Taxing Ourselves Into Oblivion

I was having breakfast with my son, daughter-in-law and grand child earlier in the week. He is 25, she is 24, and baby is 5 weeks old.

They’re both pretty successful in their jobs - both in sales, on commission, so very much performance-based - and they both work very hard. They are ambitious. They want a big house with a big family, and plenty of money to live off. Pretty normal ambitions, really, and once upon a time not so impossible to achieve.

I’m extremely proud of them both for having gone against the grain and had their first child so young. I’m also proud of how they have both adapted to parenthood. They live with me, so I see every day how utterly devoted they are, how much effort they put in, how they are learning and flourishing. The way Millie has thrown herself into motherhood and totally dedicated herself to her child is a thing to behold. Breast feeding on demand, everything. It really is a joy to see.

Because they’ve started a family young, there is a very real chance they will go on to have a very big family. They both say that is what they want.

My son, Samuel, has now gone back to work, while Millie is on maternity leave. But having both made several successful deals, and with a backlog of outstanding commission coming payable too, they found themselves between them paying £26,000 of taxes last month - 50% of the £53,000 they earned was taken, when you factor in the student loans they have to repay. (They might get some of that back at the end of the year).

To earn that kind of money in a month at such a young age is just brilliant - I see how hard both of them work, the hours they put in, early morning after early morning, late night after late night, the persistence - and I’m proud of them. It is not easy. None of their university colleagues are doing anything like as well, at least in financial terms.

With the bonanza month they both had, they could have paid off significant chunks of their student loans. But no such luck. The tax man cometh first.

Meanwhile, they are so far from being able to buy a house for their young family - not just in the area they grew up, but anywhere in Greater London - it’s a joke. I like having them live with me, don’t get me wrong, but the fact that even a couple as successful as this are miles away from owning a property of reasonable enough size to start a family makes my blood boil.

We live in a Victorian terraced house in South London that was built 150 years ago for a working-class man and his family. Yet a working-class man could never afford to buy this house now, even though it’s 150 years old - never mind the highest-earning couple in their peer group.

The most commonly given reason why people do not have bigger families earlier in life is expense. And what is the greatest expense in your life? Altogether now, “your government”. By far and away. Lower that expense and people will have bigger families again, earlier in life.

(Even the cost of housing itself - the second biggest expense in a typical life - would come down with less government - less planning permission, less building regulation, less market intervention for political ends, less fiat and so on).

Quite a few of the houses in our street are owned by the council. An old lady who lived in one of them recently died, and her house was given to a Somali family. So the taxes that Samuel and Millie are paying, and would like to have been able to use towards their own family, are being used to house another family not just from another country, but another continent never mind another culture. I’ve no doubt their needs are great. They get the house they need. We pay. How many more families not from the UK are we expected to sponsor - and delay/minimize our own procreation for?

We are literally taxing our own to enable to the procreation of others. As I say in the title, we are taxing ourselves into oblivion.

“Have you ever known taxes to actually go down?” My son asked me.

“Well,” I said. “They came down a bit in 1980s under Thatcher”.

It might feel relatively recent to me, but that was a good 15 years - half a generation - before my son was born in 2000. And even under Thatcher and Reagan, it’s worth remembering, the state actually grew.

The state continued to grow in the 90s and 00s, and, by the time you factor in all the various stealth taxes that got introduced, not least fiscal drag - perhaps the most odious of the lot - as well as currency debasement, so did taxes.

Now, because of fiscal drag, you see teachers paying higher rates of Income Tax. It’s not in any way exceptional in London to earn more than 50 grand. You haven’t got a hope of having any kind of lifestyle, if you don’t. I dread to think how many Londoners - those that work hard at least - are paying higher rates of tax. And for what?

What chance do these people have of buying a home and starting a family?

And all this money is being taken to spent on what, exactly? Not potholes, that’s for sure.

I think the question my son was really asking was, “Is there any chance taxes come down?”

Well, if you look at Britain since World War II - actually since World War I - the growth in the state has been relentless and inexorable. So the rise in taxes we must pay has been inexorable. I’m not just talking about Income Tax. As I say, I’m talking about all the stealth taxes and debasement of currency as well. Is there any realistic chance they’ll come down? Liz Truss only tried to slash government spending by two and a half percent. And look what that did.

It’s incredible to think that at the turn of the 20th century taxation - or the state - amounted to less than 10% of GDP.

Even if Reform were to win the next election, how would they realistically cut state spending by more than a couple or three percent? The institutional resistance - the blob, the civil service, the quangos, the media - would fight them at every turn.

In short, taxes are unlikely to come down by anything meaningful.

We cannot get this country purged until the currency collapses. That’s the only way I see it happening. It’s very sad.

If you live in a Third World Country such as the UK, I urge you to own gold or silver. The pound is going to be further devalued. The bullion dealer I recommend is The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. More here.

My son, who is not particularly political, observes the absurdity of it: many people who build wealth, the most productive and talented, are leaving because of high taxes, and we replace net contributors with net takers. The country is systematically driving away the people who create value while importing those who consume it. It’s economic suicide by design.

As readers of Daylight Robbery will know, I regard taxation as the best measure of freedom there is. The more heavily taxed societies - where obviously there is limited economic freedom - tend to be the societies where there is limited freedom of speech, freedom of movement, freedom of thought, freedom to experiment and all the rest of it.

Freedom of movement in the UK is limited by the cost of movement - whether it’s transport costs, petrol costs, Stamp Duty, fines, charges, new mileage taxes - all reduce movement. They’re all a tax. There might not be laws preventing movement in the way there once were if you were, say, a serf, but taxes give you a similar outcome. They restrict movement - and thus possibility - because people cannot afford to move.

You don’t need me to demonstrate how freedom of both thought and speech are being attacked. The two-tier justice system sees people committing violent crimes getting released early - indeed often not even getting convicted - while people who just said words get locked up.

I’m sorry to say it, but I don’t think even Farage and Reform can turn this one around, particularly when Farage is watering a lot of his policies down in order to give the media less to smear him with, and make himself more electorally palatable. Starmer did something not so totally dissimilar.

And if something should happen to Farage, what then? What would Reform be without him? I like Richard Tice a lot, but there is not exactly a huge queue of people waiting to fill Farage’s boots.

Tell someone about this great article.

So I come back to my point that I’ve made on these pages many times. If you are young and wanting to build a good life for yourself, and you want to be rewarded for the hard work you put in, your chance of doing that in the UK is limited. You’re best off going somewhere else. Sorry to sound negative. There are many things to be positive about in this world, but the future of taxation and freedom in the UK is not one of them.

Remember the golden rule of Daylight Robbery: fix taxation, everything else follows.

But there is no sign of us doing that.

Until next time,

Dominic

ICYMI, here is this week’s commentary - also prepping for the North American tax loss trade.

And, finally, I appeared on the mighty Tom Woods Show this week. I love Tom, and he is fast becoming one of my best buddies. Here are links to the interview on Apple podcasts, Spotify and YouTube.

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