Labour will enact a Robin Hood Tax on financial transactions

Modern “neoliberal” capitalism requires constantly increasing velocity and atomisation of transactions. A #robinhoodtax at 0.5% is nominal and fair. Capital cannot remain stateless and boarderless.

Consider what VAT is: a regressive tax on the transaction of purchasing goods set at 20% (with exceptions). 0.5% on financial transactions is fair and reasonable, will raise £26bn.

There is already a transaction tax, it’s just the proceeds for this go to the big financial institutions. Every transaction has a cost. That’s how modern capitalism works. 0.5% per transaction is effectively a micro payment. Remember these banks make hundreds of billions, and caused a world wide financial crash. It’s about time we stopped being so deferential to them and make capital contribute to the security of the societies they effectively leech off.

Workers, wealth and tax

Today the Telegraph called those in £80,000 and above “workers.”

Now, whilst many of them do work, the telegraph aren’t trying to invoke any sense of that understanding. What they are doing is a typical right wing “reframing” of language. The “working class” and “working people” has always been understood to include mainly blue collar and lower paid jobs, where as someone on £80k or above would be very comfortably “middle class” and likely to be in mainly high management, directorships, and successfully “entertainment” roles.

The reality is that this group of people have received thousands of pounds in tax cuts over the last 6 years, AND seen their income rise whilst the rest of the population has seen their income frozen and effectively going backwards, losing 10% of their value in the same time.

Taxation is not just about paying for things, it’s also a significant way of balancing an economy, redistributing money and wealth, and by doing so actually works to the benefit of the whole of society.

How much of your income tax is spent on unemployment?

Correction: The multiplier is actually 0.375 not 0.851.*

I don’t want even more of my hard-earned money taken in tax and spent on the unemployed or work-shy. My wages aren’t a bottomless pit for the unemployed. That’s MY MONEY they’re spending.

We’ve all heard things like this being said, maybe we’ve even said something similar ourselves. So just how much of your income tax is spent on unemployment?

I set out to work out the answer.

Government Revenue, Expenditure & Borrowing

In 2012, the total revenue from all forms of taxation and incomes was £591 bn.
(Source: Institute for Fiscal Studies)

Of this, taxation from personal income is shown in the table:

Revenue
Source
Amount
£ bn
% of total
revenue 
Income Tax 154.8 25.2
National Insurance 105.6 17.9
Total 260.4 43.1

Total government expenditure for 2012 was £695 bn.
The government borrowing  for 2012 was £103.5 bn.

Borrowing makes up 14.9% of all expenditure, leaving 85.1% of government spending coming from revenue. 37.5% of total expenditure by government is made up of revenue from personal income taxation, which means the remaining income from other revenue is 47.6%

* This produces the personal tax multiplier p of 0.375

p=(\frac{37.5}{100})

Spending on ‘unemployment’ (which includes all costs associated with unemployment) for 2012 was £8.4 bn. This is 1.2% of all expenditure.

Adjusting for spending from only personal taxation income, just 0.45% from direct tax goes on unemployment.

How much of your income tax is spent on unemployment?

I will use the average salary for this calculation. In 2012, the average salary or income for working was £26,000 per annum.

Taxable Income £17,895
Tax £3,578
National Insurance £2,208.96
Total Tax Paid £5786.96

So if 1% of the tax you pay goes on unemployment, that means that £26.04 of the average personal income tax paid to the government is spent on unemployment.

Or to put it another way: you spend 7p a day on unemployment.

Considering anyone of us could be made unemployed at any time for any reason, 7p a day for unemployment ‘insurance’ seems a very reasonable cost to pay.

In fact, one of the commenter below makes a very good point about how this also insures us against social unrest too.

Update: The Formula

I thought I would include the formula used in working out the final figures.

x=(\frac{t}{100})(sp)

t = total personal tax
s = percentage of government spending
p = government spending proportion from tax revenue multiplier = 0.375 x = tax paid that goes towards s

So, if one third of government spending is spend on all welfare,  I calculate that this is £716.13 for a person on £26,000, or £1.96 per day.

1625.15=(\frac{5786.96}{100})\times(33\times0.375)