Karl Marx and the myth of ‘fair shares’

Marx and Myth of fair shares

The Panama Papers have caught the ‘global rich’ with their blind trusts exposed and this is supposed to tell us something, but what? Are the tax cheats just greedy parasites wanting to shirk their social responsibility of paying their ‘fair share’ of taxes? After all are not all citizens obliged to pay their ‘fair share’ to pay for the state and all its services to keep the system going?

If you think ‘greed’ is the problem you haven’t been paying attention for the last 150 years during the rise and fall of capitalism.

Taxation is based on the myth that under capitalism everyone is equal. But some bourgeois citizens are inherently more equal than others. Most work for a living while those who own the means of production live off that work.

So inequality under capitalism has nothing to do with greed and everything to do with class. One class creates the wealth, another expropriates part of it as profit. How can that be “fair”.

Marx prescribes a steep “progressive income tax” in the Communist Manifesto but does not mean that taxation has anything to do with “fairness”. At best it makes the capitalist forfeit some small part of his profits in order to preserve the profit system.

That is because Marx see taxation as part of the distribution of income that results from the “unfair” class relations where one class produces and the other expropriates the wealth.

So while Marx definitely calls for “Taxing the Rich” in today’s language, this is part of a program to prove to workers that it is futile to expect that capitalist exploitation can be remedied by progressive taxes.

Exposing “blind trusts” to the daylight can only help erode the blind trust that workers have in the “fairness” of capitalism.

But for that to happen workers have to fight for ‘progressive’ taxes and not submit to the deliberate strategy of capitalists to increase the rate of exploitation in part by paying no, or token, taxes. Technically, this means that while all taxation comes out of the value productive workers produce, the burden of taxation can influence how much goes to wages and how much goes to profits.

That is why the bosses always use their state apparatus to shift the burden of taxation from profits to wages, increasing their share of the total value produced by labour.

By resisting this strategy workers learn that tax evasion is not about bosses greed but about survival of the system itself. The bosses fear taxes as the harbinger of their own class expropriation. They are driven to hide their incomes as the rate of profit falls and risks a meltdown in the world economy.

Here is the proof that tax evasion is not about greed but about survival. When surplus capital that cannot be invested productively to create more value, capitalists have to resort to gambling on existing commodities to the point where gambling becomes more and more risky and ends up in global busts.

Stock markets plunge as profits fall and dividends evaporate. Desperate attempt to prop them up by firms and states buying up their own shares just creates more debt with no prospect of being paid off.

Money is hoarded rather than invested when interest rates are negative, and bond yields are nil. So if you are going to hoard money where better than secret offshore tax havens where the value of you money erodes less rapidly because you pay no tax?

Capitalism is collapsing as the hoarded profits created by generations of workers are now under threat of going ‘poof’ like a bonfire of paper. This is not going to be pretty.

So when we cheer at the exposure of tax cheating bosses we should reflect that this is only a small step in exposing the rotten, corrupt, destructive society that is capitalism today.

That is why we should take Dr Marx’s prescription, that the solution to capitalist inequality cannot be the mythical “fair shares” of the tax burden but the expropriation of all the past surplus value of workers hoarded by the capitalist ‘elite’ that secretes its piles of wealth in offshore havens and makes ready to flee the inevitable rise of a workers revolution bent on expropriating their wealth.

Expropriation of capital will allow a socialist society to produce and distribute wealth according to the only “fair share” principle: “From each according to their ability, to each according to their need”.