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. 

Article
Belief
Creed
Education
7 min read

The myth of secular neutrality

Where academia went wrong.

Alex Stewart is a lawyer, trustee and photographer.  

A phrenology head is shown with its eyes closed.
David Matos on Unsplash.

In the recent horror-thriller Heretic, Hugh Grant plays Mr. Reed, a sharp-witted psychopath who imprisons two missionaries, subjecting them to ceaseless diatribes about the supposed irrationality of all religions.  Mr. Reed is also a terribly smug, self-righteous bore, a caricature of the fervent atheist who dismisses faith as mere superstition while assuming atheism is objective and neutral.  

This kind of assumption lies behind the criticisms directed by secularists at those who argue from a position of faith, as we saw recently with the debates on the Assisted Dying Bill. Yet, the notion of secular objectivity is itself a fallacy. Secularism, like any worldview, is a perspective, ironically one that is deeply indebted to Christianity, and humanity’s history of abandoning faith and its moral foundation has had disastrous consequences.  

Secularism is a bias, often grounded in an ethical vanity, whose supposedly universal principles have very Christian roots. Concepts like personal autonomy stem from a tradition that views life as sacred, based on the belief that humans are uniquely created in God's image. Appeals to compassion reflect Jesus’ teachings and Christian arguments for social justice throughout history. Claims that the Assisted Dying Bill was "progressive" rely on the Judaeo-Christian understanding of time as linear rather than cyclical. Even the separation of the secular and sacred is derived from Jesus’ teaching to “render to Caesar what is Caesar’s and to God what is God’s”. Authors like Tom Holland in Dominion and Glen Scrivener in The Air We Breathe have shown how Western societies, though often disconnected from their Christian roots, still operate within frameworks shaped by centuries of Christianity.

The antidote to human pride and self-deception was to be found in the Almighty.  Ironically, it was this humility, rooted in a very theological concern about human cognitive fallibility, that gave birth to the scientific method. 

A political secularism began to emerge after the seventeenth century European religious wars but the supposed historical conflict between science and religion, in which the former triumphs over superstition and a hostile Church, is myth. Promoted in the eighteenth century by figures like John Draper and Andrew White, this ‘conflict thesis’ persists even though it has been comprehensively debunked by works such as David Hutchings and James C. Ungureanu’s Of Popes and Unicorns and Nicholas Spencer’s Magisteria. Historians now emphasize the complex, often collaborative relationship between faith and science. 

Far from opposing intellectual inquiry, faith was its foundation. Medieval Christian Europe birthed the great universities; this was not simply because the Church had power and wealth but because knowledge of God was viewed as the basis for all understanding. University mottos reflect this view: Oxford’s "Dominus illuminatio mea" (The Lord is my light), Yale’s "Lux et Veritas" (Light and Truth), and Harvard’s original "Veritas Christo et Ecclesiae" (Truth for Christ and the Church). This intertwining of faith and academia fuelled the Enlightenment, when scientists like Boyle, Newton, and Kepler approached the study of creation (what Calvin described as ‘the theatre of God’s glory”) as an affirmation of the divine order of a God who delighted in His creatures “thinking His thoughts after Him”.   

Their Christian beliefs not only provided an impetus for rigorous exploration but also instilled in them a humility about human intellect. Unlike modernity's view of the mind as a detached, all-seeing eye, they believed man’s cognitive faculties had been diminished, both morally and intellectually, by Adam’s fall, which made perfect knowledge unattainable. Blaise Pascal captures this struggle with uncertainty in his Pensées.  

“We desire truth, and find within ourselves only uncertainty....This desire is left to us, partly to punish us, partly to make us perceive from whence we have fallen.”  

For Pascal and his believing contemporaries, the antidote to human pride and self-deception was to be found in the Almighty.  Ironically, it was this humility, rooted in a very theological concern about human cognitive fallibility, that gave birth to the scientific method, the process of systematic experimentation based on empirical evidence, and which later became central to Enlightenment thinking. 

Orwell was not alone in thinking that some ideas were so foolish that only intellectuals believed them. 

Although many of its leading lights were believers, the Enlightenment era hastened a shift away from God and towards man as the centre of understanding and ethics. Philosophers like David Hume marginalized or eliminated God altogether, paving the way for His later dismissal as a phantom of human projection (Freud) or as a tool of exploitation and oppression (Marx), while Rousseau popularised the appealing idea that rather than being inherently flawed, man was naturally good, only his environment made him do bad things.  

But it took the nihilist Nietzsche, the son of a Lutheran pastor, to predict the moral vacuum created by the death of God and its profound consequences. Ethical boundaries became unstable, allowing new ideologies to justify anything in pursuit of their utopian ends. Nietzsche’s prophesies about the rise of totalitarianism and competing ideologies that were to characterise the twentieth century were chillingly accurate. Germany universities provided the intellectual justification for Nazi atrocities against the Jews while the Marxist inspired revolutions and policies of the Soviet and Chinese Communist regimes led to appalling suffering and the deaths of between 80 and 100 million people. Devoid of divine accountability, these pseudo, human-centred religions amplified human malevolence and man’s destructive impulses.      

By the early 1990s, the Soviet Union had collapsed, leading Francis Fukuyama to opine from his ivory tower that secular liberal democracy was the natural end point in humanity's socio-political evolution and that history had ‘ended’. But his optimism was short lived. The events of 9/11 and the resurgence of a potent Islamism gave the lie that everyone wanted a western style secular liberal democracy, while back in the west a repackaged version of the old Marxist oppressor narrative began to appear on campuses, its deceitful utopian Siren song that man could be the author of his own salvation bewitching the academy. This time it came in the guise of divisive identity-based ideologies overlayed with post-modern power narratives that seemed to defy reality and confirm Chesterton’s view that when man ceased to believe in God he was capable of believing in anything.  

As universities promoted ideology over evidence and conformity over intellectual freedom, George Orwell’s critique of intellectual credulity and the dark fanaticism it often fosters, epitomized in 1984 where reality itself is manipulated through dogma, seemed more relevant than ever.  Orwell was not alone in thinking that some ideas were so foolish that only intellectuals believed them. Other commentators like Thomas Sowell are equally sceptical, critiquing the tenured academics whose lives are insulated from the suffering of those who have to live under their pet ideologies, and who prefer theories and sophistry to workable solutions. Intellect, he notes, is not the same thing as wisdom. More recently, American writer David Brooks, writing in The Atlantic, questions the point of having elite educational systems that overemphasize cognitive ability at the expense of other qualities, suggesting they tend to produce a narrow-minded ruling class who are blind to their own biases and false beliefs. 

It was intellectual over-confidence that led many institutions to abandon their faith-based origins. Harvard shortened its motto from "Veritas Christo et Ecclesiae" to plain "Veritas” and introduced a tellingly symbolic change to its shield. The original shield depicted three books: two open, symbolizing the Old and New Testaments, and one closed, representing a knowledge that required divine revelation. The modern shield shows all three books open, reflecting a human centred worldview that was done with God. 

However, secular confidence seems to be waning. Since the peak of New Atheism in the mid-2000s, there has been a growing dissatisfaction with worldviews limited to reason and materialism. Artists like Nick Cave have critiqued secularism’s inability to address concepts like forgiveness and mercy, while figures like Ayaan Hirsi Ali and Russell Brand have publicly embraced Christianity. The longing for the transcendent and a world that is ‘re-enchanted’ seems to be widespread.  

Despite the Church’s struggles, the teaching and person of Christ, the One who claimed not to point towards the truth but to be the Truth, the original Veritas the puritan founders of Harvard had in mind, remains as compelling as ever.  The story of fall, forgiveness, cosmic belonging and His transforming love is the narrative that most closely maps to our deepest human longings and lived experience, whilst simultaneously offering us the hope of redemption and - with divine help – becoming better versions of ourselves, the kind of people that secularism thinks we already are.   

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