“Government is the great fiction, through which everybody endeavours to live at the expense of everybody else.” Those words by Frédéric Bastiat, a French economist, were uttered almost two hundred years’ ago. I am sure that he didn’t ponder too much, if at all, about what life would be like in 2017, yet his words should be resonating throughout this general election campaign.
In many ways, Labour has been clever with its taxation plans. If Jeremy Corbyn becomes Prime Minister, he plans to increase taxes on those earning above £80,000 a year. That’s less than 5 per cent of UK incomes. In other words, it doesn’t affect more than 95 per cent of the electorate. It’s very easy to be in favour of tax increases when you don’t have to pay.
The same goes for businesses. Corbyn would increase Corporation Tax to 26 per cent. Because people are not directly affected by Corporation Tax hikes, they don’t object. Most people never think that the more businesses pay in Corporation Tax, the bigger the bill will be for all of us. Only people can pay tax, and those Corporation Tax bills are paid by employees with lower wages, shareholders, and customers who have to pay more for goods and services.
So when you hear Jeremy Corbyn cheered from the rafters, remember this: the vast majority of those cheering are those who are net beneficiaries. As Milton Friedman once said, “Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own…” Or as Margaret Thatcher once said, “The problem with socialism is that you eventually run out of other people’s money.”