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. 

Review
Books
Care
Comment
Psychology
7 min read

We don’t have an over-diagnosis problem, we have a society problem

Suzanne O’Sullivan's question is timely
A visualised glass head shows a swirl of pink across the face.
Maxim Berg on Unsplash.

Rates of diagnoses for autism and ADHD are at an all-time high, whilst NHS funding remains in a perpetual state of squeeze. In this context, consultant neurologist Suzanne O’Sullivan, in her recent book The Age of Diagnosis, asks a timely question: can getting a diagnosis sometimes do more harm than good? Her concern is that many of these apparent “diagnoses” are not so much wrong as superfluous; in her view, they risk harming a person’s sense of wellbeing by encouraging self-imposed limitations or prompting them to pursue treatments that may not be justified. 

There are elements of O-Sullivan’s argument that I am not qualified to assess. For example, I cannot look at the research into preventative treatments for localised and non-metastatic cancers and tell you what proportion of those treatments is unnecessary. However, even from my lay-person’s perspective, it does seem that if the removal of a tumour brings peace of mind to a patient, however benign that tumour might be, then O’Sullivan may be oversimplifying the situation when she proposes that such surgery is an unnecessary medical intervention.  

But O’Sullivan devotes a large proportion of the book to the topics of autism and ADHD – and on this I am less of a lay person. She is one of many people who are proposing that these are being over diagnosed due to parental pressure and social contagion. Her particular concern is that a diagnosis might become a self-fulfilling prophecy, limiting one’s opportunities in life: “Some will take the diagnosis to mean that they can’t do certain things, so they won’t even try.” Notably, O’Sullivan persists with this argument even though the one autistic person whom she interviewed for the book actually told her the opposite: getting a diagnosis had helped her interviewee, Poppy, to re-frame a number of the difficulties that she was facing in life and realise they were not her fault.  

Poppy’s narrative is one with which we are very familiar at the Centre for Autism and Theology, where our team of neurodiverse researchers have conducted many, many interviews with people of all neurotypes across multiple research projects. Time and time again we hear the same thing: getting a diagnosis is what helps many neurodivergent people make sense of their lives and to ask for the help that they need. As theologian Grant Macaskill said in a recent podcast:  

“A label, potentially, is something that can help you to thrive rather than simply label the fact that you're not thriving in some way.” 

Perhaps it is helpful to remember how these diagnoses come about, because neurodivergence cannot be identified by any objective means such as by a blood test or CT scan. At present the only way to get a diagnosis is to have one’s lifestyle, behaviours and preferences analysed by clinicians during an intrusive and often patronising process of self-disclosure. 

Despite the invidious nature of this diagnostic process, more and more people are willing to subject themselves to it. Philosopher Robert Chapman looks to late-stage capitalism for the explanation. Having a diagnosis means that one can take on what is known as the “sick role” in our societal structures. When one is in the “sick role” in any kind of culture, society, or organisation, one is given social permission to take less personal responsibility for one’s own well-being. For example, if I have the flu at home, then caring family members might bring me hot drinks, chicken soup or whatever else I might need, so that I don’t have to get out of bed. This makes sense when I am sick, but if I expected my family to do things like that for me all the time, then I would be called lazy and demanding! When a person is in the “sick role” to whatever degree (it doesn’t always entail being consigned to one’s bed) then the expectations on that person change accordingly.  

Chapman points out that the dynamics of late-stage capitalism have pushed more and more people into the “sick role” because our lifestyles are bad for our health in ways that are mostly out of our own control. In his 2023 book, Empire of Normality, he observes,  

“In the scientific literature more generally, for instance, modern artificial lighting has been associated with depression and other health conditions; excessive exposure to screen time has been associated with chronic overstimulation, mental health conditions, and cognitive disablement; and noise annoyance has been associated with a twofold increase in depression and anxiety, especially relating to noise pollution from aircraft, traffic, and industrial work.” 

Most of this we cannot escape, and on top of it all we live life at a frenetic pace where workers are expected to function like machines, often subordinating the needs and demands of the body. Thus, more and more people begin to experience disablement, where they simply cannot keep working, and they start to reach for medical diagnoses to explain why they cannot keep pace in an environment that is constantly thwarting their efforts to stay fit and well. From this arises the phenomenon of “shadow diagnoses” – this is where “milder” versions of existing conditions, including autism and ADHD, start to be diagnosed more commonly, because more and more people are feeling that they are unsuited to the cognitive, sensory and emotional demands of daily working life.  

When I read in O’Sullivan’s book that a lot more people are asking for diagnoses, what I hear is that a lot more people are asking for help.

O’Sullivan rightly observes that some real problems arise from this phenomenon of “shadow diagnoses”. It does create a scenario, for example, where autistic people who experience significant disability (e.g., those who have no perception of danger and therefore require 24-hour supervision to keep them safe) are in the same “queue” for support as those from whom being autistic doesn’t preclude living independently. 

But this is not a diagnosis problem so much as a society problem – health and social care resources are never limitless, and a process of prioritisation must always take place. If I cut my hand on a piece of broken glass and need to go to A&E for stiches, I might find myself in the same “queue” as a 7-year-old child who has done exactly the same thing. Like anyone, I would expect the staff to treat the child first, knowing that the same injury is likely to be causing a younger person much more distress. Autistic individuals are just as capable of recognising that others within the autism community may have needs that should take priority over their own.   

What O’Sullivan overlooks is that there are some equally big positives to “shadow diagnoses” – especially as our society runs on such strongly capitalist lines. When a large proportion of the population starts to experience the same disablement, it becomes economically worthwhile for employers or other authorities to address the problem. To put it another way: If we get a rise in “shadow diagnoses” then we also get a rise in “shadow treatments” – accommodations made in the workplace/society that mean everybody can thrive. As Macaskill puts it:  

“Accommodations then are not about accommodating something intrinsically negative; they're about accommodating something intrinsically different so that it doesn't have to be negative.” 

This can be seen already in many primary schools: where once it was the exception (and highly stigmatised) for a child to wear noise cancelling headphones, they are now routinely made available to all students, regardless of neurotype. This means not only that stigma is reduced for the one or two students who may be highly dependent on headphones, but it also means that many more children can benefit from a break from the deleterious effects of constant noise. 

When I read in O’Sullivan’s book that a lot more people are asking for diagnoses, what I hear is that a lot more people are asking for help. I suspect the rise in people identifying as neurodivergent reflects a latent cry of “Stop the world, I want to get off!” This is not to say that those coming forward are not autistic or do not have ADHD (or other neurodivergence) but simply that if our societies were gentler and more cohesive, fewer people with these conditions would need to reach for the “sick role” in order to get by.  

Perhaps counter-intuitively, if we want the number of people asking for the “sick role” to decrease, we actually need to be diagnosing more people! In this way, we push our capitalist society towards adopting “shadow-treatments” – adopting certain accommodations in our schools and workplaces as part of the norm. When this happens, there are benefits not only for neurodivergent people, but for everybody.

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