Explainer
Comment
Economics
6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?
a pile of coins.
Sarah Agnew on Unsplash.

Few doubt that Chancellor Rachel Reeves will be putting up taxes when she presents her first Budget on October 30th.  

The political narrative of recent months has very much been of an alleged fiscal “black hole” of £22bn - or is it £40bn? - that somehow needs to be filled. 

While the size of the shortfall and the identity of those responsible are both hotly disputed, and despite a lack of detail from the Treasury about what it actually consists of, the questions now being asked are not whether taxes will rise but which ones and by how much.  

Months of speculation have focused on employer National Insurance, capital gains tax and freezing income tax thresholds as areas that Reeves could look to for the additional revenue. 

But beyond the immediate issue of raising enough revenue to make good any shortfall, lies a deeper, trickier question about the way in which taxes should be levied for the good of society. If a government is to force people and companies to hand over their money, then what is the most ethical way to do this? Who should pay and who shouldn’t? How can tax be used to reduce inequality and build a better society? 

Answering such questions is, of course, far from straightforward, because there are plenty of other factors in play. 

For instance, some taxes are surely levied because they are simpler to collect. Take income tax - an unpopular measure introduced in 1799, then abolished before being reintroduced as a supposed temporary measure. It could certainly be argued that taxing people’s income - their attempt to get on in life and improve their lot in life - is less “fair” than taxing wealth that has been accumulated by someone’s ancestors years ago. Working hard and earning income is often surely a way of breaking down class divisions. But income tax - contributing 28 per cent of UK government tax take in 2023-24, according to The Institute for Fiscal Studies - has the advantage that it is relatively difficult for the average worker at a UK company to avoid it. Ease of levying it is surely a driver.  

Equally, some taxes that might seem “fairer” have deliberately not been levied because of the difficulty in collecting them, and/or because to try to do so could be counterproductive.  

A wealth tax, for instance, would be “economically damaging”, according to one of the UK’s highest profile tax experts Dan Neidle. 

Or take the politically contentious issue of non-doms, a colonial era tax break allowing rich foreigners to avoid UK tax on overseas income. It would be fairer, the argument goes, to tax them on the whole of their income. If they are going to be resident in the UK, then surely they should be taxed like a UK resident whose home is here? 

Former Chancellor Jeremy Hunt abolished this regime earlier this year but left a number of concessions that the incoming Labour government pledged to abolish. But non-doms are tax-sensitive and highly mobile, and a number of jurisdictions compete to attract them. Many are entrepreneurs and wealth creators that many countries need. Reports have suggested a clampdown could raise no money or even cost money and could drive people away. 

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.” 

Paul Williams

So, what can be done to use tax in an ethical way? Paul Williams, research professor of marketplace theology and leadership at Regent College, Vancouver and chief executive of the Bible Society, takes a Biblical perspective that he believes offers some solutions. 

He takes as his starting point a story from the gospel of Matthew, where Jesus is asked whether people should pay taxes to Caesar. The question is a trap - either Jesus gives his backing to taxation that is highly unpopular with the Jewish people, or he rejects the tax in an act of rebellion against the Romans. 

Jesus replies that they should “pay to the Emperor what belongs to the Emperor, and pay to God what belongs to God.” We are to pay our taxes to those in authority, but we are also to honour God. 

While Williams believes that too much emphasis is placed on the Budget and political parties’ promises to be able to fix everything, and that a more radical rethink of our economy is required, he also sees room for positive tweaks to the current system. 

One key area is the property market, the manifestation of so much inequality in society, with some people owning multiple houses while others cannot afford to buy one. 

Williams argues that the ready availability of debt finance has allowed those who already hold assets to easily acquire properties, turning real estate into an investable asset class to the detriment of many of the poorer in society. 

“The reason there’s so many homeless people and empty houses is due to debt finance. It makes it easy for a relatively small proportion of the population to acquire a large percentage of the assets. 

“The system has allowed a structure in which a small advantage in the beginning can lead to big, big differences over time.” 

Williams highlights parts of Devon and Cornwall that have been, he says, “completely ruined” by wealthy people from elsewhere buying second homes, leaving property “out of reach of anyone who lives and works there”. 

Nevertheless, he believes taxation can be used in this area to help level the playing field. 

He proposes a “pretty punitive” marginal rate of tax on ownership of more than one home. (Stamp duty only partly does the job and is a blunt instrument also affecting people moving homes, thereby makes mobility expensive). 

“You want to disincentivise the way the housing market is used for speculation,” he said. 

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.” 

Buy-to-lets, meanwhile, are better than having empty second or third homes, but “wouldn’t it be better if occupiers could buy that house?” he adds. 

Meanwhile, research by the Financial Times recently found a huge wealth gap between the average millennial and the top 10 per cent of millennials, who are benefiting from family wealth to accumulate substantial housing assets.  

So, would increasing the rate of inheritance tax - one of the most hated of taxes - and/or lowering the threshold also help reduce some of this inequality? After all, how is it fair that one child in the UK is born to inherit large property wealth while another is born to inherit little or nothing? Or, even worse, that second child will only ever be able to afford to be the tenant of the first, paying them rent for the rest of their lives? 

Williams is not a fan of inheritance tax per se, arguing that it is “not part of the package” in a Biblical image of a flourishing economy.  

But he adds an important caveat: “the playing field is not level. 

“There might be circumstances to impose a one-off tax on the very wealthy… if you want a transition to a more equitable society.” 

Such steps are not easy to take. It is, he admits, probably “career suicide” for a politician to adopt such views. But if we are to take steps towards a fairer way of life, and avoid a two-tier society in decades to come, then maybe the conversation needs to shift this way. Perhaps the Budget could be the time to start. 

Interview
Care
Change
Community
Masculinity
5 min read

There’s a simple solution to society’s lost boys

Mentoring the fatherless helps and heals

Belle is the staff writer at Seen & Unseen and co-host of its Re-enchanting podcast.

A teenager slumped against a sofa plays a video game
Zach Wear on Unsplash .

What if nearly every major social pathology could be halted upstream? What if there was evidence to suggest that they commonly flow from one singular factor? What would we do – would we sit back and wait for the State to intervene, pointing to where we know the problem is beginning? Or would we wade up that stream ourselves, and start damning up the current?  

Richard Kay and Robert Mansel Lewis have chosen the latter option. They are the founders of Chapter2, a charity that offers mentoring for boys aged seven to 16. And they have identified fatherlessness as the factor that is linked to many major social pathologies to be found in Western society today. 

Earlier this year, the Centre for Social Justice brought out a report called Lost Boys. It found that2.5 million children in the UK do not live with a father figure, and that just under half of young Britons grow up with one biological parent, more often than not their mother.; 

Back in 2013, the numbers were strikingly higher in low-income areas, with 65 per cent of children aged 12–16 in the bottom 20 per cent of income households not living with both birth parents – this was 26 per cent higher than in better-off households. What’s more, when children were aged three, the chance of them being in the bottom income quintile was 21 per cent if their parents were married, and a massive 81 per cent if they were in lone-parent families.  

So, we can already see a clear line drawn between fatherlessness and poverty,. Chapter2 (informed by the work of psychologist, Stephen Baskerville) also point out that fatherlessness is linked to alcohol abuse, drug abuse, truancy in school, incarceration, and mental health difficulties – all among young boys, in particular.  

There’s a smorgasbord of factors and influences that are making it increasingly complex to be a ‘healthy’ and ‘happy’ man right now. “You don’t even need to put the word ‘toxic’ in front of ‘masculinity’ anymore, Kay points out. “It’s just assumed. If we need to ask what healthy masculinity is, people really don’t know.” 

As I’m writing this, I’m sitting in a coffee shop with ‘boys will be... what we teach them to be’ emblazoned on the side of it. It feels as though multiple destructive forces are making a beeline for young men right now, and we’re panicking. We’re manically trying to halt a fast and violent flow - but what if we waded upstream? 

That’s what Kay and his colleagues are trying to do. The charity’s mission is to  

bring good men into the lives of young boys who are living without a father. These men – all volunteers (?) - are committed to being there for the long term (two years, minimum) and to build a trusted friendship. That’s it: the beginning, middle, and end of the mission.  

I was struck by the radical simplicity of it. Young boys get referred to Chapter2 through social services, schools, and by family members or guardians – they told me that referrals have never been something they’ve had to work hard to gather. Which is pretty heart breaking in itself. 

The reality is, the fatherlessness crisis isn’t going to be solved by State-led intervention, and nor should it be. The solution lies in community living as it should do. It can be helped by the smashing down of hyper-individualism and the dismantling of our obsession with the nuclear family. It can be eased by reminding ourselves that it really does take a village to raise a child. Oh, and that we’re the village. When we spoke, Kay talked about his initial reluctance to found a charity that does this work, weary that it somehow relieves us all of our responsibility to live wide-open lives. Chapter2 is working toward a world in which the mentoring of young, fatherless, boys is normal, not a last resort.  

I like that. 

The longevity of Chapter2’s goal is pretty counter-cultural, isn’t it? We’re a commitment-phobic-culture. That’s pretty anti-love-your-neighbour, right? But the only way to respond to the wound of abandonment is by showing up – relentlessly, consistently, self-sacrificially. It’s the art of staying – come what may.  

I was told that this takes the boys a little getting used to; that Kay and Mansel Lewis warn the men they’re training that there will come a point when the boys will try and push them away, assuming they’ll leave sooner or later and feeling more comfortable having that happen on their own terms. It’s a symptom of the abandonment wound, I guess. But the men stay, and the boys begin to trust them.  

And here’s the other biggie for Chapter2: there’s no agenda. No goals. No solutions. No fixing. Just presence - consistent presence.  

Again, I was struck by how foreign that must feel to the boys. Everybody else in their life needs and wants something from them – better school attendance, better behaviour at home, less trouble with the police – and rightly so. But the Chapter2 mentors are only interested in the boys’ company and trust. They’re not trying to fix them, they’re just trying to know them – if there are no measurable changes, they’ll still show up. Zero conditions.  

The poet, rapper, author, and pastor, Joshua Luke Smith, often talks about a father as being someone who will  

‘bind up your wounds and catch you when you fall’,  

because that that’s what every young man needs – someone to care enough to do those two things. Because hurt people tend to hurt people. So, wounds need to be bound before they become ‘an excuse to wound others’. Again, it’s all very upstream, don’t you think? It’s very Chapter2-esque.  

One Chapter2 mentor recently received a Father’s Day card from a boy he’d built up a relationship with. Another young boy who’d been arrested twenty or so times in twelve months eventually realised, thanks to his mentor, that it’s not worth getting into trouble. His mentor, he said, ‘is someone he can trust, he’s consistent and he knows he cares about him’.  

This is community living as it ought to. Is this also the solution to the pandemic of fatherlessness?  

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