Do you think our 21st century society can actually afford the full welfare state ideal?

[TheOtherBoleynGirls]

First things first, I want us to have a full welfare state. I think being able to provide everybody in a country with equal education, equal healthcare, and an equal safety net in times of trouble and illness is the absolute ideal.

But looking at the state our economy is in, do you think that dream is still achievable, with the right taxes and financial management, or do you think it might be a post-war ideal that is economically unviable for a country in the long run?

YABU - we can afford it if everything is managed correctly

YANBU - it’s a great but inevitably impractical idea

@EmmaH2022 erm I already pay for DS because we bought a house big enough to house him!

I think we need to decide what we want to pay in tax as a country. From that sum remove essential spending (education, health and defence) what is left can be used for the benefit bill including pensions (remove the triple lock).

How you phase that in is difficult as some will believe it's not the system they paid into. I would love to see work being mandatory for everyone but the most vulnerable.

Yes, we can. According to the Sunday Times rich list a couple of years ago the richest 1000 people in the U.K. - many who fund the Tories - have increased their wealth by £500 billion since 2009. It will be even higher now as during Covid the U.K. created a record number of billionaires as wealth surged despite a time of economic turmoil.

The Institute for Public Policy Research (IPPR), a progressive thinktank, said the findings that more billionaires were made in the U.K. during covid highlighted how the UK and global tax systems benefit the wealthy. It has called for increased taxes on income from wealth, including taxes on capital gains, land and inheritance.

George Dibb, the head of IPPR’s Centre for Economic Justice, said: “There is a massive structural flaw in the economy that whatever the economic shock the wealthier get wealthier. When the govt and central bank have stepped in with huge fiscal and monetary interventions in recent years so much of it adds to the fortunes of the wealthy.

Dibb says “If we’re going to get the whole economy into recovery, and leave no one and nowhere behind, we need to change this. Societies that are so unequal are bad for everyone and policymakers need to address this dangerous gap, or risk people losing trust in our economy and democracy.” Think of the huge uplift in living standards and public services that could be achieved by taxing the super wealthy people more effectively.

When suggesting the super rich should be taxed more, some say the rich will leave. In the video clip below economist and former trader Gary Stephenson points out that the v wealthy in this country own assets that are part of this country. If the wealthy want to leave he argues they can but the govt could if they choose tax those U.K. assets regardless if they leave. Roman Abromavich couldn’t take Chelsea football club with him for example. Companies still want our custom and many would stay even if they were taxed more or were made to pay workers more than direct the lion share of profits to shareholders.

Spectacularly missing the point there. I have no faith that the money, if found, would ever be spent on properly funding any of those things, all of which are cut to the bone (despite the fact 2/3 are council tax funded), let alone also paying universal basic income/full welfare state to people.

Ps to add to my above, if we don’t say we will vote a govt in that are willing to right the ship, change the tax system that benefits the super rich and get the economy working for more of its citizens, eventually the middle class will disappear and we will be living in a society which is made up on the super rich, the just getting by and the destitute.

Typo above, ‘made up of the super rich’, not ‘made on the super rich’.

despite the fact 2/3 are council tax funded

Where do you think councils get the money? Only a fraction comes from council tax.

I have no faith that the money, if found, would ever be spent on properly funding any of those things, all of which are cut to the bone (despite the fact 2/3 are council tax funded)

Cameron and Osborne back in 2011 slashed central govt funding to local councils and that funding remains low. Councils revenue includes council tax but central govt is their other major revenue and with it so much lower than before it is hardly surprising services have been cut to the bone.

Of course we can afford it. The ageing population is a challenge but advances in automation should mean huge increases in productivity and shorter working hours over the population as a whole to maintain the same standard of living. The fact that they obviously don't is simply because all of that generated wealth trickles upwards. Supermarkets install checkout machines - does that help the kind of people who would previously have had jobs as checkout assistants? No, they're left to take the zero hours scraps from the gig economy while the profitability accrues to supermarket shareholders, who naturally still expect to pay the same or lower levels of corporation tax.

We need to be willing to pay the taxes necessary, but we also need to confront the structural aspects of the economy that create entrenched patterns of wealth inequality that never even make it on to a tax return.

Yes, taxes were higher. People think it's worth it to get all that and I imagine a lot of Brits would too, but it will never happen because so many people here are just allergic to higher taxes even if they would benefit from them

I’m afraid that ship sailed when child benefit became means tested. It created a disconnect between those who “pay” and those who “take” - A feeling that we are no longer in it together and that high earners are just there to be milked as a cash cow. It makes them care less

Council tax is a joke. It either needs to go in with general taxation, or at least be fair across the country. National insurance should go too, and if not should apply to every adult, and include assets and any income, not just wages.

Nope I don't think we can afford to do everything we would like for everybody . If I could choose one thing to get off it's knees it'd be the NHS. Unless we have access to good medical care we'll never feel well or supported . Illness is a terrible burden for someone and not getting correct and timely treatment is worrying . That and social care .

This is so true. The rise of the robots could be an opportunity for everyone to have a better standard of living..... or for the robot owners to be gazillionaires while everyone else is unemployed

We’ll never have a political party socialist enough to even think about doing all that. And if we did they’d never get elected.

I just found this blog post by a Professor Richard Murphy on a book that says the data doesn’t support the claim that the majority of rich will leave a country if they are taxed more.

‘One of the classic claims of the wealthy, and their friends on both the political right and in the tax abuse industry, is that if the rich are taxed then they up and leave a place. Except now we know that is not true. A new study by Cristobal Young shows that. The publicity for his new book says:

In this age of globalization, many countries and U.S. states are worried about the tax flight of the rich. As income inequality grows and U.S. states consider raising taxes on their wealthiest residents, there is a palpable concern that these high rollers will board their private jets and fly away, taking their wealth with them. Many assume that the importance of location to a person's success is at an all-time low. Cristobal Young, however, makes the surprising argument that location is very important to the world's richest people. Frequently, he says, place has a great deal to do with how they make their millions.

In The Myth of Millionaire Tax Flight, Young examines a trove of data on millionaires and billionaires–confidential tax returns, Forbes lists, and census records–and distills down surprising insights. While economic elites have the resources and capacity to flee high-tax places, their actual migration is surprisingly limited. For the rich, ongoing economic potential is tied to the place where they become successful–often where they are powerful insiders–and that success ultimately diminishes both the incentive and desire to migrate.

This important book debunks a powerful idea that has driven fiscal policy for years, and in doing so it clears the way for a new era. Millionaire taxes, Young argues, could give states the funds to pay for infrastructure, education, and other social programs to attract a group of people who are much more mobile–the younger generation.
And today he has written in the Guardian, saying:

To better understand elite migration across state lines, I analysed tax return data from every million-dollar income-earner in the United States. The dataset includes 3.7 million top-earning individuals, who collectively filed more than 45 million tax returns over more than a dozen years — showing where millionaires live and where they move to.

And it turns out that place still matters for the rich — much more so than we might think.

Only about 2.4% of US-based millionaires change their state of residence in a given year. Interstate migration is actually more common among the US middle class, and almost twice as common among its poorest residents, who have an annual interstate migration rate of 4.5%.
This is, of course, what we could expect. It's easy to move when you have very little, or when you're young. It gets harder the older you get. And incidentally, as he finds, when people do move then it's to the sun, and not for low tax. Again, there's nothing new in that.

But what does that mean? It means we can tax wealth because the rich stay put.

And we can have progressive taxation.

The arguments over: the facts are what matters. Now let's get on with it.

A majority of the British public favours higher taxation and higher spending, much like the more egalitarian European social structures.

www.bsa.natcen.ac.uk/latest-report/british-social-attitudes-39/taxation-welfare-and-inequality.aspx

I don't think it's feasible.

You always see on FB or whatever "I pay my taxes, I have a right to...." (insert whatever here, i.e. have the police investigate their burglary, the road outside their house repaved, their children's school have enough TAs and a class of no more than 20, any illness to be treated quickly, be able to see a doctor or dentist the next day, claim state pension for 30 years, etc.) None of it SOUNDS unreasonable but when you work out what all these things actually cost the majority of people don't pay anything like as much in to the pot as they take out.

For a welfare state to work, the majority of people should put in roughly what they take out. Then the % who need additional resources can be covered by the richest % who put a lot more in than they spend. Expecting the richest 10% or whatever to cover the other 90% is never going to be sustainable long term.

You don’t need a study to back up this nonsense view. You just look at recent history and what happened in France under Hollande. Macron reversed the taxes in 2017 that Hollande introduced earlier because 16,000 millionaires left France. He called France ‘Cuba without the sun’.

Rich do leave, because they can. Leaving the middle and low earners to pay more. It’s a fact. It happens.

Favouring something and paying for it are two different things. Everyone wants other pay people to pay more tax. That’s why HMRC don’t get many voluntary payments.

A major problem is the inter generational inequality. Older people are going to have to contribute more but it won't happen.

Older people pay their taxes just like everyone else. What else do you want them to pay?

@Bacibaci
I think it's a bit more nuanced than that. I agree that mostly rich people don't leave a country just because income tax is a couple of points higher if they have ties to that country.

But the ultra high net worth people which the UK really wants to tax are often very internationally mobile in that they may originally be from another country or have citizenship of another country.

And also tax definitely affects decisions about where people establish businesses, which is an argument for relatively low corporation tax. I see this at work frequently. Either a business person is choosing where to establish their business and has a choice of jurisdiction or a non-UK business is considering expanding into the UK. These are the businesses which the UK really wants because they have the potential to be big and create lots of jobs. Tax is definitely one factor which they consider and if UK tax was uncompetitive internationally it would put some large businesses off.

Also high taxes affect decisions about how much people work and where. To use myself as an example, I am a lawyer and would make £95k full time. I work 4 days because the benefit to working the 5th day is so low after tax (and two sets of childcare) and because it's less stressful to work 4. I could make more working for a different firm or if I got promoted but tax (particularly over the £100k point) does reduce the financial benefit. People will make decisions along these sorts of lines all the time, sometimes subconsciously.

I've always thought that a lot more could be generated from IHT by massively decreasing the nilrate band to bring most estates within the scope of it but people seem to hate the idea of their estate being taxed after they die even more than they hate their income being taxed.

people seem to hate the idea of their estate being taxed after they die even more than they hate their income being taxed.

It tends to be those who inherit who hate it.

Turn the question on its head.

If you could have a level of healthcare that meant that you could walk into a GP surgery at any time and be seen within 15 minutes; that hospital waiting lists were a matter of weeks rather than months; that childcare cost very little (after having 12 months maternity leave on close to full pay); that there were sufficient care home places for the elderly and the long-term sick - and sufficient care provision for those who wanted to stay at home; that education up to Batchelor degree level was free; that nurses received a bursary and were paid for the shifts that they worked; that public transport was so cheap and reliable that it would make no sense to have a car ... How much tax would you be willing to pay? Or rather, in a progressive tax system, what percentage of your earnings would you be willing to pay in return for these benefits?

Pie in the sky? As someone ^^ has already pointed out, this is the norm in the country where they live. I've lived in Scandinavia and now live in central Europe where all of these are not only the norm, but are expected and demanded by the population. Once the country where I now live was back on its feet after WW2 the population decided that this would be the standard for everyone. E.g. the standard of healthcare previously only affordable by the rich should be available to all.

Now ask yourself - what happened to all of the North Sea Oil money that the UK received (and compare with what happened in Norway)? What happened to the money from the council house sales - and where were people supposed to live once all of the affordable housing was sold off? And why does the 6th largest and wealthiest economy on the planet have 7 million people waiting for a hospital appointment, and millions facing the prospect of being unable to heat, eat or pay the rent?