Illustrations by Megan Le Brocq
If a multi-millionaire stockbroker is in receipt of the same guaranteed income as a part-time bartender or barista, then what worth now are his millions? In a society where taxes and public spending are low and inequality, idle wealth and economic inefficiency are high, what can financial policy do to rebalance the books, and restore order to financial incoherence?
If the finance policy facelift at the beginning of the autumn has demonstrated anything, it’s that tax policy does materially impact society, from the highest brackets of income to the lowest. One moment a few pence are taxed differently to the way they were before, and wealth inequality increases as the tax burden on the wealthy is slashed. Then, with limitations on bonuses taken away for members of the investments industry, practical income inequality is once more widened by a political philosophy which advocates for the top-tier of private wealth at the expense of everything else. As a result of this, suddenly, the public cannot afford to pay for its houses. Clearly, if social cohesion is one’s concern at all, then this financial facelift can at least be thanked for showing us that the way forward is in exactly the opposite direction. If inflation is to be stopped, the cost of living to be lowered, and shared prosperity to be introduced to the British Isles, then cohesive, calculated reform must be implemented, and the priority of that reform must be the public.
A guaranteed income introduced absent of any corresponding reform might be dismissed by conservatives as unaffordable, or it might be called a guarantee of more inflation. For this reason, corresponding tax reform must be introduced alongside, to ensure that rather than inflation, deflation occurs and the value of the pound increases. The objective of such a tax reform would be to encourage high and middle incomes to converge on a single point, by weighting the tax brackets in such a way that an income of fifty to eighty thousand per annum is preferable to an income of over two hundred thousand per year – with diminishing returns up to that point just enough to tantalize high income workers to demand more and more, in turn benefitting the state with every raise. This is only a rough sketch of sweeping reform, but the principle is enough to change British society significantly, from a society which is decentralizing and growing in wealth inequality, to a society which is diminishing its wealth inequality and centralizing its financial authority.
Regarding tax policy more specifically – how would a government find the money to fund a guaranteed income of, for example, twelve thousand pounds pe annum for every national? Is technocratic change enough to restore financial justice to society? The previous government of this country recently instituted a tax ratio which inordinately benefitted people with incomes of more than one hundred thousand per annum, increasing the tax burden on low-income households and reducing it for private sector employees in finance, consultancy, and private industry. This caused the government to indirectly cut its funding to national health and law enforcement, as well as other non-negotiable benefits of living in a society such as education. What the tax policy of the last government demonstrated, is that seemingly minor amendments to tax policy can produce exponential results, so a tax policy which works for society can presumably be implemented easily enough if one has the right motives, and the impact of this could allow for far greater social equality than has recently existed. If the government were to institute a tax ratio which encouraged private employers to pay no more than eighty thousand pounds per annum, because anything more than that would be taxed to a point that the returns would be quickly diminishing, then incomes in the highest bracket could be reduced significantly. This would make the service class in the lowest existing bracket more financially competitive in society, by ensuring that their living expenses are paid, guaranteed, and encouraging them to find employment in the knowledge that it is possible to at least double their annual income through employment if they so wish.
One might assume that with diminishing returns on business and management class incomes, if the employers do indeed lower their pay grades, then the national tax revenue might in fact decrease. This will not be the case, because the households with the highest incomes in society already pay the lowest relative rates in tax. The diminishing returns from higher incomes would still taper just enough to encourage some private incomes higher than one hundred thousand, which could be taxed at a climbing rate of 50% up to 99% for incomes higher than three hundred thousand. Remember also that the highest earners and business owners and executives in society would also be receiving a tax-free twelve thousand per annum; only income a long way beyond this need be taxed at all. The objective of such a tax policy would be to create a business class which earns predominantly one hundred to one hundred and fifty thousand pounds per annum at most, and pays a heavy price after that point, intended to make such high salaries useless. The business class would practically be earning no more with an annual income of three million than three hundred thousand. A by-product of this would be greater profit margins for corporations, at least at first, which could be taxed appropriately, or better still could be used to increase the wages of non-executive staff. The reduction in scale of extreme wealth, and the upward transfer of wealth in our society, is not just about redistributing private wealth; it is key to reversing inflation. The effect is deflating the pound sterling, thus making the financial lower and middle classes far more competitive with the upper classes, decapitating financial inequality by lowering the top incomes, strengthening the state, and benefitting the overwhelming majority of people.
The principal purpose of a society is to benefit the public living within it; an agriculturalist, a doctor, a lawyer, a political theorist, and a construction worker are each one indispensable. What society means is that responsibility is delegated, and our co-dependence gives a higher quality of life to us all. If a low-tax, high-inequality financial model continues to diminish the integrity of that principle, then it will lead to the decay of society itself in time. Equality is the answer, and we will all be better off for it.