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
Attention
Change
Community
Loneliness
6 min read

Take some risks, invest in your friends

At the other side of risk is a precious thing: the overcoming of distance.

Tom is a physician and completing a theology doctorate. 

Three friends in the street laugh together.
Jed Villejo on Unsplash.

In the year 2000, political scientist Robert D. Putnam published Bowling Alone. Putnam analysed the decline of “social capital” in America, observing that relational networks, community involvement, and civic engagement were all waning. Why “bowling”? Well, for Putnam, the decline of involvement in bowling leagues was representative of his findings. It served as a microcosm of a bigger picture—the broad downtrend in social engagement. 

What of “social capital” in 2025? Everything, it appears, is different. The arrival of the online ecosphere has reframed how “social” is best understood. We are more “connected” than ever. Indeed, the proportion of society attached to a virtual social network, I suspect, outstrips the proportion of society involved in bowling (or other) leagues at their peak. And even in the short history of the world wide web, the nature of social engagement has developed at breakneck speed. A once revolutionary platform for connecting with past pals from school (remember “Friends Reunited”?) now seems prehistoric. We can “connect” in ways that no bowling league could ever have manufactured. Today, the array of relational possibilities is endless. Awaiting your acquaintance are inert artificial friends, with whom—we’re assured—“You can form an actual emotional connection.” Yes, the Replika app offers virtual companions “for anyone who wants a friend with no judgment, drama, or social anxiety involved.” 

What counts as “social” has expanded beyond measure since the year 2000. No doubt Putnam’s book would look different were it released today. But has the tide of social engagement really turned? 

The bond of friendship is precious. And, like many precious things, it is hard-won.  

Does today’s social mindset encourage us to pursue relationships marked by depth, confidence, nearness? The digital realm makes it extremely difficult not to treat connection as a commodity, more a product in the marketplace of life than a good to be pursued for its own worth. It generates a fantasy of risk-free relationships. “If a friendship isn’t working out, leave it; there’s always another one available”—one without “drama”, as the wisdom of Replika would have it. The measure of a good relationship here is not the strength of the bond itself. Such ties are a means to another end. Perhaps how well the relationship serves individual interests or meets personal preferences. And if we swallow this kind of “you do you” pill whole, we shouldn’t be surprised if our basic assumption is that people do not belong together but apart. 

When friendship becomes a commodity, enduring friendship is nothing short of a miracle. We are all too changeable for consumer relationships to last. Our preferences change. Our life-stages change. Once upon a time, lasting non-romantic bonds were perhaps a more given feature of life. When lifelong relationships and local community overlapped far more, the troughs of friendships were less easy to avoid but had to be faced. It wasn’t so easy to dodge “drama” and move on. But if today’s online social realm shapes our expectations of relationships, the long road of friendship becomes—unsurprisingly—uninviting. Seemingly viable alternatives to our present friends are always available. Indeed, if the “you do you” mantra holds, friendship most likely will not. Or at least not of the precious kind. 

Recently, Sheridan Voysey launched the Friendship Lab. Its aim? To make friendships thrive. Voysey, an author and broadcaster, has developed this new resource alongside a team that includes academics in psychology, law, and statistics. The Lab offers both live and on-demand courses to equip individuals and friends with wisdom and skills for fostering reciprocity and deepening connection. The Friendship Lab is Voysey’s answer to a question he asked himself: "Who can you call at 2am when everything has gone wrong?" Hence, its mission: “to see every adult have at least three 2am friends.” 

The Friendship Lab is on to something important. I suspect that something is, at least in part, that friendships require perseverance

In friendship, it takes time to be understood and to understand. We are all so remarkably complex. Our pasts are so multifaceted. There is no straightforward access to another person. No algorithm can achieve it. No personality test can name it. The deep roots of a relationship are established in attention and commitment. They are reinformed through loyalty and perseverance. The resources provided by the Lab point to the fact that friendships form over time. Like a muscle strengthened through repeated use, they are shaped by practices. Developing connection is more like slowly sculpting clay than sharing in a series of transactions.

At the other side of risk is a precious thing: the overcoming of distance. That precious feeling of being at ease. Unguarded and unafraid

This leads to something important: on its own, perseverance is not enough. Something else should be named if friendships are to thrive and last. And it is less common: risk. 

The bond of friendship always involves risk. Friendship is hard-won because it is risky. To let one’s guard down is a step into the unknown, a “drama” that can never be neatly calculated, because we can never know the outcome. And it is a particular kind of risk: the risk of making oneself vulnerable. Of exposing our hopes and fears, our wounds and weaknesses. Or facing these in others. And of course, we are all so aware of what can go wrong. Sometimes putting yourself out there results not in depth but in misunderstanding or, perhaps, rejection. And to be rejected in one’s vulnerability can be humiliating, even devastating. 

But the bond of friendship is established in these daring footsteps of risk. Friendship does not take shape by side-stepping risk but by taking the road through it—a road not free from but marked by missteps and disappointments.  

Yet such steps are not an end in themselves. They lead to a place that addresses a deeper longing—the ache for connection. At the other side of risk is a precious thing: the overcoming of distance. That precious feeling of being at ease. Unguarded and unafraid. The knowledge that you’re in safe hands.  

In an age where seemingly risk-free alternative connections are available, who would dare to take these steps? Some ancient wisdom might be needed here most of all. 

Around 30AD, a man called Jesus of Nazareth walked the road to hard-won friendship like no other. One of his followers described Jesus’ life as one of commitment to his companions “to the end.” Whilst Jesus’ profound teaching and demonstration of love often gets plenty of attention, there is something precious to be mined here. 

Risk and perseverance belonged to Jesus’ life. The risk of misunderstanding and of rejection—both of which he experienced at the hands of those closest to him. He was not immune to these. In fact, what it meant for Jesus to persevere in his commitment to his followers was for him to endure their abandonment of him. They modelled the opposite of friendship. But Jesus’ risk-taking perseverance knew no limit. It led him all the way to death. It persevered through the failure of his friends to reciprocate to the end. This is why it is just so startling that, in rising from the dead, Jesus says to his followers: “no longer do I call you servants… I have called you my friends.” 

If Jesus has walked the ultimate road of befriending us human beings “to the end”, could looking to this source unlock friendship in a new way today? 

There is a woman in the church community I’m part of who was once asked: “why are you part of this church?” Her answer: “I decided to come here.” She is in her eighties and has been part of that community for decades. I envy the simple sense of risk-taking perseverance in her approach. She is not side-stepping the “drama”—the inevitable missteps that belong to life with others. I do not belong to a generation or an age that puts a premium on risk-taking perseverance “to the end” in friendships. But another look at ancient wisdom might give us just the freedom to do so. And if the road to deep connection goes via some kind of “judgement, drama, or social anxiety” then I, for one, am all in. 

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