In today’s newspapers are two stories. One of them is the financial sector lobbying against taxes on the rich based on rich people’s ability to avoid them. The other is that local authorities are in a desperate financial situation and their lack of autonomous financial control is killing them. So what’s stopping us solving both of them? It’s a mindset thing.
Here is the easy solution. The financial lobbyists are not challenging the fairness of Scotland’s taxes, only their efficiency. They claim it’s not fundamentally an objection to taxing the rich, just that it doesn’t work because of avoidance. Great – so let’s tax their property. They can’t avoid that.
Property (housing and land) is half of Scotland’s private wealth (the other half is pension funds). So tax it – you can neither move your property nor hide who owns it. And of course that would replace the Council Tax and so would save money for or leave untouched 80 per cent of the population. Which would create much greater financial autonomy for local authorities. (Taxing land could just about close their deficit).
So a tax that taxes housing and land on a proportion of its market value fixes both those problems. What therefore is the issue? Forget what the financial lobbyists are saying – they aren’t trying to help the Scottish Government collect more tax, they’re lobbying on behalf of the rich. It’s purely venal selfishness.
Which means they’ll immediately start to lobby against a Property Tax. How? Well, I was a lobbyist so what they’ll focus on is ‘bad case studies’. That’s always how it is done. The debate will focus on a grandmother living alone in a family home worth millions who doesn’t have the income to pay the tax.
That is always the line the rich use in this lobbying push. It will immediately stop being about the efficiency of tax and all become about fringe case studies of income-poor people in expensive housing. That’s just rich people using their power and access to shape public policy in their own interests. Again.
There is of course a really easy way to deal with that – means test the rich. See those poorish rich people in big-old houses? Let them plead poverty and gain a reduction on their tax. Problem solved. Why are we even thinking about this? It’s what we do to the poor.
Why is it fundamentally wrong to means test wealthy people being asked to pay their fair share but fine to means test poor people who are being asked to pay way more than their fair share?
Let me just expand that a bit. As I hope you know, the Council Tax taxes the poor five times harder than the rich because of valuations and banding. Why? Because policy is written by wealthy people who think only wealthy people vote. It’s all about punishing those who don’t vote so you can reward those who do.
We then assume that the time-consuming humiliation of those poor people having to apply for exemptions and reductions on their patently unfair tax burden is ‘normal’ because that’s the lot of poor people. It’s ‘just how it is’.
But why is it ‘just how it is’? Certainly there is no shortage of people in Scotland who are in such desperate financial straits that they have no option but to beg for exemptions, unable to pay even their fair share (never mind five times their fair share). Then again, there are plenty more on an 80 per cent discount who are having to beg to be allowed to only pay their fair share.
Yet that isn’t seen as a problem. A low income household has to beg to pay its fair share but a high income house goes mental if you challenge their perks. We have this assumption that if a wealthy or even comfortably-off person is applying for hardship, there must be something wrong with policy.
Why? Why is it fundamentally wrong to means test wealthy people being asked to pay their fair share (that lower-income granny still gets to live in a lovely big house in a nice neighbourhood) but fine to means test poor people who are being asked to pay way more than their fair share? This is a question which just doesn’t get asked.
I was speaking to a senior politician I like. I asked them to tell me what was their personal mission in life. They said ‘end child poverty’. I said ‘no seriously, a mission you actually plan to do something about’. The politician understood what I meant. They all say that. They all say the are keen to end child poverty.
So what proportion of their working day is spent tending to the interests of a child in poverty? Conversely, how much of their working day is spend pandering to the rich? You can tell based on how much they say ‘inequality’ and ‘failing economy’ and ‘redistribution’ versus how much they fire out code words like ‘entrepreneurship’, ‘stability’, ‘growth’ and ‘red tape’.
Which I guess is about a 90/10 ratio. Ending poverty is something politicians talk about but don’t do. Equally, the other institutions of our democracy are always made to behave in the same way or do so spontaneously. Almost every administration I can think of has told its agencies and quangos to prioritise economic growth. That’s just another code phrase for ‘making the wealthy wealthier’.
Plus remember that our media is a fundamental part of our democracy. How much of our media is owned by poor people? How much of our media is staffed by poor people or people who have experienced poverty? Three or four journalists in total? And in the BBC? Surely it must be basically none.
Our democracy is shrouded in veils of assumptions and mindsets which benefit only wealthy people at the expense of basically everyone else
Because genuinely remarkably, despite the now absolutely overwhelming evidence (it truly is overwhelming) that economic growth at the top does not stimulate anything like proportionate economic growth at the bottom in and off itself, ‘trickle down’ is still the only economic policy being pursued by any political administration in Britain.
And hence we arrive at a point where our democracy is shrouded in veils of assumptions and mindsets which benefit only wealthy people at the expense of basically everyone else. I know there is this view that lots of people did well out of this inequality, but it is hard to sustain. Outside those with genuinely significant wealth, however much most people gained, they would have gained more under a different system
Which is to say even many who think they’ve won out of this picture probably haven’t. The ‘inequality point’, the point at which long-trend inequality is actually benefitting you, is much, much higher than people think.
That’s why the wealthy require these assumptions to be in place because if they had to win their arguments based on empirical data and the real-world experience of their ideologies, they would struggle to do it.
Let’s be honest; there is a chance this still sits oddly with you. The idea that a household on well above average income might have to apply for a discount on their Property Tax seems strange and alien, doesn’t it? You may even somehow instinctively feel this is wrong. But you probably don’t think the same thing about a single mother with a low-pay job in the care sector having to do the same. Why?
Tax efficiency? Autonomous local government? Child poverty? We’ve been wrestling with these issues for decades and we keep losing the fight. It is absolutely not because we couldn’t do anything about it, its that we’ve been trained to believe that action to address poverty which challenges the real perks of upper middle-classdom (which is certainly not the winter heating allowance) is fundamentally illegitimate.
It isn’t. It is ideology by the rich for the rich.