Talking tax: Burden, duty or responsibility?
The framing of discussions on tax limit open conversation. Is it time to change the narrative?
By Susan Murray, David Hume Institute
4th March 2021
Anyone who listened to the budget yesterday will have been listening through the lens of their personal experience, and that includes journalists. The negative framing of tax limits understanding and discussion.
The headline on this BBC News webpage changed throughout the course of today from “Budget 2021: UK's tax burden to 'reach highest levels since 1960s' to “Budget 2021: Rishi Sunak insists Covid-recovery tax rises fair”. The words tax burden jump out in the first first version. It is a term we see again and again and is perhaps overlooked. But the word burden is loaded, and is one whose meaning has changed over time.
The historical meaning of the word burden was about duty and responsibility and it was in this sense that it was used in relation to tax. Now the common meaning implies a weight dragging you down, rather than a moral responsibility to help others benefit from pooling risk and improving society collectively.
At recent David Hume Institute events we heard from Professor Benjamin Friedman on how Adam Smith’s Invisible Hand and the word wealth has changed meaning over time. Adam Smith’s use of the word wealth was much more akin to the word wellbeing today. Professor Linda Scott spoke of the myth of “rational economic man”, a stalwart of economic education for years.
For tax, the word burden now seems loaded in negativity. It is less about responsibility and obligation and more about a heavy load being carried. The word burden seems to come with the presumption that the load should be reduced.
I was struck recently watching the brilliant Ruth Jones on Who do you think you are? She investigated her grandfather’s role in creating Medical Aid Societies in South Wales, a forerunner of the NHS. It was all about pooling risk and this seems to have been long forgotten when we are talking about paying tax or national insurance.
Will Covid make a difference to views about collective solutions for managing risks? How would we have faced Covid if the NHS hadn’t existed?
Throughout our recent inter-generational research we heard contrasting views about tax which we will talk about more in the coming weeks. More accessible information about tax could improve understanding and empower the general population to hold government to account.
Ten years after the publication of the Mirrlees Review, the level of quality debate around tax remains limited. Yesterday’s budget announcements showed little impact of the Office for Tax Simplification, so what will bring change?
Last summer ICAS published The Future of Taxation in the UK which called for an open discussion about tax as a common good. We need this now more than ever and we all have a part to play. It’s time to talk about tax without a language barrier.
Join the David Hume Institute in conversation with economists Dr Arun Advani and Mairi Spowage on 22 March to discuss Dr Advani’s latest research on diversity in economics. Register here.
DHI Bites: Talking tax
Dr Arun Advani and Dr Andrew Summers join the David Hume Institute and Charlotte Barbour to discuss their new research and the measures that could be an important part of our post Covid-19 economy.
With Dr Arun Advani, Dr Andrew Summers and Charlotte Barbour
The authors of recently published research discussed their findings with Charlotte Barbour, Director of Tax for ICAS and Susan Murray, Director of the David Hume Institute to reflect on the implications for Scotland.
The researchers from LSE and Warwick presented new findings from analysing anonymised HMRC data of the taxes paid by the UK's top 1% and explored the relationship of headline tax rates with capital gains, total income and tax reliefs. They suggested putting a floor on the lowest tax rates with an Alternative Minimum Tax.
ICAS has called for more "honest public debate about who should pay tax and how much they should pay". Often in Scotland discussion on tax focuses only on the powers at Holyrood. However this research shows when considering total income, there is a complex relationship of different tax rates for people that are able to restructure their earnings.
As the post Covid-19 economy emerges, focus will undoubtedly turn to tax and paying for public services. Should a post-pandemic UK consider an Alternative Minimum Tax threshold?
While we can't bring you the Institute's usual thought-provoking events during Covid-19, we are working on bite-sized online sessions - like this one - to discuss new research. To hear about these events sign up to our newsletter or follow us online.
Click here to download the presentation slides.