In Praise of Taxation

Salaries above a certain threshold earned by the super rich are used as a status symbol, part of the “because you are worth it” culture that now permeates our society.  It is a way of massaging the massive egos of those people.  It is a competitive weapon in their battle with other like minded bosses that shouts, “I am at least as important as you if not more important.  Look at my salary!”

The proposal of Vince Cable, UK’s Business Secretary to give shareholders and workers greater say in the salaries of their CEOs and directors at the top of an organisation, is to be welcomed as a first step.  However, it is not enough.  Here is a suggestion for Mr. Cable and the Chancellor to consider, which is progressive, fair and serves the interests of the ordinary citizens.  Decide what multiple of the average pay of a UK employee is a fair wage for those “Masters of the Universe”, say 10 times.

Any pay above that, tax at a punitive rate rising in very steep steps to a level of, say 80%.  If this does not moderate the pay, it will have the effect of returning money to the government to help those most in need.  Taxation of the very rich, in itself, should not dent their super egos as they could continue to brag about their mega remuneration packages.  It may even give them another instrument to enhance their self-worth, with remarks like, “The taxes I pay are enough to keep [x] numbers of old people warm in winter”, or, “The taxes I pay are enough to lift [x] number of children out of poverty”.

A difficulty we have in our society  is that people do not  make connections between paying taxes and services provided by the state to those most in need, and in preserving our infrastructure, education, health service and the environment.  People seem to see taxation as a necessary evil.  It is not; it is a necessary good that makes the values we most cherish and encourage in our society a reality.  People see tax avoidance as a virtue.  The ingenuity of lawyers and accountants employed to enable those who can afford their fees to pay as little tax as possible is seen as something to be admired and copied.

Governments are presented as robbers trying to steal the wealth we have earned with the sole purpose of wasting it.  It is odd that governments, politicians and civil society do not do more to promote the value to society of paying one’s fair share of tax rather than continuously trying to reduce it.  They seem to collude with the notion that it is a necessary evil that should be curtailed whenever possible, and implicitly stamp the seal of approval on those who can exploit loopholes to avoid it.

I believe governments should go in the opposite direction and use those clever admen to demonstrate that many of the things we take for granted in our society, that make life pleasant, are due to taxation.  One need only look at some developing countries where taxation is practically nonexistent to see the consequences of such a system:  the degraded environment, the rubbish in the streets, the poverty and the squalor that assail your senses once you leave your comfortable home, if you are lucky enough to belong to the privileged elite with a comfortable lifestyle.

I am sure the super rich and the middle classes in our society would not want to live in such a bubble of privilege while surrounded by poverty and squalor. Enlightened self interest should drive all of us to pay our share of taxes willingly, with those most able carrying a heavier load.

I do not understand the government’s obsession and embarrassment about people paying 50% tax on income above £150,000, with George Osborne, UK’s Chancellor promising to abolish it at the earliest opportunity.  Fair taxes are good for society as a whole, and those who can afford to pay the higher rates should be proud that they are contributing more for a pleasanter environment for all of us to live in.

Adnan Al-Daini (PhD, Birmingham University, UK) is a retired University Engineering lecturer. He is a British citizen born in Iraq. He writes regularly on issues of social justice and the Middle East. Read other articles by Adnan.