How is lowering taxes "socialist"?

Question

In the current leadership contest for the position of leader of the UK's Conservative party, one of the differences between the two candidates is that Liz Truss is promising to lower taxes while Rishi Sunak is not (at least not now). Sunak accused his rival of having a "socialist" plan because of her desire to lower taxes:

This something-for-nothing economics isn’t Conservative. It’s socialism.

How does that make sense? Socialism is all about a strong state with high taxes providing a lot of free services to its citizens. It is usually the parties that are right-of-center, such as the Conservatives in the case of the UK, who instead want to lower taxes and reduce public spending.

I would understand a conservative politician calling the raising of taxes "socialist", but lowering them? Is there some definition of Socialism that would allow calling the lowering of taxes a socialist policy?

Answer 1

As far as I can see it, the controversy was about the likely impact of the proposed tax cuts. Liz Truss thinks that the tax cuts may increase tax income and offset expected tax income losses in the long run by increasing overall economic activity. Rishi Sunak doubts that. Both are hesitant to cut spending even more (probably would be not very popular, even want to increase spending for example on defense) and therefore must somehow explain how the expected gap in government income by a potential tax cut is compensated. Liz Truss puts her trust in the future, Rishi Sunak is rather more cautious.

Rishi Sunak thinks that Liz Truss is basically just showing empty promises and not credible policy. He compares that to Socialism, which also sold lots of promises that never materialized. In socialism, heaven was always one 5-year-plan away. With the promised positive effect of tax cuts it may be the same.

To clarify: tax cuts are not socialism, but tax cuts without corresponding spending cuts (unfunded tax cuts) may be seen as fiscally irresponsible. Further debt financing (with already 95% debt of GDP in UK) might be risky. Socialism was just a buzzword, in this case meant in a pejorative way, i.e. socialists would have no idea about economy, would be fiscally irresponsible and would promise too much (from a Tories point of view).

That's how I understood the debate between Rishi and Truss.

As for socialism itself: If the means of production are owned by everyone (equally) then it hardly makes sense to speak of taxes. After all government cannot take something that's already theirs or everyone's. Taxes are then just a mean to manage behavior and I see no reason why taxes in socialism should not be 0%, 100%, any other value or that there must be a notion of money at all. And if you want to give somebody less and somebody else more in socialism, just do it. No need to have taxes for that.

The only thing that cannot be done easily is giving more to everyone.

Coming back to modern day left/social (but not socialistic) policies: a more progressive tax system might be desirable for the left, i.e. low or negative taxes on low incomes and high marginal tax rates on high incomes. But that's probably not what Liz Truss had in mind.

Answer 2

It isn't socialist to lower taxes, and it isn't socialist to raise them either - at least not inherently.

To understand why, it's necessary to discuss what socialism actually is.

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Socialism is an economic philosophy which advocates for social ownership of the means of production, as opposed to private ownership.

State-oriented conceptions of socialism, including reformist ideas such as social democracy, typically conceive of state ownership as public - with the state being considered a proxy for the people.

To that end, socialist states may increase taxation to fund state-owned industries or services. As states which characterise themselves as socialist typically undertake a greater amount of activity, taxation increases have become associated with left-wing government.

However, in that case, it isn't the increase in taxation itself which is socialist - it is the system which the increase in taxation supports. It is possible to increase taxation for reasons which are not socialist, because socialism is not simply when the government does things.

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There is an (often intentional) misinterpretation of socialism which stipulates that it is when "free stuff" is given out, whether or not there are enough resources to sustain this behaviour.

Sunak is weaponising this misinterpretation, and leveraging it against Truss.

In the clip, Sunak implies that Truss' proposed tax cuts constitute "free stuff". They're a policy which he claims to be something-for-nothing - to be unsustainable, due to his belief that they will fuel inflationary pressures.

Therefore, through the lens of the misinterpretation, the tax cuts can be construed as socialist. However, as we understand the actual properties and philosophy of socialism, we can determine that they are not - because they don't intend to advance social ownership.

Sunak chose to leverage this misinterpretation because "socialist" is effectively used as a discrediting insult amongst conservatives. Shortly before, Sunak had also been accused of "socialist policy" for tax increases which he had pursued as Chancellor - an accusation which is similarly ill-founded.

Answer 3

Lowering taxes is not socialist in any way - this is simply the game of politics.

Conservative voters - in the current "meta" - tend to absolutely loathe anything that can be labeled as "socialist". One Conservative politician painting another as socialist is simply an attempt to make voters vote for the former instead of the latter. Nothing deeper than that.

Lower taxes can be made to appear socialist with some shallow plausibility, because socialist policies generally involve governments promising direct benefits to citizens, and a tax break is a direct benefit to citizens.

Answer 4

It's not about taxes, it's about deficits.

To understand Rishi Sunak's claim you need to understand the background against which it is made. In 2010, when the Conservatives entered government against the backdrop of the Credit Crunch, they argued at length that the main thing that needed to happen was a cut in spending to "balance the books" together with misleading analogies like claiming that the "country's credit card is maxed out". On the basis of this analysis, they launched a programme of austerity. This programme completely failed to do anything about the UK's debt. This was followed by the pandemic during which Rishi Sunak - as Chancellor - presided over a sharp rise in national debt. He responded to this rise in debt - as well as some other spending increases - by raising taxes in various ways. During all this he has repeatedly claimed that he wants to cut taxes.

So Rishi's position is that taxes cannot be cut because the debt and deficit is the priority, not because he thinks tax cuts are bad or socialist. This reflects the position on which the Conservatives contested the 2010 and 2015 elections. His claim that Truss' position is socialist is based on it taking the view that rather than repeat this approach of "balancing the books" first, she wants to boost growth¹ and then use the proceeds of growth to eliminate the deficit.

The claim that this is socialist isn't based on any kind of real economic analysis but is simply an attempt to associate her position with the earlier position of the Labour party. He's drawing a contrast between his position and hers on the basis that his follows in a true Conservative position of cutting the deficit and debt² and hers is what he asserts Labour would do.

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¹ I'll leave as a moot point whether or not her plans would actually produce this growth.

² The premise that Conservatives balance the books and Labour increase debts is oft repeated in British politics, despite the fact that it's totally unsupported by the facts.

Answer 5

It was a smart trick to blame socialism for the failures of capitalism.

Sunak already knew Truss' proposals, so he prepared in advance his comment.

Several answers pointed out that Sunak was referring to the policies that will result in deficits and debt accumulation. But Liz Truss' proposals are nothing else, but the old Reaganomics. Reagan reduced dramatically the taxes with the same promise and he ended up amassing a huge debt, the same happened after Bush tax cuts. Furthermore the idea that if you lower taxes revenues will increase come from the Laffer curve widely promoted by fanatics of capitalism turning a blind eye to the fact that nobody ever took care to properly estimate the correct values for the curve nor tried to determine how to properly adjust those values depending on the context.

I don't know if Something-for-nothing economics is really capitalist (or conservative), but for sure it has been part for a long time of the propaganda of the current capitalist system, from the Laffer curve to trickle-down and the reduction of red tape.

Apart from that the real conflict between socialism and capitalism is over who pays the taxes not on the amount of the deficit.

Socialism advocates more spending, that is true, but socialism in itself does not advocate spending more than the revenues of the state. Of the original socialist thinkers nobody proposed a policy based on accumulation of debt, this is a feature of the modern lemon socialism that became prominent with the backing of the capitalist media.

Answer 6

I think Trilarion's explanation is the correct one for what Sunak meant, in particular because he also said

We’ve got to the point where even Keir Starmer is attacking leadership candidates for peddling the fantasy economics of unfunded promises.

If we’re not for sound money, what is the point of the Conservative Party? It’s the most Conservative of Conservative values.

So from that, it's somewhat clear that he is trying to paint some counter-candidates as having an understanding of economics even more "fantastic" (in the utopian sense of the word) than that of Labour (aka "socialists").

Yes, it is a weird way to re-define socialism... (And yes, it's a "no you" kind of argument, on the rhethorical level.)

Answer 7

There's a wide scale of 'socialism', from a complete lack of tax-funded services right through to full-blown communism.

The interesting thing is Sunak's use of 'socialist' as an insult. Though common in American politics, it's not much heard in the UK, which is actually quite proud of being a socialist 'Welfare State'. This is particularly ironic, coming after a couple of years where both UK and US governments (under both Trump and Biden) have spent out on social support beyond the wildest dreams of their most left-wing citizens!

But he didn't just throw out a buzz-word as a casual insult. There was explanation.

This something-for-nothing economics isn’t Conservative. It’s socialism.

Tax cuts are a classic Conservative policy. But so is refusing to commit to unfunded spending, particularly when it might benefit the masses. Truss' proposal may APPEAR Conservative...

We are witnessing an interesting campaign situation. A private election - Conservative party members only are the electorate at this stage - is being played out very publicly. The candidate who sways the choir may not be making themselves popular with the congregation. But hey! Surely EVERYONE likes tax cuts?

Answer 8

It's just a bit of wordplay. The key part being:

This something-for-nothing economics isn’t Conservative.

True!

It’s socialism.

Ehhhh. He is basically making the point that on a scale which only measures socialism or conservatism, the proposed measure would weigh in on the socialist side, which I would suppose is true, in the sense that government run ("public") programs are not getting cut. A true conservative stance would be to cut both the taxes and the spending. (Although I would argue that fiscal conservatism died out entirely through most of the Western world somewhere in the 1980s.)

But he's certainly being loose with words by suggesting that socialism is "something for nothing".

Then again, given the rate at which most western nation's debts have been rising, he could have a point. Outside of a handful of nations, social spending programs have been funded rather strongly by future debt ("nothing").

Answer 9

To be clear: I am not taking Sunak's side on this. While it is trivially correct to say lower taxes does not mean socialism, it is also incorrect to claim that socialism means higher taxes. The accusation concerns deficits - and yes, see my last paragraph

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Socialism is all about a strong state with high taxes providing a lot of free services to its citizens.

How would you characterize Greece's policies up to their financial collapse? Lots of social spending, little tax revenue. So they ran what many would consider to be a socialist-style policies without high taxes.

Left-leaning states can choose to run on heavy deficits to finance their social programs while not increasing tax overmuch (kicking the can to future generations).

This was what Trudeau Sr. did in Canada during his tenure.

It's not socialism per se but it is spending irresponsibly, if maintained on an ongoing basis.

Now, one could argue that there are also risks to being overly budget-oriented in terms of great economic stress (Keynesian theory), so it's not super clear who is right here.

But it is clear what Sunak is claiming, by using a loaded, emotional term calculated to appeal to Conservatives: "I was finance minister. I know how to manage money. She doesn't".

Socialism tends to mean spending. Which can be paid for with taxation. Or deficits.

p.s. "left" and "right" is getting muddled anyway too since many modern conservative parties have abandoned fiscal discipline as part of their actual policies (lower taxes, spend a lot), preferring to rebrand instead on "national identity", immigration and putting off climate change action.

Answer 10

Tax incidence
There are many different taxes, and even the taxes applicable to all groups of population are not uniform across the incomes and occupations. In this sense, lowering taxes is meaningless, unless one specifies which specific taxes are to be lowered. Many socialist countries do have lower or no income taxes for the low income population and much higher taxes for higher income groups. For example, in France only about 43% percent of the households are paying taxes (note that this does not include social charges for healthcare, retirement, etc., which are payed by everybody.)

Higher taxes do not mean higher tax revenue
Another common misconception is that higher taxes automatically mean more money to redistribute. In fact, higher taxes may suppress economic activity or force its migration to other countries and/or tax heavens, thus resulting in lower tax revenues. This is popularly summarized by Laffer curve, although in reality the shape of the curve and how the revenues respond to changes in tax rates is a rather complex matter. In other words, when incomes are already heavily taxed, lowering taxes may result in higher tax revenues that can be redistributed to the lower income groups. Knee-jerk support for raising taxes is what Margaret Thatcher meant when she said about socialist policies that [They] would rather have the poor poorer, provided that the rich were less rich.

Remark I use here term socialism in the layman sense of the word, where it means a capitalist social democracy rather than Soviet-style developed socialism.

Answer 11

Of course. The central tenant of socialism is that every person “aught to work.” (Simon)

1. “…capitalistic mode of production in its historical connection and its inevitableness during a particular historical period, and therefore, also, to present its inevitable downfall; and to lay bare its essential character, which was still a secret. This was done by the discovery of surplus-value.“ (Engels)

https://www.marxists.org/archive/marx/works/1880/soc-utop/ch02.htm

2. “…Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?” (Marx)

3. The auspices of Engels described outright sales, which would view government as a capitalist for any free rider mutable services administrations over labor.

To answer why conservatives (Christian Socialists/Saint-Simon) don’t do Socialism according to Marxism justice is because we are sex positive and ascertain the poorest’s undoing by payment installments in products (producer surplus valuation exchanged for utility, if I may, as contractor profits are kilter value with utility exchanged less valuation by said payment installments in products, or taxation and redistribution overtaking the mode of production).

4. Marx quotes Storch, here, “‘Thanks to the advance of industry and science,’ says Sismondi, ‘every labourer can produce every day much more than his consumption requires. But at the same time, whilst his labour produces wealth, that wealth would, were he called on to consume it himself, make him less fit for labour.’ According to him, ‘men’ [i.e., non-workers] ‘would probably prefer to do without all artistic perfection, and all the enjoyments that manufacturers procure for us, if it were necessary that all should buy them by constant toil like that of the labourer.... Exertion today is separated from its recompense; it is not the same man that first works, and then reposes; but it is because the one works that the other rests.... The indefinite multiplication of the productive powers of labour can then only have for result the increase of luxury and enjoyment of the idle rich.’”