As many know, I don't buy all the arguments of the standard economics repertoire, especially as now interpreted by mainly mathematical economists. But some of the ideas they have abused are very obviously right. One is the diminishing marginal utility of income.
The idea of this is very simple. What it says is that the first £1 you earn is worth more than the second, and so on. Actually, the evidence may well be that there's almost no tailing off for quite a long time - new research suggests until about £22,000 of income is reached - but thereafter there's no doubt that each individual pound (or yen or dollar or euro) is relatively worth less than the one before.
Until you reach the point Nigella Lawson reached where you don't check or notice that your staff have spent £600,000 of your money because there's so much that simply passes unnoticed.
There is, however, an important point in this. The fact is that if each pound is worth less as your earnings increase then each pound of tax paid also imposes less strain. The declining marginal utility of income also means that the marginal cost of tax falls as income rises too - so hat a greater part of marginal income can be paid in tax without imposing a greater real burden on the taxpayer.
This is, I think, economic fact.
It's why we need a progressive tax system in the UK. We don't have one right now. Nigella Lawson makes a compelling case for why introducing one would be virtually costless to those it might impact most.
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I fail to see how a fraud case can be used for political advantage by yourself. Their accounts were monitored by accountants. They failed in their job. All this proves is that accountants and auditors are failing the UK people and there needs a shake up of the system. The accountant admitted there was much more exciting things to talk to Charles about, not boring fraudsters,
I am not making political advantage
I am making a point – they were not interested as they had so much money is what has been said in court
This is a very valid point Richard -although you do not take into account that the ‘white-knuckling’ psychology of the rich ( I know a few!) is that every pound does have equal utility, hence the bizarre hoarding of corporations as if this were the case! There is a pathological phenomenon at work here that needs to be looked into. Nigella lawson was ‘careless’ but not necessarily representative of the manic scrooge-like behaviour of the rich who watch every bent farthing as if it were their last sou!
Do you think it’s possible to quantify ‘progressive’?
So for example if the richest 10% ‘earned’ one-third of all earnings in the country, how much tax would that 10% pay to qualify as ‘progressive’?
Not necessarily a question just for Richard; a straw poll would be interesting.
To take up Gary’s challenge:
I agree with Mr Murphy on 2 concepts which he has long expressed with passion:
1. The concept of prioritising needs rather than wants.
2. There is a concept of ‘enough’.
Rather than thinking of tax in terms of the percentage of what’s taken, maybe we should think about ‘how much should the person have left’. The rest should be taxed and given to the Poor and the good of Society.
How much is enough? The figure of £22,0000 instinctively sounds about right. Maybe a bit more if you have special circumstances (e.g. disability, large family). Maybe less for anyone in socially useless activities (e.g. bankers).
The only exceptions I would make to this would be actors and artists, who play a pivotal role in society to help up all to Think and reflect on who we are.
Anyone else wanting more should be regarded as what they really are. Greedy, selfish pigs. Sorry for the tone, but it needs saying.
I am not sure £22k is enough until we sort out land ownership to be honest – right now £22k of earnings usually only works because of s state subsidy e.g. on health, education and more so the illusion may be wrong
But there are clearly limits
I should make clear I am a higher rate tax payer
What is “enough” anyway? Many might think it obscene to spend £100 on a meal or £1,000 on a bottle of wine or £100,000 on a car, but do we want a society where there is no place for beauty or excellence? The “Trabant” society where there is no incentive to develop choice or innovation because there is no profit to be made from doing so?
The wine example is also relevant: if everybody is left with the same amount of money who will get the finest wines? The answer: those with political connections. And so you end up with a scenario where you simply replace inequality of assets with inequality of connections.
And as for actors and artists, who would judge which art is good and deserves funding and which is bad…history shows that only time sifts the wheat from the chaff and that the favourite art of politicians is a load of crap.
Brilliant!
Peter.
Roger-the present environment of greed, financial abuse, cupidity and corporate white-knuckling is the very thing that stops innovation. Beauty is an internal and relational quality of humans so nothing to do with Trabants or bottles of wine -to associate beauty with acquisition is a category error of the worst sort and indicative of moral paucity.
If you can see no beauty in a well made product or in nature then you are unusual. I think most people would say that wine, food, art and nature are all capable of great beauty. To deny such an obvious truth indicates that perhaps ideology has replaced truth and common sense. I would accept that mass produced objects could be regarded as having no beauty, but anything touched by nature or man has the capacity to be beautiful. But it takes care, and often it is the demands of customers that raises the standards of care.
The point I’m making, Roger, which you blithely seem to miss, is that if you put these things before human relationships and needs then beauty is abstract and narcissistic. I’m a musician and whilst i can appreciate the beauty of late Beethoven it does not trump the beauty of honesty, integrity and charity in human relationships – you;ve totally missed the point I was making. There are many religions, who have at their heart, the notion of inner beauty as opposed to external form -why should this be unusual? This exists in Judaism, Quakerism and Islam.
Roger,
I think the reverse is true. Consumerist societies just don’t produce truly beautiful things. I understand the argument that we venerate that which is aged, but I think another, equally valid, proposition is that beautiful art is no longer being produced because we live in a monetarist society.
Put simply, where would you rather live- York or Milton Keynes ?
I wonder if the £600k+ spent credit cards has been grossed up for income tax and national insurance? By my estimation if it isn’t a case of fraud or theft the employers could owe around £825k in Income Tax and NICs on top of the £600k that was spent and that doesn’t account for interest or penalties either.
That is a thought I had too…