Monday, October 24, 2005

Cameron is no moderate

It's amazing how many people seem to have been taken in by the attempt to portray David Cameron, the pro-war Thatcherite, as a 'moderate'. Here's my piece from today's Guardian.

Cameron is no moderate
He supports the Iraq war and tax cuts, opposes EU social policies and has neocon associations

Monday October 24, 2005
The Guardian

What exactly is moderate about David Cameron? On taxation, the Tory leadership favourite has signalled his attraction to the flat-rate tax, a far-right wheeze that would leave, according to a Treasury report, up to 30 million Britons worse off and the super-rich even richer. Declaring his support for "flatter taxes", Cameron has enthusiastically backed the decision of his lieutenant, George Osborne, to set up a commission to investigate the idea and has signed up to a classic Thatcherite economic agenda of tax cuts and deregulation.
On Europe, he wants the Conservatives to break their long-standing link with centre-right Christian Democrat parties in the European parliament and talks of "fighting to end the EU's damaging social role". And in foreign policy, he is an unreconstructed hawk, his campaign masterminded by the neoconservative trio of Tory MPs Osborne, Michael Gove and Ed Vaizey, all enthusiastic cheerleaders for Pax Americana. Osborne hailed the "excellent neoconservative case" for action against Iraq in 2003 and denies that the invasion has radicalised Muslim opinion.
Gove and Vaizey are signatories to the statement of principles of the Henry Jackson Society, which has its UK launch next month. The society - named after the US Democratic senator who opposed detente with the Soviet Union - campaigns for a "forward strategy" to spread "liberal democracy across the world" through "the full spectrum of 'carrot' capacities, be they diplomatic, economic, cultural or political, but also, when necessary, those 'sticks' of the military domain". Calling for the "maintenance of a strong military with a global expeditionary reach", the society bemoans the fact that "too few of our leaders in Britain and Europe are ready to play a role in the world that matches our strengths and responsibilities".
The list of Henry Jackson patrons reads like a Who's Who of US foreign-policy hawks: including the former CIA director James Wolsey, William Kristol, editor of the Weekly Standard, and Richard Perle, former chairman of the Defence Policy Board and the man many see as the architect of the Iraq war.
Cameron himself voted for the Iraq war, believing that to vote no "would have been to break the US-UK alliance which has been the cornerstone of our peace and security". Saddam, according to the new Tory saviour, posed a threat not just to the Middle East region, but "to the world", and like all good neocons Cameron blamed the conflict on the French and their promise to veto any second UN security council resolution.
Cameron's meteoric rise from leadership no-hoper to frontrunner has taken many by surprise. But what has happened is that British neoconservatives, faced with the nightmarish possibility that in a straight fight between David Davis and Kenneth Clarke the more charismatic and anti-war former chancellor would prevail, sought to undermine support for the latter by reinventing Cameron, the pro-war Thatcherite, as the voice of Tory "moderation".
The strategy has worked. "The central job of a new Tory leader is to put the Conservative argument in a different way ... to be the change, not just to talk about it. Putting policy meat on the bones just isn't the point" - these are the views of the Tories' modernising guru Daniel Finkelstein. For him, the fact that Cameron looks moderate is all that matters. But those not enamoured by the prospect of a regressive tax system, a revival of 1980s economics, a hostile attitude to Europe or British participation in military invasions of Iran, Syria or any other country the US decides to attack in five or six years' time are well advised to read the small print.


Tim Worstall said...

Oh dear. You really haven’t been reading around the blogs have you?
A flat tax can be progressive, neutral or regressive, it just depends on where the personal allowance is set. The Adam Smith Institute’s proposal (which iswhat Cameron and Osbourne have been looking at) with a 12,000 family allowance would be more progressive than the current system. Setting it higher with a higher tax rate (say, 16 or 18 or 20k with perhaps a 45% rate) would be even more so and still could be revenue neutral.

What I really don’t understand is why you think the current system, where people part time on minimum wage, pay income tax, is a good idea? And the current system is hardly progressive....have a look at average tax rates by income group sometime.

Victor S said...

First off, Worstall is dead wrong there - a flat tax by definition cannot be progressive, there are just varying levels of regression. The reason being that 25 per cent of an income of 10,000 pounds means something very different to 25 per cent of a million pounds. The person on 10,000 pounds a year needs every last penny of that 10,000 pounds and then some, but the person with a million pounds could be taxed as high as 90 per cent and he'd still have a grand old life.

Secondly, Neil, I read you brief bio there at the side, and thought 'Check, check, check, yup, yup, totally, hold on, "restoration of capital punishment"?' - As Bob of Sesame Street was wont to say, 'Which of these things is not like the others?'

Anonymous said...

Victor, you say that a flat rate tax cannot, by definition be progressive. If by "progressive" you mean taking from "the rich" and giving to "the poor" then surely the following example would satisfy any redistributive urge.

The personal allowance is set at the average income. The tax rate for the remaining population would then be set to cover all government expenditure.

Now, I don't have the figures to hand to put numbers to this example. I suspect that it may be impossible with the current level of state expenditure. It would almost certainly be politically undesirable, but it is theoretically possible and does fulfil the Robin Hood requirement of a progressive tax.

As Tim points out it is entirely possible to create a fair flat rate tax system that brings in the required amount of cash to fund government expenditure. I suspect that the real antipathy towards the concept from the left stems more from a fear that it would be too understandable for us dumb proles. If we could really see the effect of taxation on our pay packets we might just start demanding that the state stops wasting so much of our money.


Anonymous said...

The basic flat tax argument is that the current tax system, with its myriad credits, debits and exemptions, costs too much to implement. Therefore, less money is availible for welfare projects and the like.

While it seems a good idea to reduce admin costs wherever possible, a flat tax seems a bit like using a chain saw to cut a finger nail. Fewer administartion costs, for sure, but all notions of fairness will be a bloody mess.

Of course it'll make the richer better off: why do you think bastions of the rich and powerful (cf: The Economist, Adam Smith Institute, US Republicans) think its such a great idea. That the poor and lower middle class will be funding this enrichment should seem perverse even to the most strident libertarian.

Gavin Ayling said...

Of course it won't make the rich richer. Meanwhile, the government's changes to the SIPP pension rules offer perks to the well-off that are quite beyond comprehension.

Victor is missing the very simple fact that the higher personal allowance provides a fairer level of revenue from those on low incomes and provides the same level of revenue from those on higher incomes. Those on very large incomes are currently able to exploit the complexity of the tax system to pay less than the so-called "progressive" tax regimes allow.

Nick said...

It's tempting to worry about Mr Cameron, but while I've got Mr Blair (a much bigger threat) to worry about, I don't think I'll bother with Mr C. He can wait 'til he wins power.

Matthew said...

The Adam Smith Institute's flat tax proposal may be more progressive than the current system (I'm not sure), but it is a fantasy, as it involves public spending falling by £50bn.

If you start with that basis you can design all kinds of wondrous tax systems, e.g. it is trivially easily to design one in which every citizen is £800 a year better off (current tax system with £800 a year per person rebate).

Without that cheat it's more difficult, and perhaps a £12k allowance and 45% rate would do it, but no-one is politically suggesting anything like that, and if you believe marginal rates of taxation are very important in incentives to work it might not even raise what you want.

Victor S said...

In response to Remittance Man - No, the definition of progressive income tax is not simply a system which redistributes income. When talking about 'progressive' tax systems, progressive means 'in a progression', not 'socially just'. A progressive income tax taxes individuals at a progressive rate, i.e., with percentages increasing ever upwards as greater incomes permit greater percentages of incomes to be remitted to government.

Thus, even with the example you give, such a flat tax is not progressive, as while those beneath the average income pay nothing, the wealthy and super-wealthy pay the same rate as the middle class. Whether or not this manifestly unfair is besides the point: Such a system does not increase tax rates progressively.

Victor S said...

Furthermore, Gavin, you have a very odd idea of the class composition of society: There are not two homogenous and distinct groupings called The Poor and The Rich, but many, many gradations. Hence, once more, the need for progressive taxation. The current system is far from perfect, but there is no left-wing case that can be made for a flat-tax.

Truly, it is only the innumerate and the greedy who support flat taxes.

Anonymous said...

Neil, could you provide a couple of sources please:

[1] Where is the Treasury report which said flat tax would leave "up to 30 million Britons worse off"? I've hunted on but can't find anything saying that.

[2] George Osborne saying there was an "excellent neoconservative case" for action against Iraq in 2003? I can't find anyone saying that.

Matthew said...

It was (rightish) economic analysis firm, Lombard Street Research, who found 90% or 27m would lose out if revenue was to be kept the same

Anonymous said...

Thanks, Matthew. But that's to produce the same revenue, when I guess most advocates of this reform are also keen on slashing expenditure. Anything along those lines from the Treasury?

Anonymous said...

"The reason being that 25 per cent of an income of 10,000 pounds means something very different to 25 per cent of a million pounds. The person on 10,000 pounds a year needs every last penny of that 10,000 pounds and then some"

But they would pay zero. The flat tax would not start with your first pound of income. So in that sense it is "progressive".

Futhermore, the flat tax is already in place in several countries. It did not lead to the apocalypse, so doom mongering is a bit comic.

Anonymous said...

Aha! Victor's just shown how a flat rate tax will get implementated. "Only the innumerate and the greed could support a flat rate tax".

Since a significant portion of the population fall into at least one of those categories (most into both) we're onto a winner.

Flat rate taxes, here we come!


Matthew said...


Well if you are going to advocate a flat tax that has a slashed revenue then you can come up with any figures you want, depending on how much revenue you wish to slash.

A 1% flat tax and a £10,000 personal allowance would leave 100% of taxpayers better off, for example.

Unknown said...

Neil, my wife told me this morning of a recent BBC radio segment on the Henry Jackson Society, and Cameron's neocon connections.

I found your Guardian article-blog posting via a Google search, and provided a couple links to it from my posting of today: The Neocon Agenda: Will We Undermine It? Or, Is Democracy Dead?