Explainer
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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. 

Column
Atheism
Belief
Comment
5 min read

Defining cultural Christianity 

There’s already a backlash against Dawkins and the New Theists.

George is a visiting fellow at the London School of Economics and an Anglican priest.

A speaker turns from the podium against a backdrop reading 'Centre for Sckeptical Inquiry
Richard Dawkins speaking at a sceptics event, 2022.
CSI

“Richard Dawkins says he’s a cultural Christian,” I said over breakfast.  

“What’s that?” she asked.  

I had a stab at it. “Someone who doesn’t buy the Christian faith, but likes hymns and churches and to live in a nominally Christian country, because it’s decent. Apparently.”  

“So what’s new?” she said.  

She has a point. I’ve just completed a decade as a rural parish priest and plenty of people came to church because it’s a respectable, middle-class thing to do. It’s as comforting as it is comfortable.   

But cultural Christianity is a thing of the moment not just because of the pop-atheist Dawkins. To be honest, he’s struggled to retain his increasingly embarrassed atheist flock over the past decade, so in the public sense he’s not much of a trophy. But there are those of higher and more surprising profiles, who have come out for Christianity as the very essence of our culture and the bulwark against something much worse (for which read Islam).  

The backlash against New Theism has been swift. And, strangely, most of it hasn’t come from humanists and atheists.

A key text for cultural Christians is Tom Holland’s Dominion: The Making of the Western Mind. It posits, inter alia, that Christianity is the foundation of our civilisation, even the bits that try to destroy the faith. Holland has more recently experienced a miraculous cure from cancer through intercession (which sounds suspiciously like deal-making prayer, but never mind).  

Then there’s Ayaan Hirsi Ali, whose journey from Islam to atheism to Christianity traces her developing conviction that secular humanism is a reed in the wind against the threat to the West from militant Islam. Holland and Ali, among many others, including women’s rights activist Louise Perry in her apologia for traditional Christian morality, The Case Against the Sexual Revolution, fuel the enthusiasm of Justin Brierley for a new renaissance in his joyful book, The Surprising Rebirth of Belief in God.  

Collectively, these are called the New Theists, who ride against the four horsemen of the atheist apocalypse (more accurately, perhaps, the four hacks of the new millennium), Dawkins, the late Christopher Hitchens, Daniel Dennett and Sam Harris.  

The backlash against New Theism has been swift. And, strangely, most of it hasn’t come from humanists and atheists, but from what one might call established Christians. I have heard the likes of Ali and Holland called cosplay Christians and their faith derided as Christianity-lite.  

Dawkins still says the Christian faith is nonsense, but who’s to say the spirit isn’t moving in him?  

Robert Thompson, a north London priest, has posted that “we will be in the midst of Christian revival… when we actually reorder our lives around the abused Christ and raise the abused Christ’s body”. He argues against Brierley’s championing of London’s oldest church, St Bartholomew the Great, because it’s “the gayest church in town” (no, I didn’t follow this line of argument either) and critiques Brierley’s account of Holland’s witness (if not conversion) by comparing it with “the worst Easter Day sermon I’ve ever heard”.  

I accept that this is a savage paraphrase in its brevity. But it’s all there and it comes not from any of the (now old) New Atheists, but from someone ordained to the priesthood. Meanwhile, Chine Macdonald, director of the Christian think tank Theos, writes in relation to his claims of cultural Christianity that “Dawkins isn’t actually a fully paid-up follower of Jesus” and that she’ll save her excitement over New Theists until they start “talking about the ways in which their lives have been turned upside down by the radical love of Jesus Christ.”  

Frankly, all this sounds a bit snobbish and patronising, as if there’s a minimum bar for Christian entry, as if it’s cosplay Christians indulging in Christianity-lite. Sure, Dawkins still says the Christian faith is nonsense, but who’s to say the spirit isn’t moving in him? Frankly, I have people at my communion rail who say the same thing. And, to be brutally honest, I can count on one hand those of my very many Christian friends who claim that their world has been turned upside down by the radical love of Jesus Christ.   

To be clear, Thompson and Macdonald have important things to say. Thompson writes movingly about his pastoral experience of cystic fibrosis patients in hospital, to take theological issue with Brierley for writing about “an unbiblical God who simply does not exist” as he waited with his patients “until they died… generally well before their 40th birthday.” No Holland miracle cures, please.  

Macdonald writes usefully about the difference between the word “Christian” as an adjective and a noun, the New Theists being Christian adjectives in action. She also speaks of Dawkins’ talk of Christianity as a “decent” religion (as opposed to Islam) and his feeling “at home” in a Christian country as code for “whiteness”. To my shame, I hadn’t thought about that.  

This would all be an ecclesiastical spat, like arguing about angels on a pinhead, if it weren’t for a darker danger beneath it. I think of former nun Karen Armstrong’s work on the dangers of religious fundamentalism when outsiders are excluded. In that context, I worry even more about those who claim that the New Theists are the work of “the enemy”, or Satan, because they “hollow out” our faith more insidiously than atheists.  

In contrast to that, Bishop Graham Tomlin gave a sermon at Lambeth Palace the other day in which he referenced Dietrich Bonhoeffer’s claim to a faith that proclaims Christ at its centre, rather than worrying too much about the boundaries of the Christian community, which are always a bit fuzzy. I like that, because with fuzzy boundaries it becomes harder to exclude New Theists.   

It’s tough being a Christian, whether new or old. When a rich young man comes to the Nazarene and asks how he can acquire the kingdom of heaven, he’s told to sell all he has, give the money to the poor and follow him.  

None of us can reach that bar. But the implication I hold on to is that he’ll walk alongside us anyway. And that applies to everyone in this column, without exception. Now that’s what I call radical love.