Article
Economics
Politics
1 min read

How can taxes build a better society?

As we await Rachel Reeve's budget announcement, Laurence Fletcher wonders what positive tweaks can be made to our economic system.
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Few doubt that Chancellor, Rachel Reeves, will be putting up taxes when she presents her first Budget on October 30. 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.

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 perspective that he believes offers some solutions.

He takes as his starting point a story in the gospels, 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 “completely ruined” by wealthy people from elsewhere buying second homes that used to belong to locals, 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 says.

“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.

 

Interview
America
Creed
Politics
S&U interviews
16 min read

Is reconciliation possible in America’s culture wars?

Understanding a strange kingdom of anxiety and belligerence.

Miroslav Volf is Professor of Theology at Yale Divinity School and is the Founder and Director of the Yale Center for Faith and Culture.

A protest placard is held above a march, reading 'If you don't change it, you choose it'.

Miroslav Volf grew up in Croatia and is now Henry B. Wright Professor of Theology at Yale University, and the Director of the Yale Center for Faith and Culture. He is the author of many books and is one of the USA’s most prominent public intellectuals. Graham Tomlin recently met up with him to discuss life, politics and faith in the USA during this pivotal election year. 

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Graham: So great to see you today, Miroslav. 

Miroslav: It's always wonderful to see you too. 

I want to talk to you about life in the USA in this election year and some of the issues surrounding that. What do you feel is the mood in the USA at the moment as the election approaches? 

It's tough to describe it, but I would say that predominantly it's a mix of belligerence along with apprehensiveness and uncertainty. I think the American left isn't the happiest with its candidate. They wonder whether Joe Biden can win against Trump, and whether he is too old to be president. On the other side, I see a certain kind of triumphalism and an increasing radicalism, and that is, for many people, worrisome. I also note a willingness to fight. And then there are some, among them some of my colleagues at Yale, who are determined to leave the country if things don't turn out quite the way that they hope! I tell them that I'm used to living under authoritarian regimes - that's how I grew up - and it's possible! Perhaps also responsible.  

Back in 1996 you published your book Exclusion and Embrace, which largely came out of your experience of the war between Croatia and Serbia, and before that, living, as you say, under a totalitarian regime in eastern Europe. I was struck by a question you asked there: “what kind of selves do we need to be to live in harmony with others?” I wonder how you reflect on writing that book now in the context of contemporary America, which seems much more polarised than it was back in 1996? Is there some of that work that resonates particularly with the US situation right now? 

I think so.  Some eight years ago - I'm not sure exactly where to draw the line - I sensed that the political fronts were hardening. They have since become almost completely mutually closed. Any movement toward the middle, towards reconciling, is experienced as a defection and weakening of one’s side.  

I have felt it before, in the former Yugoslavia. When I wrote the book advocating “embrace,” it fell on deaf ears - for Croats, Serbs, and Muslims. The book was written and published as the war was going and had barely ended and my compatriots felt that I was taking away their enemy; they were invested in having one. The time for reconcilers comes when fronts have gotten a little bit more porous than in situations like the one I've just described, which is to say that the time for reconcilers is ‘ordinary time’, rather than making interventions in the actual situation of conflict.  

As to the kinds of selves we need to be, whether in conflict or before or after it, I think it's being people who resist themselves becoming closed by the boundaries of the combatants in the fight, people who are able to see beyond the seen to the unseen, as it were, who hope for the unhoped for and who have the moral ground on which they stand, whose “will to embrace” has not been undermined by violence. 

In that book you also wrote about repentance and forgiveness as being crucial elements in reconciliation. Do you see much evidence of repentance and forgiveness within the USA right now? If not, what would it take to bring about that kind of culture within American life?  

I don't see much willingness. I see the culture becoming increasingly unforgiving. There are, of course, ritualistic gestures of forgiveness in different domains of life, but they're really public image management tools rather than steps toward reconciliation.  

Some of the resistance to forgiveness is a function of the conflict, as I noted earlier. In cultures of late modernity, I see another reason for resistance.  For the most part, we operate with the narrative account of the self: ‘I am what I have done, what has been done to me, what I have made out of what I've done and what others have done to me.’ But if you have this notion of the self, how do you do what the miracle of forgiveness requires? How do you unglue the past deed from the self that has committed that deed, when that deed is—by definition— defining of the person?  Forgiveness requires a vision of the self that isn’t defined by its acts.  For Christians, God’s unconditional love defines the self. That emphasises the importance of the Christian message and deep theological reflection on it to make such an account of the self plausible. 

And to take that idea further, much of our identity politics language tries to isolate one particular aspect of a person's self, and so that's the only thing I need to know about. So, I might say to you: I know what you're like. You're Croatian and therefore I can either say you're one of my tribe or you're not one of my tribe and I can either shun you or accept you that way. But of course, we are, as people, much more complex than that. We're much more multifaceted. We have different identities that are not just about nationality, but they're about relationship, embeddedness within society, political or family allegiances and all kinds of different facets of our selves. That trend to isolate one aspect of the self as definitive is surely quite unhelpful in enabling us to engage with each other as persons, as opposed to just a projection of our imagination? 

 It's a kind of betrayal of the particularity of the self and an inability to perceive the person as the particular individual that they are. I think that's also the case in ethnic or political conflicts. I remember during the war in the former Yugoslavia, saying to my fellow Croatians: “To be a Croatian is, almost by definition, to have Serbs as your neighbours.”  But, obviously, in the situation of conflict, the last thing you want to hear is that you have been defined by your relationship to the person whom you now want to obliterate! 

Exactly. And you can see that same dynamic playing out in the Israel-Gaza situation right now. In many ways, Israel is defined by its relationship with the Palestinians, and Palestinians are defined by their relationship with Israelis, and you can't get away from that.  

These days we often hear about culture wars. Progressives and conservatives offer different visions of the future. In the United States that seems a very polarised, toxic debate. Do you think that Christian faith offers a different path from either? Does it beckon us on a third path that is different from the conservative and the progressive polarity? 

Yes, it does, especially with hardened polarities of this sort. You know the old adage – “I don't care what's left and what's right; I care for what's right and what's wrong.” This right / wrong contrast, this dualistic moralism of religious traditions, can obviously be lived in different ways. But if we understand it in the properly Christian way, with humility, the contrast between right and wrong seems to me important because it provides us an independent place on which to stand and from which to open up a space for movement in this rather sterile conflict, or at least not to let ourselves be drawn into it.  

To nurture such Christian independence, we need to return to the big question that Dietrich Bonhoeffer asked toward the end of his imprisonment: “Who is Jesus Christ for us today?” That seems to me to be a central question, and it helps avoid the temptation of the church—as you see happening in the United States on both sides, left and right—to a certain kind of identification with the politics of a cause. 

I don't know if you've seen this book The Kingdom, the Power and the Glory: American Evangelicals in an Age of Extremism, by Tim Alberta, which is very interesting. He’s a staff writer for The Atlantic, and this is his second book, looking primarily at the evangelicalism’s betrayal of the gospel, “thinning out,” so to speak, into a nationalist civil religion. 

The idea of the “stranger King,” suggests that we are in a kind of revolutionary situation. 

People in the UK often wonder how the Evangelical Church in the USA seems so solidly behind Donald Trump, who shows no particular sign of Christian, or evangelical faith. Clearly he will endorse certain conservative positions which evangelicals are in favour of, but is there something deeper going on than that? How do you read the Evangelical support for Donald Trump? 

I think it’s not only true of evangelicalism in this country, but in other settings, and it is also true of other Christian (and even more broadly, religious) traditions—that the nation ends up being a much more powerful god than the Father of our Lord Jesus Christ. So, when there's a sense of threat, everybody coalesces around defence of that political in-group.  

My colleague here at Yale, the sociologist Phil Gorski, has written this interesting article “The Return of the King”. He talks about the shift from disenchantment and secularisation to a new immanentism in the U.S. today. He also invokes the vision, from ancient pagan cultures, of a ‘stranger King,’ who is not so much a sacred king, as in Christian understanding, one responsible to God, but a divine figure, who comes from nowhere, from outside, and who is seen as a rescuer, with divine powers that are above moral scrutiny. 

I think that speaks of the way in which people understand Trump. It doesn't matter how he behaves; he can do as he wishes. He could, as he put it early on, even before he became president, kill somebody in the middle of New York and that wouldn’t impact how people view him. We know about his sexual escapades and the lawsuits, and they don’t impact how he is seen by his supporters.  

The idea of the “stranger King,” suggests that we are in a kind of revolutionary situation. Steve Bannon is a very good example. He says he is a kind of Leninist who wants to take control of the state apparatus and dismantle everything. So, there's been a certain radicalism that is obsessed with power. I think that's where Trump has come in. And he has found religious interpreters who have helped him emerge as a new King Cyrus, or somebody who need not be held to moral standards because he is what is perceived to be needed right now. 

The idea of a re-paganisation is very interesting. Here in the UK, many people observed that Boris Johnson was the one Prime Minister in recent times (unlike Blair, Brown, May, Sunak) who did not really profess any very obvious religious faith. His great heroes are in fact, the classical pagan writers of Rome and Greece. There was no great idea for political harmony or vision there. It was more about holding power for its own sake in some Nietzschean sense. 

At least a few years back, some of the neo-pagan philosophers, like Alain de Benoist, who wrote, among other things, a book titled On Being a Pagan (which built partly on Heidegger and mainly on a certain interpretation of Nietzsche), were popular in hard-right circles. De Benoist sees himself very much as retrieving paganism, in sharp contrast to monotheism.   

One of the themes you mentioned a moment ago was that of the nation. One thing that strikes us on this side of the pond looking at America is a very strong brand of Christian nationalism. American churches often have a flag at the front, and presumably this idea of a Christian nation goes back to the Puritan vision that founded America. How do you read that theologically? Do you see the nation as a positive thing or a negative thing? Is it something we should be suspicious of? Is it something that should be embraced?  

I'm disappointed to see the nation turning into what seems like the supreme good.  I find it useful to differentiate between “patriotism” and “nationalism,” though this is somewhat arbitrary linguistically. If one went with that distinction, “nationalism” would be particularistic and exclusivist, and a nationalist would have a “national” God; “patriotism” would describe commitment to one’s own nation in the community of all nations, and a “patriot” would worship the God of all nations.  I think that Christians have universal commitments in the sense that there are no moral insiders and moral outsiders.  This kind of universalism is rooted in the simple conviction that each one of us is created in the image of God, who created all of us, and in the belief that Christ died for each one of us and was raised for our justification. I cannot place relative values on people based on their proximity to me. What I can have, is a greater responsibility for those with whom I live, those “whose lives are closely linked with ours,” as we pray in Episcopal and Anglican liturgy.  

What I find problematic is not just the “America first” kind of particularism (which sometimes goes along with isolationism).  Problematic also is the “America, the best” kind of universalism (which often goes along with expansionism).  One is withdrawing, the other is aggressive, but in both we are interested, above all, in ourselves and our own well-being. I think we need a world order in which we can affirm the equal dignity of every single human being — so that the life of my compatriot is not worth more than the life of those on the other side of my nation’s borders.  Equal dignity would also require that we care in a special way for those whose lives and conditions of life have been curtailed by the way we have exercised political power historically.   

The other aspect of this is surely that the Church is itself a multinational community. In the Christian Church, as they say, water is thicker than blood - in other words the water of baptism that binds us is stronger than differences of ethnicity and nationality. The church is a community that reaches across every nation of the world. These bonds are stronger than any other, and that relativizes the nation as an entity that defines us. It doesn't mean we can’t have a certain patriotic pride in our nation, or our place of origin. The particularity of that is a good thing - we're all rooted in places and histories, which are a part of who we are, but being Christian and therefore bound to each other relativizes the idea of the nation as what ultimately defines us as a people. 

 Agreed. 

You wonder what it would be like if across the culture wars we could recognise each other's Christian faith as being a stronger bond than the ideological differences that divide us? 

Or in situations of conflict - if we could recognise the value of a person of my ethnic group and someone of another ethnic group as exactly the same. That would have profound implications, even when we engage in what we might deem to be a just war.  How war is conducted would be greatly changed if we thought of one side and the other in that way, that each individual is of absolutely equal value. 

World altering and disorienting processes are under way, which I think partly underpin those political tensions, and we need to cast our eyes to that which lies underneath political tensions and to what can take us out of them. 

One of the other themes I wanted to explore was one of the casualties of our modern political life - Truth. We talk about living in a post-truth age. A huge volume of opinion, ideas and data comes at us every day because of the information revolution of the internet, social media and so on. The question is: why does truth matter in politics? I recall something you wrote in Exclusion and Embrace: “if argument cannot win, weapons must.” Once truth goes always leads to violence. So, could you just expand on that a little bit and explore that theme in the context of our political life?  

The stance that people often embrace in conflict is this: “If truth is against me, why should I be for the truth?”  And so, truth becomes a casualty of my own interest. We can observe that from a little kid, telling an “innocent” lie, all the way to the workings of the propaganda machinery in world politics. In a way, a lie is an homage to the truth, because a lie presents itself as truth.  A good deal of the tensions in the USA are rooted in an inability to trust that what the other person says is correct, so that there is this mood of suspicion that nibbles away any trust that may be built. It may be important to remember what Jesus said about truth — that it will set us free.  The truth sets each one of us free precisely by binding us to one another in trust. 

That begins to open up one last area I wanted to explore with you. You run a course in Yale University called Life Worth Living, which you offer for students who want to explore some of the deeper questions as to what makes a life worth living. I'd love you to just explain a bit about how that course works, but particularly bearing in mind the theme we're talking about today. What is a life worth living in this particular moment in the context of the USA? You talked at the beginning about how you’ve lived under totalitarian regimes, and that it's possible to live a good life even in really difficult circumstances. What does that life look like at the moment?  

I think of that course as a kind of exercise in truth-seeking conversations, in speaking about what matters most to us in life with those who disagree with us. The course is offered to Yale College students, undergrads, primarily. We may have seven or so seminar groups each semester, all populated by students from different cultures, embracing different faiths or none, and we discuss in sequence various competing visions of the good life on offer.  When I teach the class, I tell the students that, of the traditions we are exploring —  Buddhism, Christianity, Islam or Nietzsche’s philosophy — all make truth claims.  Which is to say that they are talking about the truthfulness of each of our lives. Our goal in class is to wrestle with these truth claims not just intellectually but also, and even primarily, existentially.   

This is a very important exercise in how one can, in a pluralistic setting, affirm the truth and stay by it, while at the same time entertaining seriously the opinions of others, even adjusting one's own perspectives in the light of the perspectives of others.  We need these kinds of skills given our profound disagreements on political, economic, and life-orientation issues.   

 So a life worth living would be a life where you can have those kind of conversations? 

Certainly.  These kinds of conversations and the kinds of deep but humble commitments to truth and to honoring others irrespective of whether we agree with them or not are a key element of a life that is worthy of our humanity.  At the political level, they are a condition of the possibility of envisioning and moving toward a common future.  

Do you see any signs of hope of this kind of discourse within the USA? You started off by saying how there's a sense of anxiety and belligerence. Are there signs that give you just a little glimmer of hope that there may be a different future going forward? 

Well, when I speak about the class to people, I don't see them yawning, nor do I detect wistfulness in their eyes, as if this were somehow unrelated to real life.  I see people listening and wanting to move in that direction, entertaining it as a possibility. When I talk in churches about the question “Who is Jesus Christ for us today?”, I don't find resistance. I find people saying — yeah, that's what we need to take seriously, because we are living in a kind of dystopian period.  

Our problems today are not just hardened political fronts and the emergence of civilizational nations with authoritarian leaders.  World altering and disorienting processes are under way, which I think partly underpin those political tensions, and we need to cast our eyes to that which lies underneath political tensions and to what can take us out of them.  Generative AI!  Imploding environment!  Tremendous disparities in wealth! These are things that will profoundly shape our future, and we need to know how to talk about them notwithstanding the deep disagreements we have.  We also need to nurture a Christian imagination, a hope for the world that the New Testament sketches — largely symbolically — at the end of the book of Revelation.  People today resonate with these kinds of themes, and that gives me hope.  

It has been good to end on this longer term note. One thing that Christian faith does - is it thinks long term. It doesn't think in electoral cycles, it thinks more in centuries than years or even decades, so getting that bigger perspective is really helpful. 

Thank you Miroslav for your time and your insights into our times.  

Thank you for the conversation. It's always great to talk to you. 

Miroslav Volf

A man with a beard and glasses, leans back and to one side while takking and holds open hand in front of himself
Miroslav Volf.