So I have always understood those politicians who talk a lot about aspiration. I've also always understood the value of individual achievement. But I have never bought the idea that anyone can do anything or be anything if they just try hard enough. It simply isn't true. Not everyone can make it by sheer hard work and commitment. There are some barriers and difficulties that are virtually impossible for the individual to overcome without assistance and they aren't anything to do with the moral worth of the individual who encounters them. If you start life as a disabled woman in a dirt poor village in Afghanistan you are highly unlikely to become a multi-millionaire and if you are a male child born into a well educated affluent family in the US with a good slug of inherited wealth then the chances are considerably higher.
This ought to be so obvious to state that it is utterly banal. Unfortunately we have been subject for so long to a barrage of propaganda to the contrary that it can't be restated too frequently. The economic system we live in doesn't just reward people for hard work, intelligent insight and a determination to take well calculated risks. It rewards people for being born into the right circumstances and gives you precious few rewards if you are born into the wrong ones.
Because of this it used to be taken for granted by the vast majority of people that it is no bad thing to tax those who have more wealth than they can possibly use and for the government to use this money to give a leg up for those who are less fortunate. No longer. We now face a clamour from the rich saying that they have got all this income through their own cleverness and enterprise and they don't think the state should be taking it away from them.
Taxes for the rich are going down and their rewards are going up. Twenty five years ago the top 1% of people living in the US took home 12% of national income. The figure now is 25%. (Joseph Stiglitz, The Great Divide, p88). Put simply this means that any increases in income that have happened in America in the last 25 years have gone to the very rich. Much the same has happened in the UK.
Over the same period there has been a total transformation in what is considered normal for taxation. The 1950s Conservative government of Winston Churchill had a top rate of income tax rate of over 85% for its entire duration. It didn't stop that government from presiding over one of the most rapid increases in our national income and from achieving a massive reduction in the national debt as a share of GNP. Nor did it prevent that government from building over 100,000 council houses a year or paying grants for students to go to University.
In the late 70s all of that changed and tax rates have been slashed across the Western world. The Conservative Government of David Cameron and then Theresa May has presided over top rates of 40%. Yet few of the very wealthy pay that rate on much of their income and most corporations routinely use very good tax lawyers to take their effective tax rate way below that of most working peole.
Not surprisingly low rates of tax coupled with high rates of avoidance has contributed to an era of austerity in which services are cut back and national capital assets like council houses sold off rather than created. We have football stars earning so much money that they don't know which of their cars to drive and not enough schools being built to educate our children. We have salaries and bonuses going to top people in financial services as a reward for their innovation and intelligence - despite the fact that their innovations almost wrecked the system in 2008 and billions have had to be paid out in compensation for what is politely called mis-selling. But if any politician dares to suggest that the solution to this might be to make sure they pay the right taxes so that the state can redistribute some of that income they are immediately jumped on as an extremist. About as extreme left as Winston Churchill!
So it is not surprising that a lot of people are very angry and prepared to listen to extreme solutions. It is obvious to most people that something has gone wrong with the system and that it isn't working to give them the deal that they were promised. If you are young and aspirational, you work hard, and you are intelligent you are still going to find it very hard indeed to buy a house, start a business and make it by your own efforts. These days most people need family money and help. We are back to the era of Jane Austin. The key question is not what kind of energy and worth do you have as an individual but what are your expectations? Are you going to inherit anything?
In these circumstances it has become necessary for anyone who seriously wants to create a land of opportunity to support higher taxes. And, of course, it is no good a government adopting higher taxes if those who ought to be paying them simply avoid them. We need international collaboration on tax collection and we need the British government to have the courage to impose taxes based on reasonable estimates of what is earned in that country. When it comes to individuals I believe this means that we have to move more of taxation onto property which is an asset that is very hard to hide or to move abroad. Since income tax is being widely dodged by clever lawyers we need to move to collecting a lot more of tax via rates on property. I do not mean a wealth tax but I do mean raising council tax on properties to the level where it becomes as significant a contributor to the exchequer as income tax. I also think the UK should adopt one of the very few good parts of US tax law. If you are a US citizen and pay taxes abroad they can collect off you the higher amount that you would have paid in the UK. Properly and rigorously enforced this simply makes it pointless to move your income to Belize. When it comes to corporations I think we should be taxing the company on its revenues in the country instead of on its net profits. If necessary punitive estimated revenues. That is the best way to stop corporations shifting their money abroad.
None of these policies is however as important as one simple shift in our psychology. We have been told for decades that it is wrong to take taxes off the rich because they have earned that money by their own efforts and the feckless poor should have tried harder. We need to start reversing the equation and stating the facts as they truly are. The feckless rich took our society to the brink of disaster in 2008 and still have no explanation as to why that happened. They are being paid excessive rewards for completely fictitious exceptional abilities.
We need to control and manage the feckless rich and give a bigger share of national income to the deserving poor.