Taxation: are we better off than 1979?

September 7, 2009 at 11:22 am 1 comment

by Anthea H0llist

Yesterday, I was asked to read a piece of research that compared taxes and benefits in 1979, 1997 and 2008. I was a bit apprehensive to 1) read about taxes, 2) read about how worst off we are than 29 years ago and 3) read about taxes (as you may have guessed this is not a favorite topic of mine!)

Of course I was not around to experience the benefits of  a 1979 taxation system, but even I knew that 1979 was better off than 2008 (and this was before the notions of  ‘credit crunch’ and ‘economic downturn’ were thrown about).

So what did the study say? Well it seems that it is good news for some. The 1979 system provided levels of provision for low and middle incomes that were both generous and designed to last a lifetime. 1997 saw highest incomes being rewarded and the poor disadvantaged; while 2008 trying to readdress the failure of the 1997 system saw healthy benefits for people who are never sick or unemployed. Median earners are however no better or worse off in 2008 than in 1979 or 1997.

Since 1832 the popular catchphrase about the rich getting richer and the poor getting poorer seems to have been perpetuated around modern culture, and rightly so. The people who have bemoaned the unjustly state of affairs about a capitalist society supporting the elites class is not without its evidence. Despite the major shuffling and re-arranging from ‘New Labour’ the end result is the same. High-income families gain the most, while lowest income families continue to be disadvantaged. I do not however claim that high-income families are not paying enough taxes. My experience is that the rewards for longer hours and higher pay are small. Indeed a large proportion of high earners income is reduced by taxes. Yet the benefit of a less progressive taxation system seems to have worked in their favour.

Ok, I must admit that 2008 is better off than 1997 for the lower income families, but what are the chances that low income families can afford to remain in work throughout their lives. Often these families are unable to afford the luxury of private health care to ensure that they don’t miss work due to illness, while lacking the necessary social capital to negotiate around a bourgeoisie world. It is easy to think that in this modern society, technological advances make it easy for us to work none-stop. The internet, a revolutionary tool, means that we are plugged in 24 hours a day to our work. But often these low income families do not always have the appropriate amount of ‘IT Skills’ nor are they privileged enough to have such white collars jobs. So this 2008 system proves to be just as unfairly balanced as its predecessor.

As for the median earner- what do we have to complain about? We have stood still throughout time. No better and no worst. So we can at least be thankful that our pockets and bank accounts are not emptying at a greater speed. Still, the question remains over whether no movement will benefit us in the long term or whether they (government) are waiting for a later date to cash in.

 My hope for the future is gloomy not just because of the current economic crisis but because those who are trained to develop a system to help the poor and unprivileged seem unable to work out the longitudinal effects of taxations on the very people that they are suppose to be supporting. I am not an expert but what I do know is that the aged old mantra of lowering taxes and handing out more benefits to the disadvantaged is not the answer. What is, is anyone’s guess.


Entry filed under: Government Departments.

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1 Comment Add your own

  • 1. Matthew  |  September 11, 2009 at 10:43 am

    Thanks Anthea. It seems that New Labour has neglected the median earners but helped the poor, but not the sick on unemployed.

    This means that people on incapacity benefit and job seekers alowance are worse off now – and they are stuck there. What are we going to do about it?

    This also means that New Labour has not done much for people on average earnings (which are quite low) favouring the middle class – what are we going to do about that?


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