Macroeconomics: UK economy, IB Economics

Faiza Shaheen writes and interesting article in today's Guardian about declining social mobility and issues associated with wealth inequality. It's easy to dismiss as the politics of envy if you like, but the reality is considerably more nuanced. 

As the article notes: "The richest 1% of households in the UK have wealth of more than £3.6m,  whereas the bottom 10% has £15,400 or less", similarly, "those who go to the most elite private schools, the “Clarendon schools” (Eton, Harrow, Winchester, Rugby, Westminster, Charterhouse, Shrewsbury, Merchant Taylors’ and St Paul’s), are 94 times more likely to end up at the very top than those who go to any other school."

Having taught at one of them for nearly 20 years, anecdotally, it's remarkable how some of  the laziest, least motivated and often least intelligent former pupils often end up in extremely lucrative careers

Will Hutton's view of the Spring Statement. Another voice, similar themes.

This is an odd article to place - I put it here because it's fundamentally about 'fairness' and 'opportunity' and, as such, difficult to separate from inequality. 

Age UK argue that access to cash, at a time when cash transactions are declining, and that if over 65s don't have it, then they risk being excluded from society. 

This BBC article looks at the impact of business rates on some small businesses and should, I hope, get you thinking about the fairness of this way of taxing businesses. 

If, like me, you've ever stood in a shop and compared the price of a good to what you could get it for online, then you, like me are perpetuatiing the unfairness of a system where bricks and mortar retailers are paying disproportionately more in taxes. 

In this article, John Harris wonders whether the time for a Universal Basic Income has come, and how it might help create a more equal and less divisive society. 

However, of course, although this sounds superficially appealing, the big question that remains is how such a scheme would be paid for, with critics suggesting that it would require far higher taxes, and that this would be inconceivable. 

The politics of envy or a simple question of fairness - how can the super-rich pay an average rate of inheritance tax of 10% when those with less wealth pay more?

Another lovely example of tax avoidance in action.

I leave this here without comment. Make your own mind up.

Another Guardian article looking at alternative ways to finance social care, or shore up public finances more generally. This time Ben Tippet argues for a wealth tax on the top 1%.

However, whilst notions of 'fairness' make this sort of thing superficially appealing, you could point out that the top 1% already make a disproportionately large contribution to total tax revenues, and that any such scheme has little chance of raising the sorts of sums envisaged.

I'm going to discount any adverse effect on entrepreneurialism - because I think that this argument is hokum but tax avoidance means that such taxes aren't often very effective. 

I suspect that I'm going to be off to have a little play with this resource this week: the IFS have launched TaxLab to demystify Britain's tax system and shine a light on some of its unfairnesses. It seems to be of it's time - with the current move to clamp down on tax avoidance.

However, some remarkable inequalities emerge: "Top-band Londoners pay only three times more than bottom-band northerners, despite property values over eight times higher. Revaluation could see northern bills fall by 20% and London bills rise.

Further, National Insurance is also fundamentally unfair. 

This is an excellent read; I'm sure it's also an excellent resource. 

The new head of the CBI, Tony Danker, has used his first keynote speech to call for a resetting of the British economy in the wake of coronavirus, suggesting that there's a need for a "fairer, greener economy".

He argued that rather than squandering the opportunity for a reset in the aftermath of the global financial crisis of 2008, there was a need to capitalise on the opportunity this time around, to boost productivity and foster sustainable economic growth going forward. 

In the light of John McDonnell's announcement that the so-called NHS 'rescue package' is going to be financed by an increase in the top rates of tax, the Institute for Fiscal Studies have announced that the top 1% of income earners already pay over 33% of all income tax receipts. Is this fair?

As a counterpoint to that, it's worth reading the whole article:  "taxes in the UK were below average for the G7 group of industrial nations and lower than in most countries in western Europe." This suggests that there's probably some room to raise the top rate of tax.