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John Passant

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March 2013



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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
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Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

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Me on Razor Sharp this morning
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Tax the rich till their pips squeak – notes for a talk at Marxism 2013

These are the notes I have done for a talk at Marxism 2013 in Melbourne over Easter.



Tax comes out of the wealth, the extra value, what Marx called surplus value, which workers create.

The falling rate of profit in the developed world since the late 1960s has seen governments respond by, among other things, cutting taxes on capital, in particular company tax, flattening income taxes and shifting tax bases to consumption, i.e. more on to workers and the poor. Australia, despite having a high profit rate because of mining and banking, has followed suit.

As well as the pressure falling profit rates in the developed world are putting on company tax rates and base shifting, competition forces individual companies to try to cut their own tax bills and so increase their after tax profit through tax avoidance to get an advantage over their competitors. This talk looks at both the systemic response of cutting taxes on capital and the individual capitalist attempts to cut their own tax bill.

Falling profit rates have produced in response a shift of wealth from labour to capital. Tax has both followed and led this trend. Taxes have become less progressive. As a consequence inequalities of wealth and income have increased markedly. A steeply progressive tax system – e.g. abolishing the GST, increasing company tax, imposing a real super profits tax on all industries, including mining and banking, markedly increasing income tax rates on the rich, introducing wealth and wealth transfer taxes and so on can only partially address that increasing inequality. That’s because the increasing inequality flows from increasing income and wealth inequality.

The best way to address the shift in wealth from labour to capital is to fight for real wage increases and more jobs. This will not only improve the lives of workers by improving their living standards it will also change the political climate and has the potential to turn the slogan tax the rich into a reality.

With 2.2 million Australians living in poverty; with indigenous people dying over a decade earlier than the rest of us; with low spending on public education and health, particularly not addressing the need for more and better paid nurses and teachers; with a crying need for disability services to be free on Medicare, for a free dental scheme, for a massive program of public housing to home the 105,000 without a roof over their heads every night. The needs are many and they are great. The need for higher taxes on capital and the rich to pay for a society of social justice right and satisfying basic human need right now is great.

An increase in Australia’s tax take to the OECD average would increase revenue by over $100 billion annually. The fight would be over which class – capital or labour – bears the burden.

There is much to be done. The wealth is there. Tax the rich to pay for better public health and education, to address poverty and homelessness, to introduce a free universal health care and disability system. But a radical and progressive tax system – taxing the rich till their pips squeak – will produce a backlash from capital. Plan B would be to nationalise any companies involved in a capital strike or threatening one in response to increasing their tax burden. Nationalise the mining companies and the banks.

Strike; nationalise; tax the rich. Fight back against the one sided class war the bosses have waged against workers and the poor over the past 3 decades for a more just and humane society in Australia here and now.



We live in a world wracked by economic crisis in its two major blocs – The US and Europe. This is a crisis of profitability, of the global tendency of the rate of profit to fall.

Profit rates across the globe are falling. Now there are a whole range of countervailing tendencies that capital will adopt. Cutting wages; increasing the rate of exploitation through more intense work or improved productivity or both ; cutting the cost of necessities like food through improved production techniques; and destroying the value of capital; all could in the short or long term increase profit rates but with rotten outcomes for workers.

Tax comes out of surplus value. Surplus value is the difference between what workers are paid and the value they produce. So for example I might work in an industry where goods and services are made to be sold on the market. I work 8 hours per day but make enough value in 5 hours to feed, clothe, house myself etc and look after my kids. So the difference, that other 3 hours, is surplus value and goes to the boss because they own the factory, the machines, the building, the land, etc.

Taxes on capital come out of that surplus value, the surplus value at the heart of the system created by workers in industries that make goods and services for the market. So the state in its quest for taxes fights with all the other hostile brothers over other people’s loot. They are all fighting over the surplus value workers produce. Importantly too, the state cannot tax too much those industries where the workers produce profit by selling on the market. To do that is literally to kill the goose laying the golden egg for the state.

One way to improve the after tax rate of profit is to cut taxes on capital. Of course, with less tax revenue from capital being imposed and collected either the state can increase taxes on labour, (sometimes by shifting tax bases, for example from income to consumption) or it can cut social spending or both. Or it might consider increasing borrowings. However the examples of Greece, Italy, Spain and Portugal have probably made that borrowing/debt option much less attractive.

Neither Swan nor Abbott are going to go on a borrowing spree to fund socially necessary activities, despite the fact that Australian Government debt as a percentage of GDP is very very low compared to most other countries.

The evidence seems clear. As profit rates have fallen around the globe and are up to half what they were in the boom years of the 50s and 60s, the state has responded across the globe by cutting taxes on capital.

In Australia company tax rates have been cut from 49% in 1985 to 30% today and with various attempts to cut it further, the latest being the failed Resource Super Profits Tax whose revenue was to be used to fund tax cuts for business.

The Labor Government commissioned then Treasury head Ken Henry to examine Australia’s Future Tax System. The Henry Tax Review in 2010 recommended a cut in the company tax rate in the short term to 25% to keep Australia in the front part of the pack of OECD countries.

Our Canberra comrade, Peter Jones’, has analysed the Australian rate of profit and concluded that it is at its highest perhaps since at any time after WWII. This is built on very high profit rates in mining and banking. So the Australian trend has been the opposite of that of the rest of the OECD. Yet still Australian business want tax cuts. This is because they don’t understand their own system; they want to retain their profitable position vis-à-vis the rest of capital; Australian capital depends on foreign investment and that is sensitive to headline company tax rates; and because the bosses’ ideology is the more money in their hands the better off society would be. Both major parties have accepted that ideology. So the last 30 years of neoliberalism has been a transfer of wealth from labour to capital. Cutting taxes on capital is part of that logic.

The very high profit rates in Australian mining – the rate of return is on average 20% per annum in mining – was behind the Resource Super Profits Tax. But Rudd Labor wasn’t going to use the $12 billion annually from this for much social spending. Much of it was going to be used to cut company tax rates. The RSPT was effectively a proposal to redistribute to all of capital the extra ‘unearned’ or ‘undeserved’ profits the mining bosses were making because of the barriers to entry into the industry like the massive capital costs involved in successfully exploiting a mine, the finite nature of the resources and high demand from China and other places, and the monopoly that is private ownership of land or state ownership of minerals.

The RSPT would have been at a rate of 40% on all super profits on all minerals. The mining bosses mounted a dishonest campaign against it. The ALP abandoned its traditional social democratic role of attacking some capitalists for the benefit of capital and rolled Kevin Rudd. The new PM, Julia Gillard, negotiated a settlement with the big 3 mining companies, BHP, Xstrata and Rio Tinto.

The new tax, the Minerals Resource Rent Tax, applies only to coal and iron ore and its effective rate is only 22.5%. Instead of raising $3.7 bn (original estimate), or $2 bn (revised estimate, it raised just $126 million in the first six months, of which $78 million is from BHP. This is chicken feed for BHP.

Back to Peter Jones’ analysis of the Australian rate of profit being at its highest perhaps since any time after WWII and this being built on very high profit rates in mining and banking. If that is the case then the argument for taxing mining and banking more (and thus to mimic the effects of competition by reducing the return at least partially to the average profit rate) is very strong. Of course we want the money to be spent on public health, education, transport etc etc, i.e. for the benefit of workers, not as Labor wants as company tax cuts for bosses.

Irrespective of what is happening with Australian profit rates, falling global profit rates have seen governments around the world cut company tax rates and this will force a future Australian government to do the same to ‘remain competitive’, or ‘internationally competitive’ or whatever the buzz phrase is. As a capital importing nation the headline company tax rate is important for Australia in attracting highly mobile foreign capital.

OK, let’s get in to the juicy bit of the talk. It is not just business and other pressure on governments to reduce company tax rates that is important. That is a systemic response to falling global profit rates.

As well, competition forces individual companies to try to cut all their costs to improve their after tax profits. One way to do that is obviously for a company to cut its own tax bill. If it can pay less tax than its competitors who pay the standard or normal rate, it gets a competitive advantage over them.

So companies do all they can to avoid tax. Sometimes this is through specific government tax concessions, (which all taxpayers who fall within the criteria benefit from) and sometimes it is through tax avoidance arrangements.

Who here works? Good. And you all pay tax? Good. Who here has drunk coffee at Starbucks? I ask because just remember this the next time you are ‘enjoying’ their delights. You pay more tax than Starbucks. It has been in operation in Australia since 2000 and in that 12 years has paid no income tax. Not a cent.

I would like to introduce Twiggy Forrest. Twiggy owns Fortescue Metals Group. BRW Rich list has him as being one of Australia’s richest men with wealth estimated at over $3 billion. The photo is of Twiggy demonstrating against the Resource Super Profits Tax. In the last 16 years guess how much income tax FMG has paid? Zero. Zilch. And with $700 million of accumulated losses FMG won’t pay tax in the next couple of years either.

Sitting here in the front row too is Nathan Tinkler. He is a mining man and in 2010 was listed on the BRW Richest 200 list. Nathan now lives permanently in Singapore, in fact in the same street as Gina Rinehart. In court proceedings last week Nathan declared his taxable income in 2010/11 was just $9000. This is below the tax free threshold of a bit over $20,000. So he pays no tax. Everyone in this room who works fulltime will have earned more than Nathan Tinkler and paid more tax. But not to worry. His wife just happens to have a trust with assets of over $1 billion and she gives him money to live on every few months. Talk about lucky eh?

Did anyone use Google today, perhaps to check out my talk time, or details of Marxism? You can put ads on Google by contracting with Google Ireland or now Google Singapore. Google has revenue from Australia of between $1 and $2 billion a year. Last year it paid just $74000 in tax (i.e. its tax bill was less than 1% of its revenue).

Google has tax avoidance arrangements around the globe. Its Chairman Eric Schmidt defended his company’s tax avoidance activities around the globe, activities which have seen it funnel almost $10 billion into Bermuda, saving $2 billion in taxes. He said:

I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.

The company isn’t about to turn down big savings in taxes. It’s called capitalism. We are proudly capitalistic. I’m not confused about this.

And that is the point. Competition forces them to seek legal and sometimes not so legal ways to reduce tax. They want more and more of the profit workers have produced to reinvest. As Marx said: ‘Accumulate, accumulate! That is Moses and the prophets!’

Viewed from the point of view of the individual capitalist tax is a crime against accumulation.

Kerry Packer expressed this logic at a Senate hearing in 1991 when he said:

Of course I am minimising my tax. And if anybody in this country doesn’t minimise their tax, they want their heads read, because as a government, I can tell you you’re not spending it that well that we should be donating extra!

So how much company tax does business in Australia pay? About $50 to $60 billion a year (depending on the impact of the GFC) out of the $290 billion in Commonwealth taxes collected. For individuals the figure was about $120 billion of the 290 billion of Commonwealth taxes.

According to the Australian Bureau of Statistics ‘income taxes levied on individuals in 2010–11 represented 39% of total taxation revenue. In comparison, income taxes levied on enterprises represented 18%. GST revenue ($46 billion) represented 13% of total taxation revenue for all levels of government.’

Remembering that Commonwealth taxes make up 80% of all government revenue in Australia, individuals pay about half the Australian government revenue and enterprises 22.5%, while the GST makes up 16% of Commonwealth revenue.

So, most government revenue comes from workers, either through income tax or GST. The tax on workers comes too out of surplus value – either directly for workers in the productive sector or indirectly for workers in the non-market sectors. In that surplus value 5 hours 8 hours example the five hours pay is after tax pay, in other words is a deduction from the 3 hours surplus value.

The level of tax on workers can’t be so high that it cuts their after tax wage too much, to below for example the level at which they can afford food, housing, clothing, transport and raising the kids. Workers have to have enough after tax income to buy the necessities of life. If workers are being taxed too highly they might fight for better wages to improve their living standards.

Of course the alternative to increasing taxes on workers (which the Henry Tax Review specifically recommended) is to cut government spending on public services like health and education, transport and so on. Another is to flatten the tax rates so the capitalists, the rich, pay less tax and increase tax on the rest of us. That is precisely what the Henry tax review recommended – a flat tax rate between $35,000 and $180,000 (covering 97% of individual tax payers). However this would have meant an increase in tax on workers on incomes between $37,000 and $94000. Wayne Swan might be slow but he isn’t a political fool. He rejected this. Nevertheless it shows you where the long term thinking of the bourgeoisie is heading – flatter tax rates for them. Less tax for them, more tax for us.

Henry also recommended a broader based land tax and a move to further taxing consumption – the GST basically – because this was efficient. He was looking for higher taxes on workers and different bases to get more out of us and so to give government the revenue to spend on social services or to cut taxes on capital.. There has been real pressure from business, academics and the like to broaden the base of the GST to include fresh food, health and education and to increase its rate to 12.5%. That would give government the money (about $20 billion) to cut company tax rates.

According to the ATO, between 2005 and 2008 40% of big business (turnover greater than $250 million) paid no income tax. The figure will be larger after the GFC. The number of companies who are non-taxable is 61%, an increase of nearly 5% over the previous 2 years.

Some industries are worse than others. The mining industry is the industry with the lowest number of taxpaying businesses of any. 73% of mining companies are non-taxable.

No doubt someone will ask about the carbon tax. OK, carbon pricing is a market solution to a problem the market created.  It won’t work because it needs a non-market solution to address the enormity of the problem. It is an attempt to cut workers’ living standards to help pay for the environmental crisis of capitalism.

Further, the rate of tax – $23 a tonne of CO2 emissions – is too low to generate a change to renewable energy. The Greens estimate it would need to be $70 a tonne to make wind farms efficient, and over $100 a tonne to make solar farms cost effective.

On top of that the dropping of the floor price and the move to an ETs, join gin with Europe in 2015 means the price here will drop to whatever the EU price is. It is currently between $6 and $10 a tonne.

Large polluters receive compensation of up to 94.5% of the cost of the scheme to them.

Further Tony Abbott may have, or at a second go double dissolution may win the numbers to abolish it.

So what can be done?

According to the OECD Australia is a low tax country. We are in a group with the US, Korea and Turkey with total tax revenue around 25% of GDP. The OECD’s figures, and trends (especially over the last decade) show that Australia is a low tax country – consistently about 5% below the OECD average and in the group of comparable countries such as the US, Korea, Turkey and Japan. For 2010 (2011 figures should be out soon) Turkey and Japan and Ireland were slightly higher than Australia in terms of their tax to GDP ratios.

Since the GFC the gap has widened a little to about 7% below the OECD average, with the extra 2% perhaps explicable by the fall in company tax receipts and GST and the slowdown in the mining boom. This also means, and given there isn’t much Government debt (despite the crap both sides go on with) and that judged as a percentage of GDP government spending in Australia is low.

The tax capital pays is fairly low compared to the headline rate. Remember the campaign during the mining tax row in the days when Kevin Rudd was PM? The effective tax rate for mining companies is 13% to 17% of their accounting income. For companies generally, despite the fact the headline rate is 30%, the overall effective rate is 20%. For workers it is 22% on average.

Neoliberalism has been about shifting wealth from labour to capital to address falling profit rates.

The share of gross national income going to labour is at its lowest and that to capital its highest since records began to be kept.

The long slow playing out of this process in the tax field has been to flatten tax rates, reduce tax burdens on capital, shift taxing to consumption in part from income, all with the view to improving after tax profits.

So now we have an outline of an argument. As profit rates have fallen because of the way production under capitalism is organised the other members of the band begin to demand that the state cut taxes on capital and slash public services to stimulate growth. Cutting company tax rates is a countervailing tendency to put more profit in the hands of capitalists.

Neoliberalism arose in the 70s in response to the collapse in profit rates in the developed world in the late 60s and early 70s and the failure of Keynesianism to address the crisis. In the UK and US the political expression of this new philosophy of a strong state to impose the market and curb unions and workers and shift more wealth into the hands of the ruling class was Thatcher and Reagan. In Australia it was the Hawke Labor government whose strategy was to lock workers into wage cuts though managed capitalism and class collaboration, i.e. through the Accord.

The results have been successful from Australian capital’s point of view. But they want more, to retain their seemingly exceptional profit rates, wealth, income and good position in the global economy, and in part this requires remaining competitive internationally. Indeed some studies indicate that the US tax policy and direction and trends flow through to other countries over time.

That means further cutting tax rates and taxes on capital. The consequence of distributing more wealth to capital and the rich is increasing inequality.

In this regard the OECD Divided we stand and the ACCOSS poverty indicator are sober reading. Inequality has been growing across the developed world and that includes Australia. The tax system in Australia has been part of this process to increasing inequality with flatter taxes, shifts to consumption taxes, and various tax concessions favouring the rich and capital.

Here are some indicators from ACOSS and others of this inequality, and inequality that could in part be addressed by taxing the rich.

The number of people living in poverty, according to ACOSS is 12.8% of the population, up for the 8% in 1994.

2.2 million Australians, including 600,000 children, live below the poverty line.
In Australia:

The richest 20 percent own 62 percent of the wealth.

The poorest 20 percent own less than one percent.

The richest 1% of Australians saw their share of total national income almost double between 1980 and 2008:

1980: 4.8%
2008: 8.8%

The top 10% saw their income grow 4.5% per year since the mid-80s.

The bottom ten percent grew by only 3% per year.

If the average wage had grown at the same rate as the income of the top ten percent it would now be about $110000 per year rather than the $75000 it is.

According to the ACTU ‘[h]ouseholds in the top 20% of the income distribution pay an average of 34.5% of their incomes in taxes; households in the bottom 20% pay 26.7%.’
This seems a small difference between the rich and poor for a supposedly progressive tax system.

Now remember that that top 20% own 62% of the wealth and the bottom 20% own less than 1%.

Let me give you a more personal example. In the 40 minutes I have been speaking my estimate is that Australia’s richest person, Gina Rinehart, with wealth of $17 billion, has gained more than a worker on the minimum wage on $30000 earns in a year. In the hour we are here she will receive more than a worker on the average wage earns IN A YEAR. Think about that. Someone’s working life for a year. Getting up every day to put in 8 or more hours of work, day in day out for the whole year and the result is the same in money coming in as Rinehart gets in half an hour or an hour.

A progressive tax system could help address these results, although it won’t undermine the societal and economic drivers for growing inequality or the massive disparity in wealth unless a much more radical tax system were to come into being.

But before we look at specific ‘tax the rich’ proposals in brief, a word to all those who might think taxing the rich is a reformist or liberal or other non-socialist slogan. Let me quote Lenin:

We see that the demand put forward by the Social-Democrats—the complete abolition of all indirect taxes and their replacement by a real progressive income tax and not one that merely plays at it—is fully realisable. Such a measure would, without affecting the foundations of capitalism, give tremendous immediate relief to nine-tenths of the population; and, secondly, it would serve as a gigantic impetus to the development of the productive forces of society by expanding the home market and liberating the state from the nonsensical hindrances to economic life that have been introduced for the purpose of levying indirect taxes.

So what would the beginnings of a progressive tax system here and now look like? How can we squeeze the rich till their pips squeak (to use a phrase from a right wing UK Labour Party Treasurer in the 1970s)?

An increase in Australia’s tax take to the OECD average would increase Government revenue by over $100 billion annually. The fight would be over which class – capital or labour – bears the burden.

Abolish the GST (cost $50 billion) and make the tax system sharply progressive. This could include a rent tax on all companies receiving rents – banks, all mining companies for example. That is about $20 billion a year. End the $15 billion disguised tax grant to very rich superannuants. Treat capital gains like all income, i.e. tax it all. Abolish all business tax concessions. There’s $50 or $60 billion for you a year before we even begin to talk about wealth taxes, inheritance taxes, and making the income tax system steeply progressive and fixing up the company tax system and increasing the company tax rate.

In France Jean-Luc Mélenchon from the Left Party proposed a 100% tax rate on those earning more than about $360,000. Easy to do here too. Make the rate on those earning more than $250000 a year 100%. This is the top 1% of taxpayers. And have a steeper rate for high incomes underneath that. At the moment the rate for those with incomes greater than $180,000 is only 45%.

Increase the company tax rate to 35% – an extra $5 to ten billion. Halve dividend imputation the tax credit shareholders get for company tax paid – another ten billion. What to do about all those companies who don’t pay and haven’t paid tax for years. Tax all big business on a percentage of their gross income, not taxable income. Impose in other words a minimum company tax on companies for the privilege of exploiting us.

Capital may react to attempts to tax them more with a capital strike or threat thereof.

Nationalise them under workers control as part of plan B. But that has to be part of a wider class struggle for improving living standards and defending jobs and social services.

One reason neoliberalism arose as a philosophy and practice was the quiescence of the working class. From the Accord onwards strike levels have collapsed in Australia.

As Jade Eckhaus writes ‘… in the 1970s annual strike days per 1000 workers varied between 600-1200…’ In 2011 and before that it was ‘generally less than five [!]’ Last year it was ten, mainly because of strikes by teachers and nurses and building workers. But you get the idea. Strike levels today are less than 1% of what they were in the mid1970s. Even compared to the last years of the Keating government the strike levels today are only about ten to 20% of strike levels then.

It is this loss of class combativeness, this lack of class struggle that helps explains the neoliberalisation of Australia and two consequences for tax – the capture of tax policy by the one percent and growing tax inequality, itself a subset of growing inequality and a lack of will to tax the rich.

Let me finish off with two points.

Taxing the rich will only be on the agenda, and using the extra money to improve public health, education, transport and address climate change also will only be on the agenda with a resurgence of class struggle by workers in Australia.

An upsurge of class struggle will be about workers improving their living standards in all sorts of ways – increasing real wages, creating jobs, making workplaces safe. Taxing the rich and big business and using the money to benefit workers and the poor is part of that campaign to improve the living standards of workers by getting back some of the surplus value we create for the bosses.

In doing that a more progressive tax system can be put back on the agenda.

There is much to be done. The wealth is there. Tax the rich and business to pay for better public health and education, to address poverty and homelessness, to introduce a free universal health care and disability system. But a radical and progressive tax system – taxing the rich till their pips squeak – will produce a backlash from capital. Plan B would be to nationalise any companies involved in a capital strike or threatening one in response to increasing their tax burden.

Nationalise the mining companies and the banks.

And included in Plan B would have to be price controls to stop companies just passing on any tax increases to workers in higher prices.

Strike; nationalise; tax the rich. Fight back against the one sided class war the bosses have waged against workers and the poor over the past 3 decades for a more just and humane society for workers and the poor in Australia here and now.



Comment from Dave
Time March 25, 2013 at 5:29 pm

Hi John, just a question or two on this line ‘Tax comes out of the wealth, the extra value, what Marx called surplus value, which workers create.’ I don’t really understand this. The tax I pay, and all workers pay, doesn’t as the money that we get for wages is the costs of variable capital that conceptually exists ‘before’ the production of surplus value. Secondly whilst I don’t know enough about how tax works for capital are businesses only taxed on their profits or do they pay tax on expenditure – wouldn’t then tax be part of the costs of production , part of constant capital?

Comment from John
Time March 26, 2013 at 8:16 am

For companies it is tax on profit. About $50 to $60 billion a year. There are state and territory royalties (taxes on production, not profit) on resources, and I am working through that in a discussion of rent and tax. The main company tax, the tax on profit, looks to me like it is out of surplus value, filtered through the exchange process. but even a tax on business expenditure is tax on surplus because it is funded by the portion of surplus value each industry and then company can capture in the fight over looting our wealth. The question of tax on workers is an interesting one and one I am trying to nut out. I don’t see how tax we pay can be the cost of variable capital. Isn’t the cost of variable capital the after tax wage? In fact given that gross wages are tax deductible, presumably the cost to the boss of variable capital is actually the gross wage less the employers’ marginal tax rate applied to that amount, plus on costs like superannuation. Taxes can reduce the after tax wages workers are paid to below that needed to cover necessities etc. I have the five/8 hours model in my mind. If say taxes increase the amount of time a worker has to work to cover their living costs, from 5 in the example say to 6 hours, that means that only 2 hours is left to go to the boss. Now that assumes that workers actually fight to increase their wages to reflect the tax change. If they don’t, then the reality seems to be that after tax the workers end up with 4 hours recoupment to cover 5 hours necessities (to use shorthand).

Comment from Dave
Time March 27, 2013 at 10:26 pm

But that would make work a direct relationship between workers and capital and the state at the point of production… Variable capital is simply the amount a capitalists spends on labour. It is not impacted by what a worker then has to spend their wages on ( at this level of analysis)….

Comment from John
Time March 28, 2013 at 7:49 am

There can be. Simple example. I work 8 hours and 5 hours is paid to cover my needs to come back to work – food, housing, clothing, transport, the kids etc. The other 3 hours I work for the boss, the surplus value. The state comes along and taxes me (as hapopened during WWI, and was extended during WWII and the period after). The question of who bears the burden of that tax depends on class struggle. I could fight for the retention of the necessary labour at 5 hours, passing it on to be deducted from surplus value. Or I can accept a cut in terms of the tax so now my pay is 4.5 hours socially neccassary, 3 hours surplus value and 1/2 an hour to the state.

Comment from Dave
Time March 28, 2013 at 7:02 pm

Hang on. I think you are compounding things here. Surplus value is what is left over minus v + c. The size of v is determined by generally historical conditions. If the state demands more or less of my wage for taxation that doesn’t impact the value extracted at the point of production rather it is a shift in these general historical conditions ( a very complex process). Also I am confused by you use of necessary labour here ( I’ll duck over to Capital in a second) do you mean socially necessary labour time which is the value of the commodity and thus includes v+c+s? Also of course nothing that happens in volume 1 really describes capitalism as it is ( except for the historical chapters). The battle over taxation is a battle that happens postfestum doesn’t it? Wasn’t that your original point?

Comment from Dave
Time March 28, 2013 at 7:34 pm

ps…I will go off a reread the appropriate sections of Capital to see how Marx’s uses the word necessary…

Comment from Dave
Time March 29, 2013 at 10:36 am

Hi John, Marx does use necessary in the way that you do….but I think it is problematic as it creates a confusion. Is the necessary part of the work day that that covers the time to pay for the money spent on variable capital or worker’s subsistence? At this level of Marx’s argument it is fine to see them as equal but we need to go beyond that to understand capitalism as reality. So from late 1940s -1970 wages were higher than workers’ expenses – hence the high rate of savings; since the late 70s they are lower….and thus non-wage incomes like credit and investments have come to play a larger part in people’s lives…

Comment from John
Time March 29, 2013 at 1:03 pm

Well, labour power is a commodity just like all the others so it is technically the socially necessary labour time whoich is its value, and that includes subsistence plus other factors like skill, education. The actual price, the wage, will vary around that accoridng to supply and demand, and classs struggle. Was there a wages ‘overhang’ which workers used to invest in savings etc. I don’t know. I am thinking about mine workers. There average wage (across all employees, so managers as well as the people who do the work) is just under $150,000 from memory but the value they create is $800,000? Not sure of the exact figures but somethign like that. Obviously not a Marxist analysis but that increased wage is because of demand and supply above value and allows these workers to perhaps save, or spend on bigger mortgages, or pay for the increased rents in the minign areas.

I have to sit down next week and work this through more thoroughly. And the week after, and the week after. There is a lacuna in Marx’s wriitng, a gap about tax.

Another intersting thing I am exploring is rent taxes. Volme III of Capital deals with that but Marx spends hundreds of pages on monopoly and the like and then goes into the organic compositon of capital. His OCC argument for agriculture in the 1800s doesn’t apply to mining in Australia in the 21 st century soi I am going to back to ideas about landlords as monopolists – in this case the state and terriotry governments and the Commonwealth government as an after the event landlord.

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