George Osborne holds freshly minted coins during a visit to the Royal Mint in Llantrisant, Wales on March 25, 2014. Photograph: Getty Images.
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"Tax Freedom Day" comes earlier for the rich than the poor

The day when someone in the richest 10 per cent stops contributing to tax is nearly a month earlier than someone in the poorest 10 per cent. 

Today the Adam Smith Institute is marking this year’s "Tax Freedom Day". For those unfamiliar with the concept, "Tax Freedom Day" is defined as "the day when average Britons stop working for the Chancellor and start working for themselves". In other words, tomorrow marks the day where every penny you earn goes straight into your pocket, and not to the pesky taxman. Sounds good right? Well it gets even better. This year your "freedom" comes three days earlier than last year, three whole days.

If you’re not cartwheeling round the room at this unexpected financial boon, it’s possible you’ve worked out that Tax Freedom Day is, in fact, utterly meaningless. The celebratory nature of the Day only highlights that it is an obvious and cynical wheeze, intended to frame tax, in all forms, as a malign force. Tax is no longer a mechanism to provide your children with an education, to protect you from illness, or to make sure the roads are paved. Instead it is an imposition, the government taking what is rightfully yours.

The concept of Tax Freedom Day becomes even more bizarre when you examine how it is measured. According to the Adam Smith Institute it is "calculated by comparing general government tax revenue with Net National Income (NNI). The total of all government tax revenue – direct and indirect taxes, local taxes and National Insurance contributions – is calculated as a percentage of NNI at market prices. This year it comes to 41.09%. That percentage is then converted to days of the year, starting from 1 January."

In other words, the date of Tax Freedom Day is found by determining the fraction of the UK economy "captured" by taxation. This fraction is then used to determine a date in the calendar that is an equivalent fraction of the year.

The question is, does this method work, and can it really measure when an "average taxpayer" can expect to be "free" of taxation? The answer is, not really. For a start, nations clearly don't pay personal income tax.

Despite this, a more relevant Tax Freedom Day can be worked out. More precisely, Tax Freedom Days can be worked out. Equality Trust analysis has found that when all taxes on income are taken into account, the richest 10 per cent pay 35 per cent of their income in taxes. However, the poorest 10 per cent actually pay more – 43 per cent. Taken as a fraction of the year, this means that the day someone in the richest 10 per cent stops contributing to tax, or their "Tax Freedom Day", is actually on 9 May. The poorest on the other hand are still waiting for their Tax Freedom Day, which will not come until 5 June, nearly a month after the richest 10 per cent. 

In this sense, Tax Freedom Day can actually teach us something. By at least one important measure, our tax system is still hopelessly regressive. People may not always find themselves hugely motivated by the prospect of paying tax, but it is an important and widely accepted part of our life. We pay tax to receive certain public services, many of which have a social value far greater than their financial cost. Tax Freedom Day seeks to pervert this obvious truth by convincing the public that tax only harms them, and that it can be avoided without cost. What we need is not to demonise all forms of taxation, but to have a clear and honest public debate on whether our tax system is fair, whether it protects the most vulnerable in society, and whether it really places the greatest burden on those with the broadest shoulders.

John Hood is media and communications manager at The Equality Trust, where this piece originally appeared. 

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Leader: Mourning in Manchester

Yet another attack shows we are going to have to get to used to the idea that our liberalism and our freedoms can only be preserved by a strong state.

Children are murdered and maimed by a suicide bomber as they are leaving a pop concert in Manchester. As a consequence, the government raises the terror threat to “critical”, which implies that another attack is imminent, and the army is sent out on to the streets of our cities in an attempt to reassure and encourage all good citizens to carry on as normal. The general election campaign is suspended. Islamic State gleefully denounces the murdered and wounded as “crusaders” and “polytheists”.

Meanwhile, the usual questions are asked, as they are after each new Islamist terrorist atrocity. Why do they hate us so much? Have they no conscience or pity or sense of fellow feeling? We hear, too, the same platitudes: there is more that unites us than divides us, and so on. And so we wait for the next attack on innocent civilians, the next assault on the free and open society, the next demonstration that Islamism is the world’s most malignant and dangerous ideology.

The truth of the matter is that the Manchester suicide bomber, Salman Ramadan Abedi, was born and educated in Britain. He was 22 when he chose to end his own life. He had grown up among us: indeed, like the London bombers of 7 July 2005, you could call him, however reluctantly, one of us. The son of Libyan refugees, he supported Manchester United, studied business management at Salford University and worshipped at Didsbury Mosque. Yet he hated this country and its people so viscerally that he was prepared to blow himself up in an attempt to murder and wound as many of his fellow citizens as possible.

The Manchester massacre was an act of nihilism by a wicked man. It was also sadly inevitable. “The bomb was,” writes the Mancunian cultural commentator Stuart Maconie on page 26, “as far as we can guess, an attack on the fans of a young American woman and entertainer, on the frivolousness and foolishness and fun of young girlhood, on lipstick and dressing up and dancing, on ‘boyfs’ and ‘bezzies’ and all the other freedoms that so enrage the fanatics and contradict their idiot dogmas. Hatred of women is a smouldering core of their wider, deeper loathing for us. But to single out children feels like a new low of wickedness.”

We understand the geopolitical context for the atrocity. IS is under assault and in retreat in its former strongholds of Mosul and Raqqa. Instead of urging recruits to migrate to the “caliphate”, IS has been urging its sympathisers and operatives in Europe to carry out attacks in their countries of residence. As our contributing writer and terrorism expert, Shiraz Maher, explains on page 22, these attacks are considered to be acts of revenge by the foot soldiers and fellow-travellers of the caliphate. There have been Western interventions in Muslim lands and so, in their view, all civilians in Western countries are legitimate targets for retaliatory violence.

An ever-present threat of terrorism is the new reality of our lives in Europe. If these zealots can murder children at an Ariana Grande concert in Manchester, there is no action that they would not consider unconscionable. And in this country there are many thousands – perhaps even tens of thousands – who are in thrall to Islamist ideology. “Terror makes the new future possible,” the American Don DeLillo wrote in his novel Mao II, long before the al-Qaeda attacks of 11 September 2001. The main work of terrorists “involves mid-air explosions and crumbled buildings. This is the new tragic narrative.”

Immediately after the Paris attacks in November 2015, John Gray reminded us in these pages of how “peaceful coexistence is not the default condition of modern humankind”. We are going to have to get used to the idea that our liberalism and our freedoms can only be preserved by a strong state. “The progressive narrative in which freedom is advancing throughout the world has left liberal societies unaware of their fragility,” John Gray wrote. Liberals may not like it, but a strong state is the precondition of any civilised social order. Certain cherished freedoms may have to be compromised. This is the new tragic narrative.

This article first appeared in the 25 May 2017 issue of the New Statesman, Why Islamic State targets Britain

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