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
Biology
Comment
Wildness
5 min read

There’s a sting in the tail if we construct lessons from nature

Don’t be like the bees

Juila is a writer and social justice advocate. 

A bee keeper hold honeycomb to the light
HiveBoxx on Unsplash.

‘Be like the bees’ we hear not infrequently. These furry hive dwellers have been coopted by many, from socialists to capitalists, to put a point across. One party draws on their social structure as an inspiration, another their worker bee ethic. They are indeed an example to us. And yet at the same time, bee communities do things that we would find reprehensible in fellow humans. Male bees are expelled from the hive when they are no longer considered reproductively useful. The bees we see out and about this summer are often the oldest, sent to do the dangerous foraging work because they are considered the most expendable. This was a jarring discovery for me, reading it in Katherine May’s timely book, Wintering, during the first COVID-19 lockdown. I was one of the millions shielding and being protected by the ways that society shifted to serve the most vulnerable to the virus; bees, I had just learned, would not behave like this. There are some limits, it seems, to the lessons we construct from nature.  

For we do love to construct them. Spend a moment on LinkedIn or Substack, and there are a multitude of articles drawing lessons from the world around us and the creatures we share it with.  

This impulse is not new; throughout history, people and communities have done this. People’s relationship with nature is not static or homogenous. The wilderness has been variously a place of fear to be avoided, of growing wonder as described by the Romantic Poets, a site of knowledge neglected by those in power but maintained by others, often women and indigenous communities.  

What strikes me about the current trend is that it seems to push to an extreme of unquestioning veneration: nature is perfect and our whole teacher. There are posts about perfect harmony we should emulate, or a call to copy an endless adaptability. These are the things that we might long for – but do not seem to be borne out in ecosystems where sea urchins demolish kelp forests, and the climate crisis reveals the limits of species to adjust. We are being called to see what we want (or feel we need) rather than what actually exists in the world around us.  

This instinct to carve lessons from creation extends beyond the natural world to the work of human hands. The Japanese art of kintsugi, repairing broken pottery with gold, has become increasingly prevalent as a metaphor for healing; a beautiful idea but one that risks being stripped of its culture, and that has both limitations and dangers. In Sarah Perry’s novel, The Essex Serpent, Cora’s husband Michael masks his abuse by speaking in a romantic metaphor of his intention to break her down and mend her with gold, like the Japanese art in their hallway. But Cora is not a vase; she is woman. Michael’s breaking harms her. She only begins to repair after he is gone; it is messy, some parts seem irrevocably changed. I think of my own losses, and how healing is indeed available, but rarely as straightforward as putting the same pieces back together. To think it is so can hinder our restoration, and miss out on the transformation that may be possible. As the journalist Poorna Bell wrote after her husband’s death by suicide: “I was in some ways sadder, wiser, but also my existence was much bigger, more honest.” 

We have a great capacity to learn – and we need it to survive. As writer Andy Crouch put it in his book, Culture Making: “a human baby is the strangest and most wonderful creature this world can offer. No other mammal emerges so helpless from the womb, utterly unable to cope with the opportunity and adversity of nature. Yet no other creature holds such limitless possibility… We are hard-wired for nothing but learning. All we begin with are possibilities.” 

This ability to grow and understand and change is essential if we are to navigate the world. And in our encounters with this place, with brokenness and confusion, the instinct to make meaning, to tidy, to be able to point to something and say 'this is how we should be’ is a form of comfort. Maybe even control it. We are grappling with not just how to understand the world, but how to be in it.  

If we are always looking for the lesson, we devalue nature by prizing it just for what it can give us. 

Creation and creativity have much to teach us – they’re a testament to and the fruit of the imagination of God. But to prize them just for their lessons seems to fall into another form of extraction and to miss out on something else, something that may be a greater gift in this messy world: wonder.  

Bees moving from flower to flower are not setting out on their mission with a side hustle of education for the human race. They are being their full bee selves. Nectar is necessary; this is how it is collected. Bees share knowledge about the good plants via a ‘waggle dance’. This is how the colony persists. It is not for my benefit (though it may encourage me to a moment of playfulness).  

Writing this on my balcony, I pause when I see dozens of birds circling one thermal; a moving column of gulls and red kites that goes up and up and up. I could strive for a teachable moment (maybe something about co-existence?) but it feels not just unnecessary, but an interruption. In that moment, I was a human being in awe of birds riding the warm air; that feels like something full of beauty in itself. I worry that if we are always looking for the lesson, we devalue nature by prizing it just for what it can give us. And we miss out on the opportunities to marvel at creation itself.  

And, in calling each other to be like other creatures, we accidentally dehumanise other people and ourselves. In the face of conflict, polarisation and disconnection, to contend for each other’s humanity feels vital. And to recognise our own humanness is to acknowledge our limitations. There are parts of nature currently beyond our comprehension. Birdsong holds complexity heard by the intended audience but we can only guess at its meaning. There is something to accepting the edges of our own understanding. Sometimes we touch on truths that seem to contradict or be in tension. Perhaps they are layers that we cannot intellectually fit together but that build up a fuller, richer story that resonates in our souls. Glimpsing something of the multifaceted wisdom and wonder of God himself – and that helps us to remember who we are. A particular type of creature: a human. 

So, I won’t be a bee. I’ll keep trying to learn to be what I am: a particular human in a bigger community, world and story. Now, I’m off to admire the goldfinches, glinting in the sunshine. 

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