Thanks for the reply. My point about someone earning £millions being dependent on the labour of others, and therefore on the inputs that allow those others to work, comes from this observation. As a sole trader I know what I am worth, exactly what I earn. If I worked twice as hard (or maybe twice as smart) I would probably earn twice as much. But at some point I am going to reach a limit on what I can earn purely by my own efforts. So if I take someone else on I am permitting them to earn an income, and my income is increased by their work. Scale that up enough and you can get people earning millions - not because of their own work, but because they have thousands of people working for their organisation, all contributing part of the wealth they generate to the person at the top. So when the person at the top says "I earned this money", what they are really saying is "I created conditions for others to earn this money, and I take a cut of what they earn". nothing wrong in that, we need leaders and entrepreneurs. But it shows that the conditions that have equipped their employees to create that wealth (e.g. health and education) contribute hugely to their £million(s) salary, and therefore they are receiving indirectly from those public services. And I would say that a person whose income is dependent on thousands being healthy and educated is receiving more from society than an individual on a low wage who has only benefitted from their personal use of health and education services.
I don't feel that the tax rates applied to the wealthy are penalising. From your figures above, our £2 million CEO takes home £1,120,874, which is a massive reward and enough to live an incredibly high standard of living. And I salute wealthy folk like James Dyson and JK Rowling who pay their tax. How do we handle the tax avoiders? You're right, it is down to government to do it. It could pay for 94.7% of the budget deficit if they did. But why aren't they? I don't think Labour did it because until the banks crashed enough money was coming in and they were afraid to upset the wealthy vested interests. And I don't think the Conservatives are doing it because they are anti-tax, anti-public services and don't want to alienate those who support them financially (such as Belize based tax avoiding multi millionaire Michael Ashton). Labour were afraid of the big tax avoiders, the Conservatives are in league with them. And the size of tax avoidance and evasion dwarfs benefit fraud. Yes, benefit fraud is wrong, but the damage it causes to the UK economy and society is tiny compared to that done by tax avoiders. And tax avoiders are trying to keep hold of money they have only been able to earn because other people have provided services for them (such as educating their workforce for them, or having a police force that stops criminals preying on them).
The harsh fact is we are not flat broke as a country. There is enough money in the system. The problem is the government doesn't want to collect the taxes that are due, which would close the deficit and avert the majority of the budget cuts. Instead of closing the loopholes and going after those who don't pay their taxes (which means you and I have to pay more, or put up with worse services, probably both) they are actually reducing the number of tax inspectors. The HMRC is having to lay of 13,000 staff and has big cuts to its revenue and capital budgets. This is a totally wrong-headed move if the government is serious about collecting the taxes it needs to sustain public services. So the government are either plain idiotic (because if they strenghtened the HMRC it would bring in much more revenue than they would spend on it) or don't really want to go after the big tax avoiders. Either way, I am not confident in a government whose actions are either stupid or corrupt. And that's what makes me angry - the decisions to try and resolve the budget deficit are largely driven by service cuts (which hits the vulnerable) and there is little consideration for collecting the full taxes that are due (which would affect the wealthy). Not even raising taxes, just collecting those that are due under the spirit of the law at this point in time. And because of this ideologically driven approach we are seeing police officers getting sacked, serving soldiers returning from Afghanistan to find their jobs under threat, construction companies going bankrupt because they no longer have any public contracts, students starting their adult working life £40K+ in debt, care homes being closed, etc. etc. etc. The government may not be wanting to make these cuts, but it comes across as if they are saying "Well, we couldn't possible ask Sir Philip Green or Vodaphone to pay their fair share of tax, that wouldn't be proper, so we'll just have to demonise the disabled, sack nurses and make the under 25s homeless".
And because the government has cut too quickly and too far any hope of growth in the economy has been choked off. From the little economics I do know, the reliable approach to managing public finances is to save in the good times and spend in the bad, even if you have to borrow some to get things going. If you look at the American economy in the 1930s you see laissez-faire economics at the start, with government stepping back and hoping the markets would sort it all out. It didn't work. Then you had Roosevelt and the New Deal spending on projects such as the Hoover Dam, getting people back to work, and that started to get growth going again. Ironically it took the massive borrow and spend under a centralised command economy during World War 2 to really get everyone back to work and out of the Great Depression, it wasn't austerity and the private sector. I hope it won't come to that, but it shows that sometimes drastic spending and government intervention are necessary. At present some heavy weight economists, such as Nobel prize winner Joseph Stieglitz, are saying that the UK government's policy of austerity will kill off growth and send us futher into recession. I hope they are wrong, but the data so far is showing they are right.
One final point, and that's to do with the relative unimportance of money. I have been reading about happiness and what makes people happy recently (my first degree was in Psychology!). By and large, once people have a minimum income level (and it doesn't have to be much), having more and more money above that level does very little to improve their happiness. Far more important are factors such as the quality of relationships, having control over things in your life, and doing things for other people. An experiment at Harvard gave one group of people money and told them to spend it on themselves, and gave a second group some money but told them to spend it on other people. The first group went out and spent their cash, and at the end of the day were no happier than they were before. The second group spent the money on someone else, maybe gave it to charity, and it made a lasting impact on their well being. I find a lot of political discourse over who can get how much money a bit depressing, because it misses the point that money is a means to an end, not an end in itself. I don't mind paying my taxes (perversely I quite enjoy it) because I know society needs it and because I know the really important things in my life (family, friendships, culture, faith, voluntary work) will be unaffected by me giving away the 20% that I earn above the basic threshold. On my modest income I have more than enough to live a good and happy life.
But I suppose that if I am idealistic in expecting the government to chase after the wealthy and powerful who dodge taxes, I am more so if I hope people will take a step back from the rat race and ask the question of what is really important in life. That's far more important than clinging onto some extra pennies (or £millions), but we are ruled by bankers rather than philosophers.
Take care,
Rosieres.
(Who is getting far too verbose in old age).