Last week I was alerted to a video on the Beatles official YouTube channel. The Beatles (or Apple Corps Ltd) have recently posted a film clip for their 1966 song "Taxman", written by George Harrison:
The Beatles didn't do a whole heap of explicit protest songs, which makes this something of a rarity in the canon, and it is even more of a rarity in popular music generally in that it name checks Wilson and Heath. There just aren't a lot of popular songs which mention Prime Ministers, Presidents, Treasurers and Chancellors, or Leaders Of The Opposition.
As a protest song, this song ends up in the weeds of taxation policy. The song is a complaint about the then new Wilson Labour Government's set of Income Tax rates for the 1966/67 income tax year; which fixed the general rate of taxation at 8/3 in the pound¹ and thence a progressive surtax on incomes²; starting at 11% on amounts of more than £2000, going up to 55% on amounts of more than £15,000. We can find these rates in the Finance Act 1966¹ and the corresponding notes from HM Revenue and Customs.
Since the base rate of Income Tax of 8/3 in the pound is 41.25%, then the effective rate of Income Tax on amounts of more than £15,000 is 41.25% + 55% or 96.25%.
"Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman
Yeah, I'm the taxman"
Thus the top rate of taxation of 96.25% was 19/3 in the pound. This means that Mr Harrison's complaint of "one for you, nineteen for me" was actually slightly short to the tun of 3d. In comparison, the top rate of Income Tax in Australia for the year 1966/67 was 15/4 in the pound or 76.66%.
Essentially this is a complaint about the marginal rate of taxation on a fantastic amount of income. For incomes of less than £2000, the standard rate of 8/3 in the pound, likely covered at least 95% of the population. The average wage in the United Kingdom in 1966 was only £891. Even at twice the average wage at the time, the marginal rate of Income Tax was still only 8/3 in the pound.
It is worth remembering that Mr Harrison's complaint, actually only refers to every pound of income beyond £15,000. Marginal rates of taxation have to do with that last unit of income. Those Surtax rates are purely marginal rates of taxation which are over and above the base rate of tax; in this case the Surtax rate of 55% on amounts over £15,000 is 11/- in the pound but only starting at that 15,001st pound. At bare minimum, Mr Harrison would have had to be earning at least £15,001 for that 11/- in the pound rate to apply.
For George Harrison to pay income tax at the top marginal rate; which is 41.25% plus 55% which gives you 96.25% or 19/3 in the pound, he was on 16.835x of the average wage. (£15,000 / £891). If we put this into a modern context, Average Weekly Ordinary Time Earnings (AWOTE) in Australia as at Oct 2022 is $92,344 and 16.835x is $1,554,621 minimum. If we then accept that the average is way way skewed upwards by people on fantastic amounts of income, the median wage is probably a truer central measure of incomes and that is only about $60,000.
Here's the rub. Quite obviously income tax rates well above 50% are increasingly confiscatory in nature and since superstars like football players, movie actors, musicians et cetera are likely to have a brief yet stellar career, then then best strategy quite apart from taxation minisation, is to have that income directed into a Discretionary Trust of some kind. That way, incomes can be paid out of the Trust over a longer time frame; which is far more sensible from a life and estate planning perspective.
Also,
"Don't ask me what I want it for,
if you don't want to pay some more."
There is an whole other argument about the nature of taxation and government spending but for the purposes of this, we're going to assume the convenient lie that taxation pays for government services.
Later on in the song Mr. Harrison actually goes on to explain some of the things that government does/did.
"If you drive a car, I'll tax the street." - Well yes, Road Tax is a thing and in 1966 the UK was still in the middle of a building phase in which the Highways Agency would build some very lovely Motorways. As it is, ordinary roads need maintenance anyway.
"If you try to sit, I'll tax your seat." - This is probably a convenient rhyme however, as it currently stands, seats are taxed in the form of VAT. Again, the discussion of a consumption tax and whom the burden of taxation actually falls on, is a discussion beyond the scope of this post.
"If you get too cold, I'll tax the heat." - Given that Britain is a cold little sceptered isle, then some kind of heating tax; especially for the energy generated in order to make that heat (be it gas or electric) seems fair and reasonable to me.
"If you take a walk, I'll tax your feet." -In an urban environment, footpaths don't just build themselves. See the above argument for road tax. In a rural/natural environment, toepaths, land care, and preserving national parks is actually surprisingly cheap. I have no objections to par usage fees if it means that a national park is going to outlive all of us. If Mr Harrison meant a tax on shoes, then see above re VAT and a consumption tax.
It is like Mr Harrison forgot his own song while he was writing the song. HM Revenue and Customs wants taxation for the purposes of suring up the pound so that government services can be provided. Taxation in principle is the method which citizens in Commonwealth come together, right now, over purchases of the accoutrements of civilisation in a collective purchasing arrangement. That's what the Taxman wants it for.
As for Mr Harrison himself, whining about the fact that you have to pay a lot of tax on the kinds of incomes per year that most of the people who bought the record would likely never even see until the cumulative effect of 20 years, is rather a bit cruel.
Let me tell you how it was, in that one year of income, you earned more money than the average teenager sitting in their bedroom spinning the disc would earn, of all the years put together until they were 36. It would take until halfway through the Thatcher Premiership before that would happen. The Beatles may very well have been the greatest rock band thus far but a protest song complaining about taxation because you are fantastically rich, is silly.
¹https://www.legislation.gov.uk/ukpga/1966/18/pdfs/ukpga_19660018_en.pdf
²https://www.gov.uk/government/statistics/rates-of-surtax-1948-to-1973
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