Article

America

Church and state

Comment

Idolatry

Politics

7 November 2024

4 min read

Trump's triumph is not the end of the world, nor the dawn of a new age

Donald Trump may not be as bad as many fear and not as good as many hope

Graham Tomlin

Graham is the Director of the Centre for Cultural Witness and a former Bishop of Kensington.

Silhoutted by a sun rise, a helicopter flies over The White House

Marine One Flying over The White House, Inauguration Day, 2017.

Anthony Quintano, CC BY 2.0, via Wikimedia Commons.

Reading reactions to Donald Trump's election win across different news outlets over the last couple of days has been an education in the contemporary political landscape.

For left-leaning media the future is dark. An Atlantic opinion piece laments that “we must learn to live in an America where an overwhelming number of our fellow citizens have chosen a president who holds the most fundamental values and traditions of our democracy, our Constitution, even our military in contempt.” The Guardian called it “an extraordinary, devastating moment in the history of the United States.” It is a secular version of the sermon: “The End Is Nigh”.

Yet turn to the Daily Telegraph, The Spectator, or anything on the right, and you find a mixture of gloating (“Trump’s triumph is a disaster for Starmer and the self-regarding, virtue-signalling elites!”) and optimism that a new day is dawning. Trump himself hailed the advent of a ‘golden age’ for the American people. Having been mired in misery since the Conservatives’ routing in the UK general election here is a welcome bit of good news for those on the right.

On either side the apocalyptic note is hard to miss. A Telegraph writer says: “2024 is the real deal, a revolutionary moment, a reconstitution and realignment of American and Western politics around fresh principles.” A Guardian writer says that “there is nothing but bad news for Europe in Donald Trump’s US election victory. The only question is just how bad it will get.”

Immediately after elections there’s always a bit of this apocalyptic tone. When Boris Johnson’s Conservative Party dismantled the ‘red wall’, winning traditionally secure Labour seats in 2019, the rhetoric was that this was a generational change, a fundamental re-alignment in UK politics to the right. Labour, surely, was finished. Five years later, after Keir Starmer’s landslide and the routing of the Tories, it all looks very different – at least here in the UK.

Politicians always, in the long run, fail... The question is how badly they fail and whether they are able to do some good along the way until they do so.

Tony Blair fell from grace due to misleading us all over the Iraq war. David Cameron fell because he lost a referendum over Brexit. Boris Johnson was ousted because he allowed parties in Downing Street while the rest of the country was locked down. George W. Bush pursued a disastrous campaign for regime change in the middle east. Barack Obama started with great hope, won a second term, but didn’t change gun laws and was widely thought to have weakened the US through a failed foreign policy. Joe Biden is thought to have failed because he let inflation grow rampant and allowed American borders become too porous.

Donald Trump will fail too. He may, as he promised, deliver an improved economy. He may stem illegal immigration. That, after all, is why many voted for him. But eventually he will disappoint. So would Kamala Harris if she had won. So will Keir Starmer. And that is not to criticise these particular leaders. Like football managers, they all get sacked in the end, and there are very few who like Sir Alex Ferguson, or Jed Bartlett, get to wave farewell to the crowds at the time of their own choosing. Even then, Fergie’s legacy was tainted by his inability to create a legacy, and Bartlett was, despite our misty-eyed nostalgia, a fictional President.

It’s always tempting to reach for apocalyptic language at times like this. Yet the real meaning of ‘apocalypse’ is ‘revelation’, or ‘unveiling’. Taking the longer view, perhaps the real apocalyptic moment at times like these is the unveiling of the true place of politics – as important, but not ultimately important. These moments reveal the inadequacy of all human kingdoms, and our longing for a different kingdom, a kingdom of ‘righteousness, peace and joy in the Holy Spirit’ as the Bible has it, things that no government or election result can ever deliver.

Politics matters because the way we live together matters. Yet what politics at its best can provide – a well-functioning economy, law and order, managing good international relations - only go so far in enabling a flourishing life. Like returning to a familiar drug that we think we can once and for all make us happy, despite the numerous times it has failed before, we still somehow believe that politics can solve all our problems. “Trump will fix it” said the banners – though in fact that is what every politician promises. Jesus warned: “Many will come in my name and say ‘I am he’, and lead many astray.”

Most probably, Donald Trump will not be as bad as many fear, and not as good as many hope. Because politics is never the final word. As American theologian, Matthew Burdette put it recently: “The solution to our politics is not a political solution. Voting for the right or the wrong candidate will not change the situation: the devil is happily bipartisan, so long as politics is our idol. No, what is needed is fundamentally and thoroughly spiritual. Only when we can say with the prophet Isaiah that “the nations are like a drop from a bucket, and are accounted as dust on the scales,” that is, only when we can see against the horizon of the ultimate how small are our worries, will these relative, penultimate things like politics be set right and take on their true meaning in our lives.”

Explainer

Comment

Economics

29 October 2024

6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?

Laurence Fletcher

Laurence Fletcher is a journalist at the Financial Times.

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.