Posts Tagged ‘Arbeiterprogramm’

The Unequal Tax Burden on the Poor Today and in 19th century Germany

March 14, 2014

Lassalles Pic

Ferdinand Lassalles: Founder of the first Socialist party in Germany, the German Worker’s Union.

Owen Jone’s book Chavs: The Demonization of the Working Class also discusses the way that the poor now pay a greater proportion of their wages as tax than the rich as part of the massive shift in wealth away from them and to the upper classes.

This ‘trickle-up’ model of economics has not come about because the people at the top have become more talented or more profitable. It has been driven by the smashing of the trade unions, a hire-and-fire labour force, and a taxation system rigged to benefit the wealthy. Even Jeremy Warner, a right-winger and deputy editor at the conservative newspaper the Daily Telegraph, finds something amiss: ‘it is as if a small elite has captured – and kept for itself – all the spectacular benefits that capitalism is capable of producing’.

‘There’s no doubt that the current tax system is regressive, ‘says chartered accountant Richard Murphy. After all, we live in a country where the top decile pay less tax as a proportion of income than the bottom decile. Murphy identifies a number of reasons, including the fact that poorer people spend more of their income on indirect taxes like VAT; the National Insurance is capped at around £40,000, and that those earning between £70,000 and £100,000 a year can claim £5,000 of tax relief a year over and above their personal allowance. (P. 165.)

The pioneering German socialist, Ferdinand Lassalle, criticised a similar arrangement in the Wilhelmine Germany of his time. Lasalles was the son of Jewish silk merchant, who became a Socialist activist after encountering a workers’ demonstration in Silesia. He founded the first German worker’s party, the Deutscherarbeiterverein, DAV, or German Workers’ Union, in English. In his Arbeiterprogramm Lassalles pointed out the way the German state made the payment of direct taxes a condition of voting, while the bulk of the tax burden fell on the poor in the form of indirect taxes.

Indirect taxes, gentlemen, are consequently the institution, through which the bourgeoisie realizes big capital’s freedom from tax, and burdens the poorer classes of society with the costs of the political system.

At the same time, notice the peculiar contradiction and peculiar justice of the proceeding, to put the burden of the requirements of the national budget into indirect taxes and consequently on poor people, making, however, direct taxes the measure of and condition for the franchise and therefore the right to political power, which only supplies the infinitely small contribution of 12 million to the total state requirement of 108 million.

Ferdinand Lassalle: Arbeiterprogramm (Stuttgart: Philipp Reclam jun 1973) p. 32. My translation.

Contemporary Britain is clearly very different from 19th century Germany. Unlike the Germany of Lassalle’s day, Britain does have universal suffrage, and all adults, with the exception of the mentally ill or those in prison, have the vote. It could also be argued that also unlike Lassalle’s Germany, much of the tax burden in Britain still falls on the rich in terms of the amount of taxes they pay. Nevertheless, the similarities are striking. The rich and middle class are increasingly finding ways to stop paying tax altogether through finding loopholes, or making tax havens the location of their head offices through a series of accountancy fiddles. And although the majority of British adults do have the vote, working class voters feel increasingly disenfranchised and alienated from a political system which consistently ignores them. Tony Blair aimed New Labour at the middle class electorate, proclaiming ‘We’re all middle class now!’ As a result, although working class support for the Labour party is still strong, many working class people do not vote in elections as they feel their own needs are being ignored in favour of the middle class. Ed Milliband has declared that the Labour party should ‘reach out to the middle classes’.

Lassalle believed the exact opposite. Before he founded the DAV, the German working class identified its interests with the Liberals. In his Arbeiterprogramm, Lassalles criticises the Liberals in France and Germany with the attempts to limit the franchise through the imposition of property qualifications. He demands instead not the census of the Liberals, but universal male suffrage, to which class conscious working class activists should concentrate on waking and sleeping through their working day and their leisure hours, until they finally won the vote. It’s time for a new campaign to re-enfranchise the working class through policies designed to appeal to and represent their interests. A shift of the tax burden back on to the rich, so they pay their fair share, would be a good start.