Against Tax Rate Nationalism
Since the unveiling of Rachel Reeves’s budget and the release of last year’s net migration figures, much has been said about Britain’s growing tax burden. The tax burden as a percentage of GDP is now expected to grow to 38%, the highest in peacetime history and well above the post-war average of around 33%.
Mainstream commentators and many on the online right have raised the alarm about this figure, and many have said that Britain now faces a ‘tax death loop’. The argument goes that the more "productive" work is taxed, the more capital and skilled workers will flee the country. Consequently, taxes will have to increase further to fund the ever-growing demand for benefits and public services.
The problem with this argument is that it is largely based on a misreading of the statistics, a poor understanding of the benefit system, and an insistence on economic ideology over basic common sense.
Rachel Reeves’s economic plan is still deeply flawed, and I recommend that you read our coverage of the budget and our suggestions on what path the Chancellor should have taken. Yet the reaction has been equally woeful.
The claim that Brits are being unreasonably taxed is overstated. By historical standards, we are paying higher taxes to fund the pensions and care of an ageing population, yet we do not see any proposals from Reform UK or the Conservatives to end the triple lock. Nor do we see any realistic proposal to grow the real economy outside of the City of London. It is very easy to sit on the opposition green benches and howl with fury over the Government’s admittedly woeful economic performance, but it means nothing without a plan of your own to replace it.
Britain is not alone in having an ever-increasing tax burden. Nearly all major developed economies are at record high levels, largely due to the same age-related social spending commitments that we are struggling with. Even in the Land of the Free, the tax burden is rising. Given the arguments laid out by the online right, you would think that the average British worker is taxed at a significantly higher level than our American counterparts. However, we in fact pay a marginally lower rate of 29% compared to the American 30%.
The second claim made on Twitter is that Britain is suffering from unprecedented brain drain at an ever-increasing rate, with rightists blaming taxes and leftists blaming Brexit. Our productive young , aged 18 to 34, are apparently fleeing the country in droves to destinations unknown.
This moral panic is supposedly proven by the revision of the British citizen emigration figure from 77,000 last year to 257,000. The ONS changed its methodology to count how many British citizens were detected on the HMRC system rather than employing a rather awkward survey at airports. Yet, the figure in 2021 under the new system was 233,000. It should also be noted that one third of the number of Brits that emigrated last year also returned, albeit at a slightly older age. Extrapolating to the UK citizen population cohort as a whole, 0.9% of the 16-34 population emigrated, and 0.33% of that population returned last year. There is no demographic analysis for these people, or where they came from or went to.
The right wishes to push a narrative that ethnic Brits are fleeing in droves to Dubai to be replaced by non-white immigrants, but there is simply no evidence for this claim. It could equally be that first or even second-generation migrants with citizenship are going back home. But that would also be a claim without evidence.
The figures above are entirely within a normal historical range for British emigration as well. Emigration is in our blood, whether we like it or not. Our people have sought out new homes all over the world for the past 400 years. Britain experienced a far greater mass exodus of our youth in the immediate post-war period, yet it did not lead to “brain drain” or a tax base collapse, so I do not see why that would be the case now.
Lastly, on the claim about benefit-dependent single mothers earning up to £100,000, this can simply be dismissed by Googling “benefit cap”. Even with allowances and subsidies included, the argument is so stupid that it barely demands a refutation, but it did not stop Matt Goodwin, Nigel Farage, Kemi Badenoch and so many others pushing this complete nonsense.
So why are so many advocating that people should move to places with low tax rates? There is actually an inverse correlation between the tax rate of a nation and its GDP per capita and quality of life.
There are only three ways in which a modern nation can operate on a low tax rate:
Slavery, akin to what the Gulf Arabs employ. Cheap, coloured, imported labour that lives in slums whilst the natives live in desert skyscrapers.
Libertarianism, where the state has no obligations and where the people must rely on family and religious institutions for support. Modern examples include India, Pakistan and Bangladesh. Ever wonder why there is so much rubbish on the streets of South Asia? It’s because the Government doesn’t bother to pick it up in many areas. But they have super low taxes!
A state where the government does not raise money through taxes, but instead raises it through owning many of the means of production. Think Russia or China.
None of these solutions are favoured by the Thatcherite right. So I suggest they put up, shut up, and render unto Starmer what is Starmer’s. Or be a traitor to your country and serve as an educated slave in Dubai. I couldn’t care less.