous unit of agency and explanation, in both our social and natural environments, and sustains the loathsome cult of rugged individualism.

At the same time we are demonstrably fashioned and individuated as members of complex and important communities, such as families, schools, towns, churches, teams, parties and nations.

When presented with the brute force of a tax as an exercise of coercive authority, our individuality is more likely to be affronted than is our arguably more fragile sense of belonging to a group. This is because taxes always target discrete entities (a person, a business, an association or corporation), so that one cannot easily escape the sense of having been singled out as the distinct object of a tax.

When instead a tax comes along with a reminder of our embeddedness and interdependence – as a levy for disaster relief might do – we are on the whole less likely to bristle.

Putting it bluntly, citizens of Western liberal democracies are somewhat at sixes and sevens over their conflicting social roles. They are unsure of whether they are fundamentally co-operative or competitive, and uncertain of how to translate their various competing self-conceptions into policies that can reconcile them.

I’d suggest the other reason we sometimes chafe at the thought of paying more taxes is distrust in the government’s ability to spend public money fairly and wisely.

This is reflected in the general suspicion that the wealthier you are, the more likely you’ll be let off gently.

Consider the generous superannuation concessions favouring the well-off, a negative-gearing regime that is designed to prioritise property investors over first-home buyers, capital gains tax exemptions that inequitably distort the property market, and the stupendous subsidies lavished on mining and fossil fuel interests, not to mention private schools, private health care providers and our too-big-to-fail private banking oligopoly.

All these occur in the context of conspicuously deficient transfers to the unemployed, single parents, disability pensioners and full-time students.

The current debate

Tax reform is now all the rage. But until we can restore faith in the potential of taxation as an instrument of civilisation, it’ll be difficult to get the public to accept any tax reform package with an open mind.

This might sound like a tall order, but there is ample evidence both from survey data and recent history that tax reform is not impossible once the public is convinced of its necessity, efficacy and decency.

I say convinced self-consciously. Talk of “selling” tax reform is spurious and itself steeped in the very cynicism that must be eradicated before meaningful tax reform can proceed. People generally don’t take kindly to having inferior second-hand goods flogged to them, but that’s basically the image that “selling” government policy evokes.

On the contrary, the government’s brief is not to bamboozle, fleece, wheedle and finally cajole the public into swallowing tax reform, but to convince the public of its intrinsic virtue.

If in the end the political state of play is such that ministers continue to view themselves as travelling salesmen, perhaps their most important grab will be the one that emphasises fairness. No reformist administration can afford to be perceived as having only the interests of a wealthy few at heart.