Taxes and the self-employed
There’s usually something interesting in your magazine and February was no exception, with the article ‘Who Bailed Out the Bankers?’. If I understood it, it was suggesting that taxes fall on the employers and not the workers. We never see the money which is deducted from our gross pay and it was never really ours. I was wondering how self-employed people would fit into this. The woman who cuts my hair is self employed and she certainly has to find the money to pay her taxes. Is she exploited? But who by, when she employs herself and no one else employs her. But is she then an exploiter? How could she be when she doesn’t employ anyone? There are quite a lot of self employed people around and I’m not sure how they fit into your ‘them and us’ picture. What do you think?
Tony Trafford (via e-mail)
Reply: We take the view that ultimately taxes come out of profits rather than wages and salaries. This is because wages and salaries are the price received by workers for selling our mental and physical capacities and like other commodities the price of our ability to work is determined by the amount needed to produce and reproduce it (for instance, the training received by an engineer helps to explain why an engineer’s salary is invariably higher after qualifying than that of an unskilled worker).
This is not to imply that wage rates are set in stone, but to say as we did in the article that at any point in history they gravitate around a point influenced by such factors and, of course, by trade union action too to ensure they don’t sink below even these levels. In effect, this means that while some taxes are paid by workers (such as VAT) the burden of taxation must ultimately fall on profits, which is one of the reasons the owning class – and the various factions within it – find it of such interest and importance. This is what we explained in the article, and if you are interested in exploring this particular issue, how the burden of taxation falls on the owning class in practice is also discussed in the relevant chapter of our pamphlet The Market System Must Go – Why Reformism Doesn’t Work.
The ‘self-employed’ are a slightly different case, as you imply, because they do not receive a wage or a salary resulting from a contract of employment. The self-employed (such as the small shopkeepers, etc) were technically part of the capital-owning class but who, as Marx pointed out, were forever being reduced towards the living standards of the working class through competition from the more successful capitalists and conglomerates. As such, their position has historically been one of the most vulnerable in capitalist society. Indeed, over time, the ranks of the self-employed shrank significantly due to this process of the concentration of capital into ever fewer hands, with smaller firms and the self-employed getting taken over or pushed out in the competitive struggle for profits.
In recent years though, there has been something of a turnaround in the numbers of those who call themselves self-employed. Not in the sense that the types of economic activities traditionally carried out by the self-employed have expanded much (in the main they’ve continued to shrink) but because a new layer of workers have had their pay and conditions de-regularised or ‘contracted out’ either by the state sector or by the corporations. This has been done as a way of stimulating efficiency (getting the self-employed to work from home for fees is usually cheaper for businesses than when they were formally employing the same people on salaries, with national insurance and pensions, etc to do the same work ‘in-house’).
So we have a situation whereby in reality, unless the self-employed are also employing others then they cannot be exploiters, and they are usually living on little more (sometimes less) than the average wage themselves, due to the pressures of commercial competition. They typically pay taxes nominally like workers do, and are, despite their ‘self-employed’ status, in an economic situation that is little different in most respects to wage and salary earners with contracts of employment. – Editors
In my opinion, the obituary written for Vic Brain was well written (Socialist Standard, April). I have always thought that people who are enthusiasts of things like the Welsh language, Scottish Gaelic, the Scots language, Irish Gaelic, Cornish language etc, are doing something which even under the uniforming pressures of capitalism is contributing to “cultural diversity” (as described in Vic’s obituary). Some might argue, I suppose, that our class position as wage slaves should mean that all other enthusiasms and identities should be subordinated or rubbished. I was glad to see your obituary writer was a bit more generous and thoughtful. I see no contradiction, for example, in having a Scottish identity related to your geographic roots, being interested in the Scots language and history etc , and also seeing a logical case for a world based on voluntary cooperation.
What are you thoughts on the subject of “cultural diversity”?
J. Russell, Glasgow, Scotland
Reply: We have no objection to “cultural diversity”. Differences of language, food, music and the like will continue to exist in a united socialist world; indeed would no longer be subjected to “Mcdonaldisation” as today under capitalism. We would add that different cultures can exist in the same geographical area and that individuals can partake of elements of different cultures (you don‘t have to come from Scotland to enjoy the bagpipes or from China to enjoy Chinese food). Our objection is to the exploitation of cultural differences for political ends, as for instance to set up or maintain a state or as the basis for a political party – Editors