Presentation by Tom Burgess author of From Here to Prosperity
Tom Burgess. Pic: Salisbury Compass

The group was delighted to welcome Tom who spoke about the issues discussed in his book.  He started by saying that there was a need for change and this was not being heeded by politicians.  One of the fundamental problems was inequality.  He referred to Wilkinson and Pickett’s book The Spirit Level (Penguin Books, 2010) which showed that inequality had bad social outcomes which got worse the more unequal society became.

He had come down to Salisbury the night before and went to see Magna Carta in the Cathedral.  He was interested to see that there was a panel where visitors were invited to say what single thing they would change if they were a baron.  He was surprised and delighted to see that the great majority of responses put ‘inequality’ and its removal as their preferred choice.  Politicians he believed were simply not listening to this desire.

Politicians did not he felt concentrate sufficiently on the fundamental causes of the problems such as this. There was a singular lack of vision by the political class generally.  A central issue is poverty and there are surprising levels of poverty even in supposedly prosperous places such as London.  He spoke of his time working for Bernie Saunders in the USA a country which, despite the image frequently presented by Hollywood, has high levels of poverty and is in many respects quite primitive.

Tax

Quite a lot of the talk centred on tax and the grossly unfair nature of the current tax system in the UK.  The current system is heavily based on taxing income whereas wealth largely escapes attention.  Readers of Thomas Picketty’s book Capital will be familiar with this argument.  There is no tax on land.  Historically there was and it was abolished quite recently in the ’60s.  There were attempts to tax betterment, that is the uplift in price which follows development of land, and a betterment levy was introduced under a Labour government but it did not last.

One of his central themes is that we all create wealth but only a few get to accumulate it.  He proposes lifting the rate at which income tax kicks in to £30,000 pa and a wealth tax of 1 or 2%.  The point was raised that by removing large numbers of people from the tax system (since the average and median wage levels are below £30k) would you remove people’s interest in it?  This is partially true although the wealthy who pay no tax or very little indeed seem to maintain a huge say in the subject despite their lack of payment!

This brought us onto a discussion of tax itself and the problem that it is characterized as a ‘bad thing’ and that the less tax we pay the better off we are.  We need to encourage the idea that tax is a contribution to society.  Put another way, it is the price we pay for a civilised society.

In many cases, tax is the most efficient way to collect revenue for the provision of a service eg health, education or the environment.  The problem was almost the word itself: if it could be changed for a more neutral word it might help.  We also in this context got onto a discussion of hypothecation i.e. a penny on income tax which is dedicated to the NHS.  This is often suggested but who is to decide where the penny should go?  The Road Fund Duty was an example of this but the revenue earned did not match the costs of road building as the motorway programme got underway.

There was a discussion of the problem of increasing taxes results in a reduction of income earned i.e. the Laffer Curve.  We are probably some way off that point – generally thought to be around 70% tax rate – where further taxes result in less actually being collected.

Individual giving

Tom also brought up the issue of individual giving for example Bill and Melinda Gates and their foundation.  Although such philanthropy was to be applauded, and they have given away millions of dollars, the community was not involved in where the money went.  He believed the community should have a say.  There was also a risk that only popular causes were funded by this means which were not always the most needy or deserving.

Tax avoidance

Inevitably, in the context of fairness and inequality, we got onto the topic of tax avoidance brought to the fore recently by the revelations in the Panama Papers and Paradise Papers.  It was ‘scandalous’ he said that these companies were getting away with this avoidance and there was little sign of politicians tackling it.  Neither Theresa May nor John MacDonald have spelt out how they are going to deal with it.  It will need international cooperation to achieve and our imminent departure from the EU will make that just a little bit harder.

There was a brief discussion on UBI and a worry expressed that we were becoming a rentier economy.

A fascinating discussion and the book is published by Shepheard Walwyn.  The group were grateful to Tom for taking the trouble to come and talk to us.  Tom is a director of the Progressive Policy Unit

 

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