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The bogey of the taxes

A great  cry is being raised at the present time by two sections of the capitalist class about the question of taxation in relation to Import Duties. Mr, Chamberlain and his Conservative friends have suddenly discovered that a large amount of poverty, misery, and want of employment exists around us among the working-class. This is due, says this section, to the foreigner “dumping” his goods on our markets, underselling the home producer, and thereby bringing about unemployment by preventing the home trader from disposing of his goods. The latter cannot retaliate upon the “foreigner’s” market owing to the tariff wall erected around it to keep him out. At once the remedy comes to the front: Tax the foreigner’s goods and keep them off our market, then the English manufacturer will be able to employ more “hands” and raise prices, to the benefit of the whole community.

But our Tory saviours shut their eyes to the state of Germany where Protection reigns, and where the nation has been passing through the worst trade depression it has ever known, with the concomitant evils of unemployment, want and misery for the working-class. If Protection be a remedy, how is it that it has failed in this case? Again, in America, which has just passed through a big “boom” of trade, the inevitable depression has set in and men are being discharged in thousands from the railways and other industries to tramp about in a vain search for employment and to consider the beauties of Protection and high prices.

Mr. Chamberlain also claims that if Protection were adopted, wages would rise. As he means wages reckoned in coin, his opponents point triumphantly to Germany and France, where wages, reckoned in the same way, are lower than in England; while he retorts by pointing to America, where the wages are higher. The one thing that this does prove is that wages are determined by some factor independent of fiscal policies or tax jugglings and thereby places both sections of fiscal trumpet blowers out of court.

The Free Traders, largely Liberals, claim that the enormous increase of “our” trade and “our” business has been due to the abolition of the Corn Laws and the general policy of Free Trade. “Our” wealth has increased by leaps and bounds, and “our” prosperity is marvellous – so marvellous, in fact, that if Mr. Chamberlain’s proposal to increase the tax on wheat is carried, the ¼d. or ½d. increase in the retail price of the loaf of bread will cast the twelve or thirteen millions of people already on or below the poverty line into the deepest depths of misery and wretchedness. It would not need a very elaborate calculation to estimate the date when, if “our” prosperity continues, the whole of the workers will be in the position of those before mentioned.

Therefore as they, the Free Traders, are the “real friends” of the working-class, they call upon that class to vote them into possession of the political machinery for the purpose of saving the workers from this dire evil that is about to be inflicted upon them. True, some cantankerous person may point out that this party is chiefly concerned in having cheap food, so that the cost of production of labour-power may, as a consequence, be cheap also; that following the abolition of the Corn Laws these humane manufacturers reduced wages in the textile industries by an average of about 14 per cent; that they opposed the Factory Acts, which had been introduced to protect women and children, with all their power; that when returned to power in 1892 upon the well-known Newcastle program, while they sent soldiers to shoot down the miners of Featherstone and a gunboat to “pacify” the dockers at Hull, they quite forgot to pass measures such as Payment of Members, Triennial Parliaments, One Man One Vote, Payment of Election Expenses, which they had pledged themselves to make law. Another might draw attention to the fact that a large section of this party import raw material and use large quantities of flour, etc., in the manufacture of cotton and other textiles, and that they are quite as much concerned in cheap wheat for this reason as for giving the worker a big loaf.

The serious-minded worker who does his own thinking will probably at first be amazed at the money, the energy and dexterity expended by both sections of the capitalist class, or its agents, in this campaign – all for the benefit of the working-class. He watches them handling figures and statistics in a way that must cause Cinquevalli to turn green with envy, each proving that the poverty and misery is bound to increase if the proposals of the other side are adopted! If, however, he turns from the assertions, contradictions, and general bewilderment that surrounds these howling Cheap Jacks, and examines the facts of the situation calmly, his amazement will disappear.

In any form of civilised society certain common expenses have to be met by the members of that society in one way or another, depending upon the conditions and form of that society. As the wealth of all communities can only be produced by applying human labour to the raw material provided by Nature, it follows that the working-class produces all the wealth in existence, no matter to what purpose it may be turned. But here a significant fact comes to light. While the working class dig the ore, construct the machines, build the mills and factories, lay the railways – in short, bring forth all the instruments and machinery necessary for the production and distribution of wealth, yet they own neither these instruments nor the wealth when it is produced. It does not matter in what direction or with what object any member of the working class wishes to apply his energies in the production of wealth, he will find a barrier to that application in the fact that some individual or individuals belonging to another class own and control the raw material and the machinery necessary to convert it, and who will only permit the worker to operate these instruments upon the condition that the wealth produced is left in the capitalist’s possession to dispose of as he pleases.

Of course, it will be easily be understood that if there were no working class to exploit, the capitalist class would have to work to keep itself, and they are therefore bound to return to the workers sufficient of the wealth they have produced to keep them in a state of working efficiency and to reproduce their kind.

The capitalists may differ among themselves as to the exact point at which this standard may be fixed, but they are unanimous in fighting to retain for themselves all above this limit. The workers, on the other hand, are always struggling to increase their share of the wealth produced, with varying degrees of success, which results in individual or sectional wages varying, but makes the return to the class as a whole a close approximation to the cost of living under the conditions obtaining in that society. It thus becomes evident that the taxes must be paid out of the surplus value extracted from the workers by the capitalists; this explains not only the latter’s interest in the question of taxation, but also why it is of small moment to the worker.

“But”, says the Free Trader, “all taxes fall upon the consumer, and therefore the workman will have to pay increased prices for the articles he purchases if a tax is placed upon them”. The obvious retort is that as the working class are the only producers, but not the only consumers, it is from the former point of view that they should look at the matter. But apart from this, the statement is not true of itself. Prices are determined primarily by the cost of production, and immediately by supply and demand. The variations in the latter cause prices to fluctuate, but the point above and below which they move, and tend to come to rest, is the value of the article - or, technically, all commodities exchange upon the average at their value. If owing to circumstances a commodity were being sold above its value, fresh capital would soon be turned in that direction, and competition and extra supply would cause prices to fall. If being sold below its value, part of the capital would be withdrawn, and the diminished supply, other things remaining constant, would cause prices to rise to the normal level.

Whatever may be the conditions at any given time, the capitalist always sells at the highest price the market will bear at that period. Articles that are easily produced are often taxed without affecting the retail price at all, as shown in the taxes on tea, beer, and spirits, while in the case of tobacco one grade is sold at a price almost equalling the tax imposed! When the 1s. duty was laid on corn the price of bread rose in a few districts; but in the majority of cases it remained stationary, and when the duty was removed the wholesale price of corn rose! House rent offers another good example. Often when the landlord raises the rent he makes the excuse that the rates have gone up, but he never offers to lower them when rates go down, showing thereby that it is only an excuse, and that while competition for houses continue rents will rise. When the Central London Railway was opened the competition for houses in Shepherd’s Bush increased largely, and as a consequence rents rose as much as 3s. in the £. This was the limit offered for the time being, and when shortly after rates were raised by a good sum, the rents remained unaltered. At West Ham, which is the most heavily rated district in England, rents are falling, while rates are rising, owing to the decreased demand for houses. These illustrations show how little the question of rates affects the workers who pay rent.

This is still more true regarding so-called monopolies whose productions are sold at the highest price obtainable consistent with the carrying on of business, and even if they were taxed up to the point of absorbing profits, other things remaining constant, the business might close, but obviously prices could not be raised. An instance from Australia may be cited. The Standard Oil Company have a practical monopoly of the petroleum oil entering that continent, and until a short time ago a duty of 3d. per gallon was levied upon it. The company charged 6d. per gallon to the retailers, who paid the tax and sold the oil at 11d. a gallon. An agitation was set on foot to have this tax taken off “the poor man’s oil”, which after some perseverance was effected.

On the same day that the duty was abolished Rockerfeller raised the price to the retailers to 9d. a gallon, who sold it to the consumers at the same price as before – in other words, Rockerfeller was relieved from paying the tax that until then he had paid upon his product entering the country, and the working class were in exactly the same position as before. In London the abolition of the coal dues levied by the City authorities did not alter the retail price one farthing.

It is thus easily seen that if the whole of the taxes were abolished it would not benefit the working class unless competition among the capitalists drove prices down in proportion, and then others would benefit as well, while the workers would have to resist a reduction in wages.

The question thus becomes reduced to one of a quarrel between the big and the little thieves as to the apportionment of the cost of maintaining the present system, and is expressed chiefly by the small middle-class forming various tax-reform parties with the object of curtailing the powers of the monopolists and big capitalists. Being only really concerned with the problem of how to stop the robbery under which they suffer, the workers should take no stock of the quarrel over the paying of the expenses of the burglary. Whether he is living in a country whose fiscal policy is based on Free Trade or in one in which it is based upon Protection; whether the country is highly taxed or otherwise; whether the district he lives in is highly rated or the reverse, makes little difference; the worker finds that whatever of the above conditions he may be under, a subsistence is all that upon an average he obtains.

Firmly gripping the above sound and logical position, The Socialist Party, the only party truly representing the workers, makes its attack upon the central pivotal position – to capture the political machinery and therewith control of economic powers and social forces – taxation and the armed forces of the nation, for the purpose of ending the robbery by overthrowing the system of Capitalism, emancipating the working class, and laying the foundations of the Socialist Co-operative Commonwealth.

(Socialist Standard, October 1904)