It is a myth that workers pay tax on their income. The wage that a worker brings home, their take home pay, is their income. The tax is paid by their employer.
The wage that a worker takes home is the price of the mental and physical energy, the labour power, which a worker sells to an employer. A worker must sell this labour power as they have no other way to sustain themselves. They need to earn money in order to survive. The wage is determined by the amount of money the worker needs to live on, e.g. money for food, clothes, rent etc. Market forces, and trade union action, maintain a workers wage at a level that they have been trained for, and that will allow the worker to maintain themselves, and their family, in order to produce the next generation of workers. In effect, the workers are being farmed by the capitalist class, provided with just enough to maintain health, to reproduce, and to continue generating profit. Therefore, the real price of labour power is what is actually taken home after tax.
A tax on wages will tend to increase wages, as workers, through their unions, will put pressure on employers to ensure that take home pay remains the same, and they are still able to purchase everything they need to survive and to reproduce. It is the employer who pays the additional taxes out of their profit. Inversely, the benefit of a tax cut will go to the employer, as wages will tend to decrease, and the employer will pay less in tax, increasing their profit. These changes do not happen automatically, but as a result of market forces, which will have a tendency to ensure that the working class receive the value of their labour power.
The arguments over tax undertaken by the various political parties are just arguments over which section of the capitalist class will bear the brunt of the costs for maintaining the capitalist state. The state needs this money to administer capitalism. The state needs to ensure that the capitalists are provided with a fit, healthy, educated workforce. This means providing education, healthcare and support during unemployment. Unemployment is necessary as it provides a flexible stand-by workforce for the next capitalist venture. There can never be full employment in a capitalist system.
The state also needs to top up low wages with tax credits, which can be thought of as wages paid indirectly by employers via the tax they pay. The tax credits aren’t paid for by workers, but by the employers via taxation. Taxes also pay for the police and armed forces that help protect the capitalist class and maintain the current system.
So, the next time you feel like saying “it’s my taxes that keep that dole scrounger alive”, or “it’s my taxes that pay for that foreigner to live in this country”, remember, you have not paid those taxes, your employer has.