From the TUC

Social mobility, equality and a minimum rate tax

17 Jan 2009, by Guest in Economics, Society & Welfare

This week the Government has made a new and welcome commitment to social mobility. This is a necessary, but far from sufficient, condition for a fairer and more equal society. Social mobility is a progressive idea, but it can also be used to justify inequality.

This is what often happens in the USA. The American Dream says that anyone can get to the top through hard work, particularly by applying physical effort to their footwear. Of course it’s largely a myth, but it’s powerful enough to have sidelined discussion of the extreme inequalities that blight the US, though that may well now change.

Of course that is not the intent of those who have written the White Paper – and in any case all the evidence shows that societies that are genuinely socially mobile are far more equal than the UK is today – even after the many worthwhile initiatives since 1997.

So we can really achieve significantly better social mobility by building a more equal society. What can government do to achieve this?

Obviously there is no magic bullet, but I am reminded of something that Peter Mandelson once said, and is widely but only partially quoted. Everyone knows he said that “we are intensely relaxed about people getting filthy rich”. What they don’t know is that he also said “as long as they pay their taxes”.

But most don’t. Not only are they under taxed, but they also manage to avoid paying the taxes that parliament thinks they should pay. In 2006, 54 billionaires in Britain paid £14.7m tax on their combined incomes of £126bn – a tax rate of 0.01%.

Putting more money into the pockets of people who will spend it – in other words the poor, whether working or not – will help counter the recession. And we can pay for it by rebalancing the tax system so that those most likely to squirrel it away off-shore pay a minimum rate of tax on their income.

The polls say it would be massively popular. Those who have done well out of the asset bubble that has proved so disastrous for the rest of us can well afford it. It will be my test of whether the Government has truly read the changed mood and started the process of ensuring that we do emerge from this recession a fairer, better balanced economy.

5 Responses to Social mobility, equality and a minimum rate tax

  1. Charlie Marks
    Jan 18th 2009, 1:10 am

    As George Carlin said “You know why they call it the American Dream? Because you have to be asleep to believe in it!”

  2. Greg Vogiatzis
    Jan 18th 2009, 2:38 pm

    The current perverse idea of social mobility has driven/is driving many “working” class families to the brink during the current climate. Positively encouraged by the media, banks ,government and advertising to have the appearence of affluence (“mobilised” from “working” to “middle”class) fuelled on credit, the charade is about to end.
    True social mobility will involve equality of opportunity and include the end of the elitist education system .
    We should by all means tax the rich to pay for opportunity to be opened up to the many and not the few

  3. Tim Worstall
    Jan 27th 2009, 4:03 pm

    “In 2006, 54 billionaires in Britain paid £14.7m tax on their combined incomes of £126bn – a tax rate of 0.01%.”

    Erm, are we really to believe that the main man at the TUC doesn’t in fact know the difference between wealth and income? No wonder we’re screwed.

    The £126 billion is “wealth”, a stock. We do not in fact tax wealth in this country. We tax income. Their income will be some number a great deal lower than their total wealth. It’s still [possible that they’re not paying enough tax for your tastes but getting such simple things as wealth and income confused really doesn’t help your case.

  4. My del.icio.us bookmarks for January 26th through January 27th | called2account
    Jan 28th 2009, 12:41 am

    […] Social mobility, equality and a minimum rate tax | ToUChstone blog: A public policy blog from the TU… – Minimum tax for the best off – that is […]

  5. Vote for fair tax! | ToUChstone blog: A public policy blog from the TUC
    Mar 20th 2009, 2:25 pm

    […] Brendan’s written on this before on this blog, and at a stroke you limit the tax avoidance scams the super-rich can use.  Our research from last year found tax avoidance by the super-rich and corporations is costing the Exchequer £25 billion pounds – that’s very nearly a bankful! […]