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Trouble ahead at the Treasury

Unnoticed, the Lib Dems are driving through changes to the structure of personal tax allowances. And

For many politicians, tax cuts are the elixir of politics. In times of plenty they are deployed triumphantly as evidence of a thriving economy; in times of hardship they are handed down by chancellors as a salve to a hard-pressed public. So it should come as no surprise that, even in this parliament - dominated as it has been by arguments about fiscal austerity, tax rises and lower spending - there will be a growing debate about which taxes to cut.

Political gravity will ensure this is the case. As the economy gradually recovers - at the same time as the pain of the deepest and longest wage squeeze in living memory maintains its grip on family bank balances - politicians will be desperate to offer hope of better times ahead. They will know that tax cuts won't solve the structural problem of stagnant wages, nor will they deal with the rising pressures on the cost of living. And there will still be sharply differing views about whether tax cuts for some mean tax rises for others, as opposed to further cuts to spending. But have no doubt: all party leaders will be forced to offer respite to a public whose anger about falling living standards will reach boiling point over the next few years.

So, how will the coming tussle over tax cuts play out? There will be a few early skirmishes following the Budget, which inevitably included a few popular giveaways - such as the cut in fuel duty and support for first-time housebuyers - along with a tax cut for business (and let's not forget that George Osborne has already proved capable of pulling rabbits out of a hat, as with his dramatic promise to raise the inheritance-tax threshold in October 2007 - a move that skewered Labour's plans for an early general election).

Osborne clearly wants to burnish his credentials as a Lawson-like tax reformer as well as a spending cutter, so in the months ahead he'll talk up the radicalism of his long-term ambition to merge National Insurance and income tax. But the challenges involved in this are daunting, and the Conservatives are very unlikely to go into the next election having just raised the basic rate of income tax by 12p, so don't expect this to yield practical policies any time soon.

Indeed, it says something about the topsy-turvy state of today's politics that we need to look first at the Liberal Democrats to understand the shifting politics of tax. It is perhaps the least remarked-upon story in Westminster that the smaller and deeply unpopular coalition partner is driving one of the biggest changes in domestic policy - and in a department it doesn't even control. Not since the days of David Lloyd George have Liberal politicians had such influence over the Treasury's tax policies.

The ambitions of senior Lib Dems are not to be underestimated. Nick Clegg knows what he wants. He has been fighting hard for it internally and he is going to succeed in getting most of it - notably, a £10,000 income tax personal allowance at a total cost of more than £13bn (having already secured a commitment to a rise in the personal allowance from £6,475 to £7,475, increased in the Chancellor's 23 March Budget to £8,105 in April 2012.

Clegg's party has been emboldened by the quiescence of its Conservative partners. That is in part because the £10,000 commitment is a central fact of the coalition agreement, but it has also served the Conservative leadership's purpose to go along with something that deflects irritant calls from Boris Johnson and the Tory right to prioritise the removal of the 50p tax rate for the top 1 per cent of earners - a move that would delight Labour - just as it provides Tory leaders with a ready-made and voter-friendly tax-cutting agenda to talk about.

This context helps explain why senior Liberal Democrats, battered on so many fronts, are more ideologically self-confident than their coalition partners on this naturally Conservative terrain. They are the ones making the political weather on tax. Buoyed by this, they have set about working on what they should be seeking to achieve by 2015; and, more significantly, what their distinct Liberal ambitions for the tax system should be in 2020.

As part of their wider ideological journey, Clegg and those around him view themselves as the authors of a new "fiscal liberalism". This blends the spirit of John Stuart Mill's call for a generous, tax-free allowance sufficient for "life, health and immunity from bodily pain" with the modernising zeal of last year's Mirrlees Review (produced for the Institute for Fiscal Studies), which sets out far-reaching proposals for simplifying the UK tax system.

The priority is to achieve and then surpass the totemic commitment to increasing tax-free allowances. Don't be surprised when Liberal Democrat outriders call for a detailed plan for securing the £10,000 allowance in this parliament and £15,000 in the next.

The belief is that a "liberal tax system" should protect a greater chunk of individual earnings from the state, a sharp contrast with the social-democratic view that support for families, funded through progressive income taxes and tax credits, is the beating heart of a fair tax system. Nor do the Lib Dems' ambitions end here. Clegg is likely to push for further increases in green taxes - putting him on a direct collision course with Conservative backbenchers who want big cuts to fuel duty - and for raising more revenue from "unearned income".

Footloose families

One of the great political advantages of having a single, emblematic tax policy is that, in contrast to many of the tax changes of the Blair/Brown years, it is an easy thing to communicate. Quite simply, people are likely to get it. So where's the rub? The hard truth that Clegg and his team have largely sidestepped is that the simplicity of the allowance policy comes at a sig­nificant price: the distributional effects of the strategy are distinctly odd. Some high-income households (often with no children) gain quite a lot each time the allowance is raised, while many middle-income families with children gain nothing and, indeed, are set to lose a great deal (see chart 1), and the very poorest, who don't pay tax, won't get a penny.

This is not an accident: it is a direct result of tax cuts based on individual rather than household income. Further, because this year's increased tax allowance will be linked to a reduction in the income level at which the 40p tax rate kicks in, an extra 700,000 higher-rate taxpayers will be created in April.

For now, Clegg will shrug off these charges with the broad-brush argument that individual beneficiaries are overwhelmingly basic-rate taxpayers. He will not be so relaxed if a popular sentiment emerges that his prized tax strategy offers little to precisely those working (and politically footloose) middle-income families that hold the key to the next election.

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All of this gives the Labour leadership plenty to reflect on. Apart from airing its internal travails over the 50p rate, and Ed Balls's recent call for fuel to be exempt from the January VAT increase, Labour has said remarkably little about tax. Many on the political right, together with much of the media class - and some former New Labour figures - have already written off Miliband and Balls as big-state high taxers with no "feel" for the concern of people striving to get on in life, nor the discipline to rein in a party hard-wired to tax and spend. That is likely to be a serious misjudgement.

It was Balls and Miliband who came of age masterminding the commitment to stick to Tory spending plans, and showed the steel necessary to peg Labour to pre-1997 basic and top rates of tax. You don't go through that experience in your late twenties only to forget it in your early forties.

Recently Miliband has said that he supports "genuine" tax relief for low-to-middle-income earners but won't back a "tax con" in which a personal allowance giveaway is funded out of a hike in VAT. For now, that is a reasonable position: many low-to-middle-income earners will be worse off once increased allowances and VAT are taken into account; painfully so, once cuts to tax credits are factored in. But stick to this position for too long, and Labour will be badly exposed. Few expect the recent increase in VAT to be reversed come the next election. As chart 2 shows (below), the VAT rate has long been converging on the basic rate of income tax - Labour in power tends not to cut Conservative increases to VAT, whatever it says in opposition. Nor is there much prospect of it reversing the coalition's increased tax allowances and, in doing so, dragging many modest earners back into the tax system.

So, the risk is that Miliband ends up entering an election in 2015 saying little more than: "I now realise that I agree with Nick." Labour strategists with the ear of the leader are well aware of this conundrum and are starting to work out how to respond.

Their belief is that the coalition has made a big mistake in focusing so much of the pain of cuts on working families with children, and above all women. But they are also acutely aware that to make targeted tax cuts, at the same time as they rebuild their reputation for fiscal credibility, will be no mean feat.

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Miliband's team is heartened by private polling that it has seen on how the Obama 2008 campaign managed to break out of the Republican tax trap. With targeted tax cuts for the middle classes, the Democrats were able to change the framing question from whether each party was "for or against tax cuts" (the Democrats typically being "against") to "who do you want tax cuts for?". That freed Barack Obama to outpoll John McCain as a tax cutter for "middle-class America" at the same time as he won widespread support for tax rises for the richest 2 per cent. Labour thinks there are lessons to be learned.

Return of the 10p rate

So what are the likely directions for the different parties? No one should mistake the Conservatives' current focus on measures to boost growth with what is likely to become their agenda as we get closer to 2015. It is almost inconceivable that Osborne won't build up a formidable war chest over the next few years to fund a major commitment to cut the tax burden on families, as well as abolish the 50p rate, should the Tories win the election.

The Lib Dems have the immediate political task of reaping some popular reward for this April's increased tax allowances, and a deeper challenge - perhaps an insurmountable one - in making their strategy more appealing to middle-income families with children. One option would be to attempt to persuade the Treasury to build a child allowance into the tax system for basic-rate payers. But, apart from difficult questions about the administrative feasibility, this would ignite a huge row with the Tories, who still want to introduce a married couple's allowance. Even more significantly, senior Lib Dem strategists whisper that, in the longer term, they may need to open up a debate about moving from independent taxation to a system based on household income - as was the case before 1988. The implications of this should not go unmissed: any public contemplation of ditching one of the proudest achievements of modern feminism in the name of liberal tax reform would be explosive.

And Labour? It will try to home in on the electoral sweet spot - modest- and middle-income families with children, on a household income of between roughly £25,000 and £50,000. Less clear is what it wants to offer this group. There is already scepticism in senior circles about whether it would be enough merely to reverse some of the coalition's cuts to tax credits; a fundamental rethink is needed. This would involve looking at benefits as well as taxes and grappling with thorny problems such as child benefit - something not lost on Labour strategists, who are quick to point out that "we never said all aspects of universalism are sacrosanct".

The idea would be to create a simpler way for the tax and benefit system to support modest-income families that are going to lose from cuts to tax credits, as well as middle-income families that are going to be hit by the axing of their child benefit. At the same time, Labour will have to act to support the very lowest-paid. An intriguing option here, which would also help make peace with Labour's recent past, would be to consider a reduced tax rate for the lowest earners: might we see the return of the 10p rate?

The cost of cuts

Above all, Labour will have to balance intense and contradictory pressures for tax cuts, targeted increases in spending and the rebuilding of its fiscal credibility. Harder still, any new tax cuts will be expensive. Given the size of low-to-middle-income Britain, a few billion pounds won't stretch far; a meaningful cut is likely to cost over £10bn. In view of the fiscal outlook, Labour strategists realise that they will have to raise taxes for some in order to cut for others - as do those Lib Dems who accept that, by the next election, public spending will need to recover with growth rather than be cut further.

When it comes to income tax, there is very little room for manoeuvre. The 40p rate already kicks in at a relatively low and falling level, and there is no support for raising the 50p rate. A further increase in VAT is out of the question. This suggests the need for new ways of raising revenue from wealth and high-value housing. Expect to hear squeals in response to a Labour version of a "mansion tax", a continued push on bankers' bonuses, further savings on pension-tax relief for the highest earners and new ideas for raising money from capital gains and inheritance. Generating income from these sources will be a stiff test of Labour's resolve: the party will face bitter opposition.

In the years ahead, however, the crisis of living standards will lead to something rather like a primal scream from low-to-middle-income households, demanding relief as they become even more resentful of growing wealth at the top. The politics of taxing affluence in 2015 won't be the same as they were in 2010, never mind 1997: on this matter, the past doesn't provide a guide to the future. As Obama showed in 2008, it is possible to forge a common set of interests between low- and middle-income earners and a narrative on tax that speaks to the extraordinary times in which we are living.

Gavin Kelly is chief executive of the Resolution Foundation

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

This article first appeared in the 28 March 2011 issue of the New Statesman, Why Libya? Why now?

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“Yes, it was entertaining”: A twisted tale of Twitter trolls and fake terror victims

Here’s what happened when I contacted people involved in the insidious new social media trend.

When I reach out to Sam to ask why she stole the image of a 19-year-old Minnesotan man to post on her Twitter account, the first thing she says is: “Am I getting paid?” The day after the Manchester Arena bombing, Sam took the profile picture of a man named Abdulfatah and posted it alongside a 137-character tweet. “Please retweet to help find Abdul,” she wrote. “He has chemo and we're very worried. We last heard from him before Ariana's concert”. She rounded it off with a hashtag. #PrayForManchester.

Abdulfatah was not a victim of the Manchester bombing and nor was he at Ariana’s concert, as he has been living in Cairo for the last year. Sam’s tweet was a lie that generated (at the time of writing) 1,280 retweets, mostly from people simply trying to help after a tragic terrorist attack. Over the last few years, trolls have responded to terrorism and other catastrophes by opportunistically pretending that their friends and family are among the victims of attacks. After the Manchester bombing, a handful of accounts continued this trend – for varied reasons.

“I had no aim,” is Sam’s simple response to being asked why she posted her tweet.

Sam explains that she wants me to pay her so she can “feed [her] team”, who she says are called the Halal Gang. After explaining that I cannot ethically pay for her interview, she concedes to speak when I say that I will link to her twitter account (@skrrtskrtt).

Born a male, 18-year-old Sam tells me she “prefers female pronouns” and immediately gives me her full name, town of residence, and the name of the English university where she studies civil engineering. When I ask for a form of ID to prove her identity, she claims she left her wallet on campus. When I ask her to simply email from her university email address, she says – over Twitter’s direct messaging service – “unfortunately i cannot provide u with evidence at this very moment”. For this reason, I will refer to her by her first name only. Her quotes are here copied verbatim from the messages she sent me online.

“I chose that mans image because he seemed like an easy target. I was quite intrigued by the huge number of retweets because i got the attention i never got at home. And yes i did him a favour by getting him clout. He's ugly so i guess I got him some girls. People who also made fake missing people are G's and i salute them.”

Why did you do it, I ask? The reply is one word. “Entertainment”.

***

Abdulfatah was casually scrolling through Twitter when he realised his profile picture had been stolen. “Honestly, it was horrific,” he tells me – again over Twitter’s messaging service – “I hope nobody has to go through what I did. Just imagine scrolling through Twitter only to find that some random person used your photo to claim you’ve gone missing in a bombing.”

When Abdulfatah decided to confront his troll on Twitter, his tweet got 63,000 retweets and 98,000 likes. “i'm from Cairo and i don't have Chemo... who tf are you? how do you know me???” he wrote – and his response went on to be featured in articles by The Sun, Yahoo!, Mashable, and AOL.com. The tweet is part of a larger story that has spread over the last few days – of “sick Twitters trolls” targeting innocent people by pretending they are missing. 

My Twitter chat with Abdulfatah spans a few hours, and he hammers home how “vile and disgusting” he finds the act of spreading fake victims on social media. “I hope people come to their senses soon and stop this type of behaviour. It’s not funny at all.” Half an hour after we exchange goodbyes, he messages me to explain that there is something else he wants to say.

“I totally forgot to mention this,” he begins. “I couldn't have done this without this groupchat I'm in called ‘Halal Gang’.”

***

In their 2017 book, The Ambivalent Internet: Mischief, Oddity, and Antagonism Online, authors Whitney Phillips and Ryan M Milner dedicate an entire chapter to “Identity Play” on the internet.

“Online and off, identity is a series of masks,” they write. “Whether online deceptions are harmless or targeted or somewhere in between, determining why anonymous or pseudonymous actors do the things they do can be very difficult.”

So why do people use the internet to deceive? The authors’ argue it is simple: “because they’re able to: because the contours of the space allow it.”

Creating a person online is incredibly simple. Believing that someone online is who they say they are is even easier. Many newspapers now create entire stories based around a single tweet – taking what is said and who said it as fact, and covering their backs with a few “appears to have” and “allegedly”s. By taking viral tweets at face value and crafting stories around them, media companies consistently break one of the internet’s oldest rules. Do not feed the trolls. 

***

Abdulfatah sent me a copy of his provisional driver’s license to prove to me that he is who he claims. After his announcement about the Halal Gang, I became suspicious that both the victim, Abdulfatah, and the perpetrator, Sam, were in fact working together to go viral. Why else would they both independently reference the same group? Instead of a random troll picking on a random person, was this the case of two friends working together to achieve social media fame?

“I have never met this person prior to this incident,” said Abdulfatah over Twitter, promising me that I could call him for clarification (at the time of writing, he has not answered his phone). “I feel offended that someone like that would ever try to claim to be a part of our group.” Abdulfatah was added to the Halal Gang (which is a Twitter group chat) in January, and says to me: “I promise you this isn't a troll.” It is worth noting that a Twitter search shows that Abdulfatah and Sam have never previously interacted publicly on the site.

From 19:43 to 20:30 on Wednesday night, I was added to the Halal Gang chat. The group describes themselves as a place for young people to “find peace and tranquillity” through the Islamic faith. The 12 members told me Sam was a “lost person” who used to be in the chat but was kicked out for inappropriate behaviour. Abdulfatah was her replacement (he says he didn’t know this) and thus Sam targeted him in her tweet after the Manchester attack. One member of the Halal Gang said that Sam was his ex and went on to send a sexually-suggestive picture of her in the chat.

“It wasn’t our intention to go viral, just to help out Abdul but I guess it was kind of cool to go viral lol,” said one member.

Rather than trolls targeting random people, this incident therefore seemed to be a case of personal rivalry and revenge. This goes some way to explaining the psychology behind, and the motivations of, people who claim to have missing friends and family after terrorist attacks. According to the Halal Gang, Sam was simply targeting her replacement, Abdulfatah, because she likes trolling.

But then, at midnight, I received another Twitter message, from a person wishing to remain strictly anonymous.

“This is a MAJOR conspiracy,” they wrote.

***

Most of the time people make up fake victims on social media, the motives are cut and dried.

Andrea Noel is a Mexican journalist whose picture was circulated after the Manchester bombing, in a collage purporting to show 20 missing people. She has been trolled extensively in the past after speaking on social media about her sexual assault, and believes some of the same “anti-feminist” trolls may have been at work.

“I started getting Facebook messages and Twitter messages from various people that I know… getting in touch with me to make sure I wasn’t in Manchester,” she tells me over the phone.

The collage Andrea appears in also includes photographs of YouTubers, and was featured on the Daily Mail’s Twitter and Fox News as a legitimate collage of missing people. According to Buzzfeed, 4Chan trolls may have been behind the picture, choosing people they disliked as their victims.

Yet when a handful of people create a fake image, it is thousands more who are responsible for its impact. In 2013, researchers found that 86 per cent of tweets spreading fake images after Hurricane Sandy were retweets, not original tweets.

Caroline Leo is a 16-year-old from Florida who gained over 15,000 retweets on her tweet of the collage. “I felt good about it because I was helping find so many people and my phone was literally freezing and I had to turn it off for a little while,” she tells me of the initial reaction to the tweet. Yet when multiple people contacted her to say it was fake, she decided not to delete it as some of those featured in the picture were actual missing people. “I was so happy to make their faces familiar to over one million people and I wanted to keep it up because I like Ariana so much and I wanted to help other people who love her just as much as I do,” she says.

Andrea understands Caroline’s motivations, but does think people need to be more careful about what they spread online. “If you realise that half of these people are YouTubers then just delete it, you know. Make a new one,” she says. “I understand that she’s trying to be sweet but after a couple of hours everyone knew this was fake… so, really just make a new one.”

Yet a big part of the reason people create fake images – or accidentally spread them believing them to be real and then don't want to delete them – is for the likes, retweets, and comments. The buzz that we feel from social media attention doesn’t go away just because of a tragedy, and Dr Linda Kaye, an expert in the psychological impacts of technology, explains social media interactions facilitate our “need satisfaction”.

“Humans are social animals and have a basic need for social belonging,” she says. “Perhaps these individuals who [use social media] in this way to gain ‘social approval’ are not having their social needs fulfilled by their existing relationships with friends and family. Adolescents may be particularly prone to this sort of behaviour, as this is a period of great change, in which peer relationships often become more fundamental to them than parental ones.”

John, a YouTuber who was also featured in the collage and in a separate tweet claiming he was missing, urges people to think before they act on social media. “If there is one thing I would like to say about this all... I understand that during events such as this, information can develop and spread very rapidly,” he tells me, “but it doesn't hurt to try to confirm information through a second source.

“For instance, say that a story on Yahoo is claiming that I was a victim - is the BBC reporting the same story? During a crisis situation, I feel that disseminating the correct information to the general public is absolutely crucial and potentially lifesaving.”

***

The Twitter user who contacted me about the Halal Gang “conspiracy” refused to speak when I said I would not transfer $10 to his PayPal account. “$10 is a steal for the info I have not gonna lie,” they said. When I refused, they sent me this offensive meme from the adult cartoon The Boondocks.

At 3:05am, another anonymous Twitter user messaged me. They claimed that the man in the Halal Gang who claimed to be Sam’s ex and had sent me a sexual picture of her, was in fact trying to humiliate his ex. “It’s embarrassing don’t use that picture in any articles,” they wrote.

As it stands, there is potential that the Halal Gang were working together to get multiple viral tweets. There is also potential that the man who asked me for $10 was also trolling in turn by trying to tell me the Halal Gang were acting like this when they are, in fact, innocent. Yet if not Abdulfatah, some members of the group seem to be corresponding with Sam, as she changed her story after I spoke with them. “I believe they kicked me way before the incident and I’ll be completely honest with you, I wanted to get them back, yes,” she says, despite moments earlier saying that they kicked her out after her Manchester attack tweet.

It is impossible to work out Sam’s true motivations for creating a fake victim, as she is hiding behind her online persona and simply answered “nope” when I asked if there was a number I could call her on. Her comments – that she lives in a foster home and is emotionally abused by her family, that she is “not dumb enough to go to an Ariana Grande concert”, and that people critical of her actions “need to move on init” – read as though she is simply trolling me, a journalist, in turn.

There is no real way for me to know who is who they say they are, and whether the Halal Gang are telling the truth that they didn't collaborate with Sam (they refuse to send over screenshots of her being kicked out from the groupchat, as the chat has a “no SS” rule). As Phillips and Milner note, even experts have great difficulty identifying people online. Either way, there is clearly more of connection between Sam and Abdulfatah than the two initial tweets made it seem. 

The reason why this matters is because this story isn’t really about Sam, nor is it about Abdulfatah. If two friends (or people involved in the same group) seek to get revenge or go viral by attacking each other on social media, it is not their actions that have wide-reaching ramifications. It is the actions of the hundreds of thousands of people who choose to Retweet uncorroborated claims, and the journalists who take tweets as gospel. Naturally, in the painful hours proceeding a terror attack, we all make mistakes about what we share on social media. But we can fix them and we can avoid making the mistakes again.

Before claiming she wanted revenge, Sam told me she was acting on a desire to be entertained. I check with her, after this revelation, whether she succeeded in this aim. “So did you find it entertaining?” I ask.

“Yes,” she replies. “It was entertaining.” 

Amelia Tait is a technology and digital culture writer at the New Statesman.

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