I write a lot about tax, and I make no apology for doing so. It is, however, important to realise why I do that. It is because I believe the tax has the greatest ability of all of human inventions to change the prospects of the people living in most countries on earth, including the UK. This is what I define as The Joy of Tax. In that case this statement in the Guardian this morning was of concern to me:
Social mobility in Britain is hampered by a “culture of inequality” that penalises school leavers who enter the workforce rather than higher education, according to a parliamentary report.
An investigation by the House of Lords committee on social mobility called for radical revisions to the content of schooling from the age of 14, to better prepare teenagers who do not go on to university for the world of work.
I am not sure on the first reading that I subscribe to all the opinions that the members of the Lords committee express, but that is not the point: if state spending that is ultimately linked to tax is being used to reinforce inequality in society then we have got something seriously wrong. The whole point of a good tax system is that it should provide the opportunity that would otherwise not be available to people because of the inefficient distribution of income and capital (whether it be financial, social, geographic, human or other) that currently exists in this country. If we have got that wrong in this case, and as a matter of fact I agree with the Lords that we have, then tax is not being used to best effect and change is necessary.
To put it another way, whenever a situation is looked at, and whatever question is asked, the criteria for judgement is does the resulting action reduce inequality and provide more opportunity for those who are otherwise excluded? If the answer isn't yes in both cases then there is something profoundly wrong.
It's not rocket science, but it sure as heck works.
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As you say in your last book, Tax has a bad rap.
The public does not understand it – nor the facts about money creation.
In the conversations I have with people about the ideas I access through your blog – even well-educated university trained people – they are ignorant of much of the real workings around these issues.
For example with all this banging on about the Government’s pro-EU leaflet being paid for by ‘taxpayers’, money one cannot be surprised that myths like this promote such wrong thinking and persist.
If it was tax payers money being used to print this leaflet, what are the Government doing with it? Stealing it?
It is not helped by politicians positioning levels of tax as a competitive lever to get them into power either.
And most importantly, people do not understand how money creation – even investment by Government – works with the tax system – the virtuous cycle of tax returns and how that helps potentially create wealth and stability for everyone.
The other corrosive element of under-investment and a lack of understanding about Government money creation is that people still pay their tax and NI but detect a drop in the level of service and then wonder why they have to pay taxes at all because they feel they get too little out of it – yet another nail in the coffin for the joy of tax.
As has been said before – some sort of public re-education needs to take place at some time in our future.
I completely agree with you. As well as being morally wrong, any policy (tax) change which increases inequality also reduces the productive capacity of the economy. If some people will not listen to the moral argument may be they will listen to the economic one?
The biggest in equality is the difference in tax rates, between un earned and earned income.
Tax on income should be equall to provide a fair system.
No, unearned should be taxed at a higher rate, as should all economic rent.
A complex tax system keeps the tax industry (lawyers, accountants, tax justice advocates) in clover.
It strikes me that the state, certainly one that has some democratic basis to it, provides (amongst other things, but perhaps its primary purpose) a balancing mechanism within a capitalist economic system between the forces of capital and the forces of labour.
Within a feudal system, the balancing act of the state was between the various landholding rights of the king and the barons (with little or no attention given to common labour until the last few centuries).
The role of tax has therefore always had an underlying “us and them” basis in the mentality of those who paid it, hence its divisive and continually fought over and argued about nature.
I’m not sure that will ever change unless the forces of capital and labour are aligned in such a way that the labourers are the owners of the capital. The question of how much tax is applied to labour or capital would then become almost meaningless and the debate would be more focused on the use of tax as an incentive/disincentive to constructive or destructive activities such as investment, health, pollution, etc…
Which always brings me back in my thinking to the need for both economic and political democracy being essential to resolving the never ending battle of the income/wealth/taxes debate between the haves and the have nots.
A very important part of the educational process for teenagers is teaching them how to start a business. Most will never do so but they will perform so much better at job interviews (in the private sector). And some will be drawn to starting their own business with a minority being successful employers, and tax payers! 😉
Prince Charles’ Youth Business Trust demonstrated the power of such teachings.
Agreed
I am all in favour of it
Prince Charles can well afford to offload a few Bob here and there. We are not all born equal so it’s far more difficult for some to get on the ladder of success. The system is mostly loaded against them.
And the unspoken or unspeakable answer?
They take that action because they like inequality.
You’ll encounter denial, rationalisation, and a fair amount of self-deception from the liberal elites: but is it really all that surprising to observe the members of an elite pursuing conscious and unconscious biases that entrench elites?