More than half of people in Britain claim more in benefits than they contribute in tax | Is this true?

No, of course it’s not.

But that didn’t stop the Mail and other papers from making this their lead story this week, knocking financial scandals with Nadim Zahawi and Boris Johnson off the front page temporarily.

The story in the Mail comes from a report published by Civitas, a right wing organisation based at 55 Tufton Street, whose work blurs the lines between think tanks and lobbyists. Current or previous occupants of Tufton Street include The Taxpayers Alliance, Vote Leave, Brexit Central, LeaveMeansLeave, Centre for Policy Studies, Migration Watch, and the Global Warming Policy Foundation (the UK’s principal climate science denial group). The rather innocuous sounding LGB Alliance is also based there. The Institute for Economic Affairs, and the Adam Smith Institute are around the corner. GWPF have recently been forced to refer themselves to the Charities Commission over their use of charitable funds for political purposes.

The money behind these groups is opaque, but where individual organisations have been forced to reveal their funders it is often from the US, wikipedia references donors like the Koch Brothers who fund similar organisations in the US.

So if it is a load of nonsense how did the report come up with this conclusion?

The British state has lots of ways it takes money off people. Too many in my view. There is tax and NI of course, but also license fees, fines, student loan repayments, child support benefit repayments, household and business rates. I am all for making these financial arrangements simpler and more transparent.

Lots of people blame Gordon Brown for these “stealth taxes” but most of them date from decisions made by Conservative Governments to shift tax collection away form direct taxes (like income tax) and towards indirect taxes.

That is why income tax isn’t particularly high by historic levels, but we are still paying record amounts of tax:

Compare over the same time period what has happened to VAT, the main indirect tax

There are also lots of ways in which the state give back to people, not just through benefits, grants and allowances, but also through the provision of services such as healthcare, defence and education.

The report only counts tax and NI on the contributions column, but attaches a notional value to the value of services like healthcare and education. For example the contribution the state makes to someones education is counted, but the contribution the individual makes through student loan repayments aren’t.

This creates a totally misleading view of what the states takes and what it gives out. The top 10% pay 1/3 of tax, not over half which simply reflects fact that top 10% get 1/3 of all income, and the UK tax system is broadly proportional

The report gives the impression that there are lots of people who should be working who are instead living off the generosity of the state.

In reality the people who take out more than they put in are overwhelming retired. The people putting in more than they take out are mostly younger, working and paying taxes. You wouldn’t get that from the Mail or from the reactions of Conservative MPs like future Reform UK party leader “30p” Lee Anderson. .

Pensions are now the largest element of welfare spending. Partly this is the function of an increased elderly population, but also because of the triple lock on pensions, which makes them rise more swiftly then working age incomes or benefits.

So how did a story that wasn’t true find it’s way onto the front page of the papers?

Partly it helps get some of the scandals off the front page for a while, and does a favour to particular factions in the Conservative Party. Most of the scandals appearing in the press originate in these internal fights within the Tories briefing against each other.

But this is also the first step back for a particular kind of economics. It was the lobbying organisations based at Tufton Street whose were behind the disastrous Truss/Kwarteng budget. Truss was regular speaker at their events, and there was a regular movement of people between Tufton Street and Conservative Party political advisors.

Their ideas have been reduced to ridicule, so they need to find new ways to re-introduce them back into public debate. Stories like this which attack the premise of the tax system, and which promote the idea that very rich people are paying too much in are just the same daft ideas that Truss and Kwarteng tried but dressed up in different language.

The thing I always find weird about headlines like the one above is the way that some people automatically accept something as true just because it pushes their buttons and appeals to their prejudices.

When I saw the headline it immediately set off alarm bells – it just sounds dodgy. So I checked with the original paper and sure enough it was nonsense.

But plenty of people who I know saw the same headline and rather than engage any kind of critical faculty they accepted it as completely true, and, without any pause for reflection, they rushed online to share it. At no point did they stop and think “what if this is total nonsense?”. It is a good example of how old media and new media interact to spread misinformation in support of a political viewpoint.

And people who like to get angry about things find headlines like this something new to feel outraged about. As someone once said “some people might get some pleasure out of hate/Me I’ve go enough already on my plate”

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