Abi Wilkinson suggests a massive redistribution (How about an NHS for housing and food?, 12 October) and in your front-page story the IMF suggests a way of financing it (Higher taxes for rich will cut inequality without hitting growth).
With the minor exception of George Osborne’s national living wage – which will distribute around £4bn to the poorest workers, compared with £14bn the Tories are planning to take away from them through welfare cuts – redistribution has all been from the poor to the rich. The IMF report says the average income tax rate for the rich OECD countries fell from 62% in 1981 to 35% in 2015 (and probably even more if you count extra tax relief). The amounts of money this reflects are simply staggering. In the UK, the fall in the share of national income going to wages – from 80% to 73% over the last 40 years – represents about £130bn every year going to profits rather than wages. As a result, there are enormous amounts of money sloshing around in the economy. But instead of being used to benefit all of us, it’s being used to create more wealth for those who already have more than they need.
The IMF estimates that in 2016 institutional investors were holding around $100tn worldwide, while the 1,000 richest people in the UK are estimated to own £650bn, increasing by £80bn a year, largely through unearned income. British firms are awash with cash: probably well over £100bn will have been paid out to shareholders this year. Apart from the fact that this makes it virtually certain that we will soon experience another financial crash, with “too much money ... chasing too few assets offering a yield”, think what we could do to reform society with these amounts. Let’s hope that the next Labour government will be truly radical. We can certainly afford it.
Jeremy Cushing
Exeter
• Employee national insurance contributions are a key factor in considering income tax rates for the rich. Employee NICs – 12% on earnings of between around £8,000 and £43,000, dropping to 2% after that – are in effect a direct tax, no different to income tax. HMRC’s annual tax summaries, as sent to every taxpayer in the land, combine income tax and NI contributions in calculating how our taxes have contributed to government spending.
In his 2011 budget speech, the then chancellor George Osborne said: “I am announcing today that the government will consult on merging the operation of national insurance and income tax”, though little more came of it. I see no justification for the poorest to be paying a direct tax of 12% on a major element of the income, while the richest are paying just 2% on theirs. Equalising NI contributions for all employees would be an easy and fair way to increase tax revenue.
Neil Hornsby
Inverness
• In your editorial (Time to tax the rich to help the poor, 12 October) you report that the IMF rejects arguments against increasing the tax burden on the richest 1%. But those of us moderately well-off will have to contribute too. There is a mechanism to bring this about during periods of inflation. About 5 million out of 30 million taxpayers incur the higher rates of 40% and 45%. To raise tax revenue the levels of income at which these tax rates kick in could for a year or two (or more) be held constant; they should not be inflation-proofed. Hence while prices and people’s incomes rose, more people would enter these tax brackets and those already there would pay more. Tax revenue would rise and, depending on how the extra revenue is used, there would be a much-needed reduction in income inequality.
Lawrence Lockhart
Bath
• When even the IMF, an institution hardly renowned for its leftwing views, advocates “significantly higher” taxes for the rich, will Philip Hammond take heed and deliver a more equitable budget next month? The time has come to roll forward the frontiers of the state and heal the rifts begun in the Thatcher years.
Lynn Loyley
Chester
• A Treasury spokesperson says that the richest 1% pay over a quarter of all income tax. He forgot to mention what fraction of all earnings they take.
John Shirley
London
• George Monbiot’s articles on a possible radical future (How do we get out of this mess, 9 September), (A lesson from Hurricane Irma, 13 September) and (How Labour could lead the global economy out of the 20th century, 11 October) are typically full of great ideas, but he seems unable to acknowledge that the only real solution to the problems he identifies – climate change, globalisation, poverty, overcrowded cities, social fragmentation, mass extinction, destruction of valued habitats – is socialism. Of course, Keynesian economics will eventually “collide headfirst” with the environmental crisis, and the left does indeed need a new narrative to counter neoliberalism, and to develop a “politics of belonging”, but this narrative is just not being nurtured today, or by a “few scattered, independent thinkers”.
All the ideas George cites as potential contributors – human beings as basically cooperative, the need for renewed sense of community, control over local commons; land value tax, political empowerment of local communities, production for need not wants (essentially Kate Raworth’s idea of “Doughnut Economics”) – were also preoccupations of many late 19th- and early 20th-century socialists and others: for example, Henry George (land value tax), Prince Kropotkin (who coined the term mutual aid), and William Morris.
George, now that you are finally slouching towards socialism, it’s time to read Morris’s News from Nowhere.
Dr Patrick O’Sullivan
Former editor, Journal of William Morris Studies, Liskeard, Cornwall
• This kind of communitarianism George Monbiot advocates has become very popular across the political spectrum; but it cannot achieve the socialist aims presumably desired by Monbiot. A land value tax appropriated by local communities is socially and spatially inegalitarian: rich areas reap massively more than poor. Egalitarian funding of local public services requires mainly national state funding. And many public services require a scale larger than the neighbourhood or locality to be minimally efficient. And the terms of employment within them need to be set at the national scale to avoid the current neoliberal race to the bottom or reliance on voluntary labour as in Cameron’s “big Society”.
Monbiot leaves dangerously vague the crucial issue of how communities are constituted, how they make decisions and within what legal constraints. If ownership of assets and funding streams are given to self-constituted and self-proclaimed community groups, then there is no way to ensure either their democracy or their probity, as the woeful history of state-funded community groups shows. If, on the other hand, these resources are given to neighbourhood bodies which are constituted by law, have regular, contested elections, transparency in decision-making and spending, and checks on corruption, then these bodies, whatever their name, are a part of the state.
Monbiot’s “not the state or market” cliche cannot avoid the real economic, power and scale relations of public services, let alone the wider economy.
Dr Jamie Gough
Department of urban studies and planning, University of Sheffield
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