Tax the Rich to the Max!
A Marxist Analysis of Taxation
The recent election saw an all out bidding war on taxation. National wanted tax cuts 'across the board'. Labour dished out tax rebates for low and middle incomes (up to $100,000 if you have kiddies). They both share the assumption that taxes are deducted from the income of workers or bosses so it becomes a question of how much tax to cut or redistribute. In reality taxation is nothing more than part of the surplus that is created by productive workers and paid to the state. Taxes of bosses income (shares, rents, interest or distributed profits) are part of the gross surplus expropriated from productive labour.
Taxes of productive workers (productive because they produce surplus value in the form of goods and services sold on the market) are in two forms.
(1)PAYE on workers income is paid by bosses from the same source as their own taxation surplus value, and never touches workers back pocket.
Therefore tax cuts to productive workers are tax cuts for the bosses!
Notice that National wants to cut income taxes across the board. All of these are tax cuts for the bosses.
(2) Consumption taxes like GST paid by workers on everything they consume. Its paid by everyone of course represents a heavier load on workers than bosses. It represents a substantial real wage cut that comes off the workers wage rather than the bosses surplus value.
Over the last 20 years the burden of taxation has shifted towards consumption taxes which are very regressive i.e. everyone pays the same rate but this is proportionately more of the total take home pay of workers than of the rich.
Notice that no-one is cutting consumption taxes. They continue to rise rapidly. Soon we will be paying road tolls - another regressive tax.
Note the question of the taxation of unproductive workers i.e. those who do not produce surplus value but are necessary for the system to run e.g. domestic workers, is a bit more complicated but follows the same set of principles. They are also paid out of the gross surplus expropriated from productive workers. This does not make them beneficiaries of the exploitation of productive workers however, as they are also subject to the same low wages (or no wages) and indirect taxation.
So how do Marxists respond to the current political circus around taxation?
We say tax the rich to the max!
This is a transitional demand - a demand that we raise now to meet the immediate needs workers but which cannot be conceded by the bosses. This forces us to face up to the fact that workers cannot meet their needs by the redistribution of income, only by redistribution of property!)
(1) Steeply graduated income tax (like Marx called for in the Communist Manifesto). What this amounts to is the demand to return a larger slice of the surplus expropriated from productive labour to the state. The question then is how to redistribute this back to those who produced it.
Of course the bosses resist this because it is deducted from the surplus they take off us and therefore their bottom line. National says taxes are disincentives. Too right, they cut into profits. Labour's targetted tax relief has nothing to do with social justice. It is designed to make sure that the social wage is enough for workers to live on so that they can be trained and disciplined to work hard to make more profits.
Putting this demand on Labour exposes the fact that they are socially engineering the workforce for maximum profits. Hence Labour has lifted the income level and targetted middle income workers and students (and migrants) to use them as a skilled labour force in the knowledge economy (increases the rate of exploitation and of profit for the bosses).
(2) Capital gains tax is another way of targetting the income share of the rich that is ripped off by expropriating surplus in the form of capital gains. Such as raising company profits before distribution, 'profits' from speculation in land, housing etc.
This the basis of the demand to renationalise privatised state assets, and expropriation of bosses property, without compensation, and under workers control. The windfall capital gains from privatisation should be all taken back by socialising all accumulated surplus!
It appears that both of these taxes are attacks on the bosses profits as a share of national income. Resistance to these taxes relies on arguments about the right to bosses to retain profits as their fair share of the national wealth - rewards for entrepreneurship, savings etc.
To break through this ideological barrier we have to raise the demand for these taxes and at the same time explain why the bosses will not pay them. Neither National nor Labour has any interest in redistributing back the surplus that is expropriated from productive workers. Nothing to do with fair shares but everything to do with the expropriation of surplus-value.
That's why our program calls on workers to build an independent labour movement that fights for every right and need outside parliament. Nothing happens in parliament without the demands of the bosses or workers outside parliament. And ultimately parliament is nothing but the front for the bosses state power which is used to smash workers struggles.
We fight for jobs for all, even though every job is exploitative. Workers must live and in the process organise on the job to take control of production, occupying and expropriating capitalist property. That's called socialising the means of production.
We fight for bosses to pay for this in the form of fewer hours and more pay. We fight to get back the surplus by taxing it to the max. We deny the right of the bosses to retain any of the profits they expropriate. That's called socialising the means of distribution!
All of this can only happen if workers take power and create a workers state that will socialise the means of exchange, the money supply and the banks. This is called socialising the means of exchange. Taxing the rich is therefore an integral part to a transitional program for socialism.
From Class Struggle 63 Sept/Oct 2005