Tax and the ‘R’word. Why aren’t we talking about redistribution?

There’s undoubtedly a queasiness about talking about redistributive taxation in this country, even amongst the left. We are all comfortable talking about ending tax avoidance. Clawing back tax from avoidance schemes and loopholes is like motherhood and apple pie, though, isn’t it? Who could disagree with that? Even the Tories give it airspace. But it’s incredibly complex and difficult to close tax loopholes. Whole financial industries are based on it. Which is not to say it can’t be done – but it’s very, very long term. If we are going to shift the conversation about how we tackle inequality, poverty and economic injustice in this country, we’re going to have to bite the bullet and talk about redistributive taxation. It isn’t a technical question alone – it’s about changing the narrative, explaining to people how tax works and that a progressive, redistributive system works in the interests of the vast majority of the population. Have we got the guts? 

Tony Benn was fond of saying that, in a civilised society, no-one should earn more than ten times more than anyone else. It might seem like a rather abstract idea, posed (as was Tony’s habit) in moral terms. But what if we genuinely took that as a principle for the economic organisation of our society? It would imply, and give justification for a much, much more aggressive tax take from the rich in our society and possibly some form of maximum income. We’re a long away from any of this, but the fact that it seems such an oddity to even discuss a maximum income or a genuine redistributive taxation system shows how far the debate has hurtled towards the right in the last three decades.

So let’s just take a moment to reflect on where that rightward shift has got us. In 2000, the average pay (including share options and bonuses) of the FTSE 100 directors was 47 times the average salary. In 2014, it was 120 times. In 2015, it rose to £5.98m, the equivalent of 144 times the average salary. Obscene levels of pay are commonplace (for instance, in the media, marketing and telecoms sector, average remuneration for FTSE 100 directors was £6.98m in 2014 – this in a sector where many workers don’t even receive the living wage).

Because of the way the super rich are “rewarded”, the recouping of this money is complicated, for sure – as is the restructuring of our economy along more social democratic lines, but we can make a start by talking about limits on high pay as well as safety nets for the poorest in our society. In fact, the two things go hand in hand. We’re an awful long way from a 10:1 ratio, but by extending the welcome debate about tax avoidance into one about inequality, high pay and general taxation policy, we can take a few steps down that road.


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