Paul Hebden digs into where our attitudes to taxes come from. He found his roots on the eve of the 2008 financial crisis.
This is an article in the fifth issue of New Economic Magazine.You can read the full question here.
In the aftermath of the 2008 financial crisis, a reckless and out-of-control banking system bred and triggered an economic crisis that turned into a drive for sweeping public policy tightening. We continue to witness its consequences today.
But the British people did not wake up one day and decide we need austerity measures to cut public spending. So where did this idea come from?Academic Mike Berry examines how the media responded to the 2008 financial crisis and finds that of‘Waste in the public sector has accumulated over the years and peaked in 2009.
Berry’s research found that most negative media coverage increased 600 percent from 2000 to 2009, contributing to what he calls of“socialization in favor of austerity”. He notes how words and phrases are like of“low efficiency”, of“waste”, of“non-working”, of“bloated”, of“Gilded Pension”, of“benefit cheating”, of“CD” Duck of“In the years leading up to the financial crisis, “beggars” became increasingly prominent in news coverage.
Thus, by 2009/10 when tax revenues plummeted, of‘When the government runs a deficit between taxes and spending, the public is ready to accept cuts as the solution. While the crisis itself has its roots in the failure of the global financial system, waste in the public sector over the years has been blamed in part for the economy’s turmoil.
However, the media has not decided to write stories about waste entirely on its own terms. Narratives are provided in part by activists.The Taxpayers Union was formed in 2002 with the mandate to provide a steady stream of of‘A research story about waste in the public sector. Part of the reason the Taxpayers Alliance is so effective is that they hardly talk about taxes. Instead, they promote a meta-narrative about waste.The theory for change seems to be that, by undermining public confidence in the ability of collective institutions to spend appropriately of‘Taxpayer money,” they can block support for higher taxes, especially on corporations or the wealthy.
This created a dividing line in the public mind, of‘Taxpayers contribute to the public pot, and others (bureaucrats, politicians, the unemployed, and immigrants) take from it.
At the end of 2019, Tax Justice UK embarked on a journey to understand how Britons think about taxation. The result is our report, How to Talk About Taxes. What we found over the course of 11 focus groups and two polls is that people don’t spend much time thinking about taxes and the economy. Taxes are complicated, and when we ask them to think about it, they use familiar cultural understandings and metaphors to explain what it means to them.Chief among these is the idea that the economy is like a container, i.e. of‘the tax paid by the taxpayer, and of‘Others take it. But taxes are also seen as something that connects people and can help pay for good things – the NHS being the most obvious example.
For those of us who believe our taxes are an important way to reduce inequality and fund our public services, this research uncovers some major victories. It finds general public support for taxing wealth, disgust and anger at tax avoidance, and recognition that taxes can and do contribute to the creation of good public services.There is also evidence that this of‘The narrative of waste has hit the mark (it is also, notably, a central part of current Labor economic propaganda). However, despite the cynical moves of some campaign groups, Britons do see themselves as part of something bigger, and understand that taxes can be part of it.
If you want to convey a more progressive tax story, you have to give people hope that the system can change. People are often cynical and fatalistic about the tax system, especially when it comes to the actions of big corporations, the wealthy and politicians. It is important that we give hope that things can change and speak up about the times we make change happen. But this should be tempered with realism: people understand that taxes are largely a force for good, but they will never like paying taxes.
People are seeing public services being gutted and they really need more investment. The public does support tax increases, so we should be calling for tax increases, especially on wealth, and linking those proposals to supporting public services. But it is important to do this while noting that not all public services are paid for by taxes. Governments have a large degree of control over the economy, and politicians have many tools to support public investment beyond taxation, including borrowing and quantitative easing.
The public hates tax avoidance. If you’re angry about it, they’ll have your back. But always trying to point out ways politicians can fix the system. When talking about wealth, it’s important to be specific. Don’t say it as if it’s inherently bad. For those struggling to afford the necessities of life, the concept of wealth isn’t inherently a bad thing.People have great admiration for rich people and often find ordinary people of‘Assault on the division of the rich. Focus on how the tax system supports collective security, so that no one needs to worry about building large personal safety nets.
Make sure to explain everything in plain, everyday language. People’s understanding of the tax system is limited. It’s better to risk being superior than to say something no one understands. Use common metaphors to help people understand difficult concepts, or ideas that are usually discussed only in numbers – like how much money actually constitutes being rich.If you’re talking about fairness, make sure you explain exactly what you mean, because different people have different opinions on what of‘Fair’ looks like.
When talking about the economy, it is more effective to use metaphors that emphasize how the economy is made by people—it can be changed to build a better world.Be very careful when talking about the economy because it is a cauldron where money is either contributed or drained (this is sometimes called of‘Container Model”). Emphasizes that taxes and public spending play a vital role in building what we all need together.
We are living through a cost of living crisis, and political decisions about taxes are a central part of it. So much so that the current moment sometimes feels more like a scandal than a crisis. The decision this year to increase national insurance instead of capital gains (a low-rate tax that overwhelmingly benefits the already wealthy) is a shame. The company’s ability to profit from rising energy prices is clearly disgraceful. The tax debate is still not won, thanks to the current administration’s promise of tax cuts that would reduce the money available for public services, benefiting mainly the wealthy.
The debate over taxes is still not won. However, we have also seen some victories, partly due to the public support for us. The most obvious recent example is the windfall profits tax on energy companies, a move that challenges decades of political-economic dogma that the state is powerless to protect households from the effects of inflation. We’ve won a tax windfall and with the cost of living crisis showing no sign of abating, the time is ripe for further wins. With the right story, why not a wealth tax next step?
Paul Hebden is Communications Director for Tax Justice UK.
