Tax the rich, don't punish the poor - here's why

The Baptist Union of Great Britain, the Methodist Church, the Church of Scotland and the United Reformed Church are not usually known for their radicalism so it's surprising they published a joint report this month titled 'The lies we tell ourselves: ending comfortable myths about poverty'. It is authoritative, eloquent and debunks the nonsense I pointed out in this blog last week. In the light of yesterday's budget it includes this comment:

'The Quantitative Easing programme has increased the personal wealth of the UK’s richest fi fth of families by enough to pay for Jobseeker’s Allowance for over a century.'

Full Fact supports the Labour Party's claim that people with an income over £1m a year can expect an additional tax cut of £100,000 a year from 6th April.

Last Friday Ruth Levitas, Professor of Sociology at Bristol University gave a seminar at Durham University, one of her slides showed how the wealth of the country is distributed between income groups:

 

The data is easier to understand as graphs. This is what the distribution looked like in 1972/1973 when income distribution was at its most equal in the UK during the 20th century.

And this is what it looked like in 2009/2010. Clearly the top 10% have become significantly richer while the poorest 10% have become significantly poorer. In fact every 10% cohort has a lower share of national income than 40 years ago with the exception of the richest 20%. The gap has almost certainly worsened since 2010 under Coalition policies.

Ruth Levitas published the same data in her paper 'The Just’s Umbrella: Austerity and the Big Society in Coalition policy and beyond' University of Bristol, UK, 2012. In the paper she suggests that if it chose to the Government could easily pay off the deficit by taxing the super wealthy instead of cutting welfare benefits or public services.

Ahead of the budget this week the New Statesman agreed:

'Choices regarding tax and welfare changes should be taken together, since they are both financial transfers between citizens and government. Decisions should be made from the perspective of who has the greatest capacity to absorb changes. This means that any reforms should target the top half of the income distribution, who both have the broadest shoulders and have escaped lightly from austerity until now.'

And Grahame Morris MP speaking in Parliament on 19th March in the debate about the Jobseekers (Back to Work Schemes) Bill said:

'The Government are creating two nations. They are seeking to penalise and punish the poor for the mistakes of the rich and powerful, in part of a continuing series of policies that are badged as 'austerity'. Those policies are pushing the poorest in society further into poverty.'