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Yes - we will feel better if we are taxed more. It's true!

By Owen McShane - posted Friday, 30 December 2005

We all feel bad. We all feel sad. We all have those “need-to-be-taxed-more” blues. This is the remarkable conclusion being drawn from British economist Richard Layard’s recent book, Happiness: Lessons from a New Science.

We are being told that although wealth has increased dramatically over recent decades, people are no happier today than in the past, when they were much poorer. Assuming that this problem needs a remedy, the Intellectual Left has come up with a brilliant answer - we should be taxed more.

I find this proposal for a “Happy-Tax” surprising. One of the big differences between now and, say, the 1950s, is that taxes were much lower during that decade than they are today. For example, today’s married woman who decides to go out to work normally does no more than bring home, in her net pay, the extra taxes now paid by her working husband. I am ready to believe many of today’s households are less happy as a result.


On the face of it, reducing taxes would increase these families’ happiness. The Intellectual Left, however, have other ideas. They claim someone else getting rich makes us unhappy. It makes our own income and lifestyle look inadequate, and all that striving makes us spend too much time at work - away from family and friends. I suspect many embittered academics hold these beliefs. As for me, frankly, other people’s wealth does not make me feel bad at all. I accept they have made other choices.

On the second point, my own research shows high taxes make some people spend too much time at work - trying to get back what the state has taken away from their spouses. But these new, high-tax advocates believe the way to stop me from feeling bad about the rich is to tax the high earners more, so bringing everyone back to a similar income. This, they believe, would reduce envy. Hence we’d all be happier.

Similarly, if we knew that working hard did not add to income we would all spend less time working - and be much happier. This assumes most of us hate our work.

These are the same old “socialist equality” arguments dressed up in new drag.

Some of these new “Happy-Taxers” claim support from the economic theory that dollars redistributed from the rich to the poor have more value to the poor than the dollars taken from the rich. Hence higher taxes increase the sum total of happiness.

If only human behaviour were that simple.


The fatal flaw lies in the assumption that people today are no happier than those who lived in times past. As I read it, the research tells us people’s expectations and aspirations today are no more satisfied than they were previously. But people now have much higher expectations and aspirations than people of the past.

Curiously, the best evidence that people are happier today than in some Golden Age since past, comes from those deep studies in social science called “reality TV” - in particular, from those series which sent contemporary families back to live in a “Victorian House”, a “Pioneer House” or even an “Iron Age House”. While those families claim to have benefited from their experience, none of them could wait to return to the modern world of washing machines, refrigerators, hot showers, antibiotics and comfortable clothes. In other words, when the same people are able to compare their own happiness “now” with their own happiness “then”, they enthusiastically opt for “now”.

New Zealand’s Maori Party Co-Leader, Tariana Turia, and her friends would like us to believe that Maori were happier before the colonials arrived. We shall wait a long time for Maori TV to produce “Pre-European House” because they would never find a family prepared to live out that real life experience, just as I would not volunteer to live out Irish life before the arrival of the Romans. Now is good.

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About the Author

Owen McShane is Director of the Centre for Resource Management Studies in Kaiwaka, New Zealand.

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