Going even further with Universal Benefits: how to get the rich onside

 on a high, tax code, the rich, triangulation, universal benefits, wealth, welfare  No Responses »
Apr 302013
 

Paul writes a splendid defence of universal benefits this morning.  You can find this post over at his blog at the moment.  It’s clear from the shape he gives to the subject that it’s really rather a no-brainer for those in favour of a smaller state.  As he argues:

[...] A simpler, more direct and universal benefits system should appeal not only to those on the left but to those who believe in a ‘smaller’ state – it doesn’t require such huge state machinery, such massive bureaucracy and such complication. It does go against the grain in some ways – we like to believe that being more ‘targeted’ means being more efficient, and we’ve followed that mantra for many years, largely despite the evidence against it that’s all too clear for anyone who’s tried to work their way through the systems. Now, it seems to me, is a time that we can try to think in different ways about these issues. Think more radically. Universal benefits is one of those ways.

Mind you, those who remain in favour of “targeting” the deserving versus the undeserving find it just as impossible to go down a route that would clearly benefit their ideologies long-term.

I’m inclined, myself, to want to go even further.  I’d like to see us adopt the concept of a citizen’s income.  Pete does a beautiful exposition of the whys and wherefores of the subject in question here, coming to the following radical conclusion (the bold is mine):

Our society has moved from being dependent on unskilled manual labour (which was adequately motivated by threat) through to more skilled manual labour (which can be adequately motivated by the promise of money) and is now entering a time where we are more depending on mental labour – which cannot be motivated by threat and can only be only poorly motivated by money. Yet, our leaders still use both to try and squeeze more and more productivity out of us.

Why then, is there the dual insistence that some people, normally rich, will only be productive in return for extensive financial reward and others, normally poor, will only be productive when faced with some form of threat? We understand where our most productive activity comes from, and we also understand that productivity there is not very well motivated by promises of wealth or threats of poverty. So is now the time to, perhaps against many people’s intuition, start removing the link between work and having enough money to live on?

And for once, in a New-Labour triangulating kind of way, I’m looking to gain a broader acceptance for such radicalism.  Any changes such as seriously universal benefits for absolutely everyone – which in essence is what a citizen’s income would seriously constitute – would require the complicity of the rich.  As I argued a few months ago, the tax system we currently have surely only exists because the well-to-do – those who have the biggest voices in society – are fairly content with the current outcomes (despite all their wailing).  So how could we convince them to jump ship and take wholeheartedly onboard this logical extension of universal benefits as described above: that is to say, the aforementioned citizen’s income?

How about this idea which I drag out of the treasure chest of ancient 21st Century Fix trains-of-thought?  This one runs thus:

For some mad reason, it provoked the following train of thought in my fevered Saturday brain.  What if we paid for everything according to our tax code?  In an entirely – or almost entirely – cashless society, tax code information could quite easily be added to our credit and debit card chips.  In such a way, we could eliminate all kinds of income tax and use the tax code – instead – to determine how much we paid at point-of-sale.  Big spenders and big earners would pay more for everything – those with less would pay correspondingly far less.  The scale would be incremental rather than banded.  Poverty traps could be eliminated at a stroke.  We wouldn’t have to calculate VAT or chase its evasion or pay out tax credits or even child benefit.

An income-tax free state which allowed for properly dimensioned public services and strove to reduce the difference between the very richest and the very poorest?  Surely a Nirvana of some kind …

As a result of varying the price at point-of-purchase (a concept which, incidentally, the discounts you get for buying in bulk already contemplates) instead of varying the income you are left with at the end of year, we could suggest not only to the rich but – actually – to absolutely everyone that anything and everything they ever earned would remain in their pockets until a purchase was required.

Yes.  It would only work effectively in a state where every purchase was tracked – but isn’t that where we’re heading for anyway?  If the cashless electronic state of total state and information awareness is going to be our future in any case, why not make it work on our behalf as we properly break the already disintegrating connection between the motivation of money and the motivation of mental labour?

Don’t pay you for what you do.  Pay you, instead, for what you are: a human being, as valuable as the next; with so many things to offer society.  And in the meantime, allow the alpha men and women to keep a hundred percent of what they prefer to value.

Some final caveats:

  • We’d have to, of course, base the tax code on access to wealth rather than ownership.  Too many rich people would soon work out ways of getting around any definition based on the latter.
  • I can imagine a flourishing industry in reselling growing up: less well-off people might become professional shoppers for the better-off, so buying at lower prices than the latter should be paying.  On the other hand, this would create business opportunities – not necessarily a bad thing in such times.
  • We’d have to be pretty clear that hacking of such cashless systems – and at the very least, revolving-door mediation – to adjust tax codes would be an ongoing issue.  I have no answer to this one.

As you can see, a few thoughts to be getting on with on the table.  And as I mentioned to Paul Bernal on Twitter this morning, some of the above are clearly heretical.  But hasn’t the situation become sufficiently complex and problematic for heresy to be almost a requirement?

Isn’t it time we began considering how we might turn the systems constructively upside down?

Why we need a new sense-of-justice system

 Fraser Nelson, individual, individual responsibility, justice, moral crisis, moral deficit, moral democracy, Spectator, state, state bureaucracy, state regulation, tax code, tax dodgers, unclassifiable  No Responses »
Dec 082012
 

We come back to the subject of legalised tax avoidance, almost as if we were talking about what it must have been like living under Prohibition in the US.  We are so unable to resist the temptation to avoid taxes – especially those of us who command those corporations out there – that we just about appear to be addicts to a game: this is a game we cannot avoid; a challenge we cannot ignore; a process we must implement; a procedure we must action.

Don’t believe me?  Read this detailed report by Reuters, published a couple of days ago, on Amazon’s $2 billion surplus – built up it would seem through plenty of totally legal tax engineering.

Not the most unhappy example, I am sure.  Just one more example, I guess.  But in that $2 billion surplus there are surely many nursing, teaching and lawyerly jobs which have gone down the drain, as our welfare state is trimmed, cut and finally slashed with the excuse that there is no resource left to fund it.

The Spectator, meanwhile, attributes the blame to the politicians who passed the laws which made such addictions legal:

[...] The people power that drove Starbucks to make its announcements should now turn its attention to political power pushing for reform of the whole tax system, not a make-do-and-mend policy where a loophole is sewn up here, and another avoidance scheme darned away there. Fraser outlined what that reform would look like in a recent column, arguing that a flat tax would remove the hiding places for tax dodgers, and remove the incentive to avoid tax, too.

I’m afraid I disagree.  For a publication which tends to find itself on the right of our political spectrum, the Spectator ought surely to be thundering on about the lack of personal responsibility in our systemic failures, instead of blaming the pork-barrel politicians owned to the hilt by their business sponsors and fund-raisers galore.

In my humble opinion, and this perhaps puts me to the right of Fraser Nelson’s own editorial line, it’s not our tax laws which need changing but our immoral addiction to finding ways of getting them round them.  Any and every system will be open to abuse: just take the sexual shenanigans which are unspooling before our very eyes.  You’re not going to tell me that because people abuse hundreds of young girls and boys, we should change the laws to make it more difficult to criminalise.  And yet Nelson does say (see the last link above), in relation to our tax system, that (the bold is mine):

Britain now has a tax code so monstrously complex that no one single person can understand more than a fraction of it. Avoiding tax was always possible in Britain, but for many years the rich did not really do so, and paid up in full. The mistake was to push the tax rate to the point where, the world over, widespread avoidance is the inevitable result. [...]

He then goes on to conclude (again, the bold is mine):

This is why higher tax rates end up with lower tax yields. Architects, software engineers and entrepreneurs will all have taken such decisions to lower their British tax bill, perhaps by leaving the country. [...]

So here we have the moral – or perhaps immoral – underpinning of everything people on the right of politics want to do with the British tax system.  Because rich people avoid it, because they are almost physically addicted to getting round what they should pay, we should reduce the burden on them in order that they may happily cough up more of what they are less liable for.

To return to the sexual shenanigans for a moment, if we applied the same principle it is clear what would happen: a quick feel up the skirt would lead to a simple caution from the friendly neighbourhood bobby and even abuse of a fairly disgraceful kind could mean little more than a small fine.

No.  We cannot run the justice system – our sense-of-justice system – only on the basis of how many people are prepared to easily run with and abide by a law.  And tax is nothing if not a sense-of-justice system.  We aim with our tax laws to ensure that society takes care of everyone’s needs.  Those needs do not disappear simply because the rich find it difficult not to get involved in legal but immoral tax scams.

And we shouldn’t make it easier for them to choose not to do so by taking down the moral barricades that bolster our sense of societal propriety.

Whether you work as a sole trader or you work in the accounting office of a large corporation, every decision you take is steeped in both its legal and moral implications.  That we choose to go with the first and ignore the second is surely more significant – more worrying – than the technical nature of our state.

Where the second continues to be something we refuse to occupy ourselves with, no tinkering, no reform, no widespread re-evaluation of the first will ever take us to any better place.  For a left-wing blogger – and this may sound a strange thing to say – I’m convinced that before we can tinker with the state, we must tinker with the individual.

And in order to do so, we need a new sense-of-justice system in place: a system which conceptualises our key, dearest and nearest principles in one space.  Perhaps a virtual online constitutional space where everyone can input and everyone can access.  Where everyone can be that citizen which democracy should help to create and sustain.

We can’t improve the moral workings of our systems through processes and procedures alone.  There must come a time when how we behave is just as important as what we do.

No doubt about it.

No doubt at all.

How complex tax systems benefit the rich (and some solutions)

 ideas, on a high, political innovation, politics, tax code, tax dodgers  1 Response »
Aug 052012
 

Steve states the following, marvellously accurately:

[...] I’ve been thinking about tax. Specifically corporation tax. One thing I’ve agreed with my conservative interlocutors about is that the tax system needs to be simplified. Too much complexity means too many loopholes for clever people (and rich people and big corporations can afford to hire a lot of clever people) to exploit and avoid taxes.

I think I was cogitating along similar lines a couple of years ago now, when I suggested we did away with income tax – though not our income tax codes:

[...]  What if we paid for everything according to our tax code?  In an entirely – or almost entirely – cashless society, tax code information could quite easily be added to our credit and debit card chips.  In such a way, we could eliminate all kinds of income tax and use the tax code – instead – to determine how much we paid at point-of-sale.  Big spenders and big earners would pay more for everything – those with less would pay correspondingly far less.  The scale would be incremental rather than banded.  Poverty traps could be eliminated at a stroke.  We wouldn’t have to calculate VAT or chase its evasion or pay out tax credits or even child benefit.

An income-tax free state which allowed for properly dimensioned public services and strove to reduce the difference between the very richest and the very poorest?  Surely a Nirvana of some kind …

Such thoughts may be considered a betrayal of socialist principles but – as Steve points out – in times of crisis, we are perhaps obliged to think beyond simply redressing the shop window:

I’m convinced that the status quo is not the only option – that we don’t have to simply put a new coat of paint on the existing structures while doing nothing to change their substance; that we can have a more just world that works better than it does now. It takes some bold thinking to jar most people into seeing beyond the current reality to that better one – but that thinking has to be practical and workable.

Tax is an immensely emotive subject for political activists on all sides.  The logical side of the human brain generally dies an unhappy death in such circumstances.  It would be nice to think we could be as rationally inventive in establishing a fair and just – as well as efficient – regime of tax policies as we are in doing the state out of what some of us might argue (more here from Peter Watt) is its just recompense.

Ideas are a good start.

Knowledgeable brains working in good faith are now needed.

For it may actually be that we have the tax systems we have precisely because, as Steve suggests, they actually benefit the rich – despite all their wailing.  If that is the case, far more radical measures need to be taken than simply calling on all contributors to pay their fair moral whack.

Nothing more nor less than a total overhaul of that status quo he mentions.

On sell-by dates and tax codes

 a con, best-before dates, sell-by dates, tax code  No Responses »
Sep 152011
 

For once, I agree with a business organisation!  “Yay!” you may say.  Or not as the case may be.

On the one hand, we have the government:

The Department for Environment, Food and Rural Affairs (Defra) says five million tonnes of edible food is discarded by UK households annually – the equivalent of £680 for a household with children.

Environment Secretary Caroline Spelman said confusion over food labelling was responsible for an estimated £750m of the £12bn edible-food wastage each year.

“We want to end the food labelling confusion and make it clear once and for all when food is good and safe to eat,” she said.

She wants confusing stock rotation information – such as sell-by dates – removed from packaging altogether.

“There are products that have several dates on them; use by, best before. Sometimes it says ‘display until’, which is not relevant at all by the time it’s sitting in your fridge,” Ms Spelman told BBC Radio 4′s Today programme.

“So I can understand when people – particularly young people starting out with shopping – look at these dates and say ‘I’m not sure about this; better throw it away’.”

So there we have a government looking out for the needs of budding consumers – and presumably, or at least so I assumed, the interests of retailers who wanted to be able to leave their product out on the shelves for longer.

But no!  I couldn’t have been further from the truth.

This is what the British Retail Consortium has to say on the matter:

The British Retail Consortium argues the government is tackling the problem of food waste in the wrong way.

Food Director Andrew Opie said a better approach would be to educate consumers so they are clear on the difference between best-before and use-by dates.

“Helping consumers understand that food past its best-before date can still be eaten or cooked could contribute to reducing food waste and saving people money,” he said.

“The government should be spreading that message, not focusing on retail practices.”

A government which claims the difference between “sell-by dates” and “best-before dates” is too difficult for young people to understand on the one hand?  A business organisation which claims what the country needs is more education on the other? 

And meanwhile we have a tax service which expects us to understand the whole malarkey of tax codes!

Puuuuurlease, Caroline Spelman, reconsider your navel-gazing advice – and instead get your Coalition colleagues to focus on the real impediments to consumer, as well as entrepreneurial, understanding.

Surely a Nirvana of some kind: "Let’s do away with income tax and pay for everything according to our tax code"

 banded, income-tax free society, incremental, Independent, on a high, poverty trap, sorted, tax code, twentysomethings  2 Responses »
Oct 162010
 

This tweet from Next Left on the Independent’s bid to sell a new newspaper product to twentysomethings for an appropriately priced 20p caught my eye this morning:

Indy to launch 20p edition aimed at 20somethings http://www.guardian.co.uk/…

You can read more on the subject here.

For some mad reason, it provoked the following train of thought in my fevered Saturday brain.  What if we paid for everything according to our tax code?  In an entirely – or almost entirely – cashless society, tax code information could quite easily be added to our credit and debit card chips.  In such a way, we could eliminate all kinds of income tax and use the tax code – instead – to determine how much we paid at point-of-sale.  Big spenders and big earners would pay more for everything – those with less would pay correspondingly far less.  The scale would be incremental rather than banded.  Poverty traps could be eliminated at a stroke.  We wouldn’t have to calculate VAT or chase its evasion or pay out tax credits or even child benefit.

An income-tax free state which allowed for properly dimensioned public services and strove to reduce the difference between the very richest and the very poorest?  Surely a Nirvana of some kind …

*

Would definitely be interested in some kind of feedback here from people more professionally versed in these matters.  There would obviously be serious downsides I’m clearly not aware of – otherwise, someone else would have implemented similar proposals before. 

Nevertheless, exploring such ideas just has to be a useful exercise in itself – even if we do end up with some kind of hybrid of several approaches to the question at hand.