The distortion of the UK tax system by socialist ideology

For a few months, when I was much younger, I read the Sunday Telegraph.

I stopped after reading an article on the UK income tax system. I could see no logical flaw in the newspaper’s argument, but it made me morally uncomfortable.

The article argued that a tiered system of income tax in which higher earners pay a higher percentage of their income in tax is illogical, unfair and both economically and morally indefensible.

Intellectually, I had to agree with the Telegraph‘s logic. The argument went like this…

In a capitalist system – or in the mixed capitalist system which we have – people are, by and large, paid their worth to the company and industry in which they work and to the country’s economy in general. The ultimate goal is always to maximise profits to the company and to the shareholders. So, with competition from other companies for the better executives and workers, a fair salary is reached for each working person by the workings of the market.

It is morally correct that people who earn more should pay more to the community in taxes. But that ideal and morally correct situation is reached by a flat rate tax on earnings not by a tiered system.

Someone who pays 20% of a £100,000 salary pays far more to the community than someone who pays 20% of a £25,000 salary. They pay according to their wealth. As their salary increases, their tax payments increase. They are taxed according to their ability to pay at the same flat rate. And, of course, it is right that people who earn a low salary beneath a certain amount should pay no tax.

The tiered system we currently have in which people on a high salary may have to pay 40% of their salary while people who earn a lower salary may have to pay only 20% of their salary is not moral, is not fair, it distorts the market forces which create ‘fair’ wages and it is punitive on the more successful workers who should be not discouraged but encouraged.

The fact that some higher earning people may be able to ‘cheat’ the system with clever accountants is not relevant. Distortions like that are inevitable in any system and are the fault of the government’s incompetent bureaucracy – they should prevent those frauds. It does not affect the principle that a flat rate tax system is fair to all taxpayers and the fact that a tiered tax system is fundamentally unfair – a political decision not a moral or economic decision.

If there is a tiered tax system, it distorts the market forces which decide salaries because, if people are losing money for reasons of political tax ideology not for genuine economic reasons, their salaries will have to increase to take account of the loss. Thus you get distorted salary scales.

A tiered tax system makes no economic sense and is morally unfair. It’s object is to blindly redistribute wealth on ideological grounds.

I could not and still can’t disagree with the cold logic of this argument. Yes, someone who earns more should pay more. But why should they pay a higher percentage of what they earn? Taxing higher earners a higher percentage is blind knee-jerk socialist ideology not economics.

I felt morally uncomfortable with the fact I could not fault the logic in the article and stopped reading the Sunday Telegraph because I felt somehow my moral values were being undermined and skewed by cold logic.

This quandary in my erstwhile youth was brought back to me yesterday when I read a report in The Scotsman that RBS, which the taxpayer had to bail out with millions and of which the government owns 83%, was about to pay 100 members of its staff £1 million each in bonuses.

The chief executive of the Royal Bank of Scotland, of course, has been awarded a pay-and-bonuses package worth £7.7 million for 2010. So his 300 underlings getting bonuses of £1 million are merely getting the left-over scraps.

These awards were made at the time RBS was making a £1 billion loss.

Coincidentally yesterday, I also caught up with a small piece in Saturday’s Daily Telegraph about Tony Blair’s Sports Foundation – a charity – which, in its first financial period, made £348,233 of which it spent £33,929 on charitable activities and £37,621 on its staff.

So I am in two minds about high earners and extreme right wing politicians like Tony Blair.

The English legal system: Justice reduced to the level of The X Factor and Britain’s Got Talent

I have to do jury service next month. That should be interesting.

The basis of the English legal system is that the accused is guilty unless he can (afford to) prove himself innocent. The police investigate a case and find the person they believe (or claim) is guilty. The state’s prosecution system then decides if there is enough evidence to convict and, if there is – ie if the defendant is presumed to be guilty – then the accused person is prosecuted on the basis that they are guilty. The state pays for a prosecution lawyer whose job is to get a guilty verdict; if he/she spots anything that may imply innocence, it is his/her paid job to prevent it being presented to the court.

Under the English legal system, the prosecutor is paid to mislead the court on the evidence, to hide evidence which may prove the innocence of the defendant and to prevent the Defence from presenting any evidence which will reveal anything which may show the innocence of the defendant. That is his paid job. The defence lawyer is paid by the defendant himself/herself to get an innocent verdict and to hide anything which might show or imply guilt.

The jury’s job is not to investigate the facts nor to decide if the accused is guilty or innocent. Their job is to decide which of the two well-paid lawyers present a better case. The object is to vote on whether the defender or prosecutor is better on style, content and presentation, much like competitive Ice Skating but without the numbered cards you hold up. It is justice reduced to The X Factor or Britain’s Got Talent.

I remember a case in which a jury member spent his spare time going to the crime scene and talking to witnesses outside the court. The judge threw him off the jury and told him it was not his duty as a jury member to investigate the case but to decide a verdict only on the evidence presented. I think the jury member was threatened with Contempt of Court.

The lawyers who present the case? They have spent about seven years in an academic institution being trained in the art of legal lying, falsification of evidence and misleading the court. Which is why politicians like Tony Blair and Bill Clinton are often ex-lawyers. They were highly-trained as liars.

The result of all this? Lots of guilty people escape conviction and lots of innocent people get imprisoned, sometimes for decades.

There is also the fact of widespread police corruption across the UK.

On 27th September 1998, the Sunday Telegraph revealed in an article written by Geoffrey Seed and Alasdair Palmer that it had obtained “the minutes of a meeting organised by the National Criminal Intelligence Service (NCIS), and attended by 10 of Britain’s most senior officers and policy makers”. The minutes stated that “corrupt officers exist throughout the UK police service” and the NCIS’s Director of Intelligence said that corruption may have reached “Level 2: the situation which occurs in some Third World countries”.

I was once told by Margaret Thatcher’s lawyer that he would never put a Metropolitan Police officer in the dock as a witness unless what he said could be corroborated by another witness: the possibility that the policeman was lying was too great to risk.

The object of the English adversarial system is to win the debate at all costs including justice. Added to this, there is the fact all police evidence must be suspect.

The English courts do not provide justice. They play a game with people’s lives in which innocent defendants are found guilty of crimes they did not commit. This is no accident. It is an inevitable result of the current English legal system which is adversarial not investigative.