Monday 7 May 2012

Tax Array

Time for another dig deep session. It verges on an Alice in Wonderland incredulity the number of organisations, the variety of assessment / claims forms and the bewildering variety of benefits out there where the government, in some guise or other, pays money back to its beleaguered citizens. These byzantine arrangements, all arrived at with impeccable credentials of fairness, equity, non-judgemental compassion and social egalitarianism ends us up in this current mad house. Duplicates of civic servants or quasi scrutinising the minute of income, assets, disposable wealth and interpersonal relationships to arrive at not so dissimilar views. Yar, this person is in need of financial support to get through.

Some times, just occasionally, the sticking plaster on top of the sticking plaster approach to crisis management fails. This is where we are now. We have to dare to lift up the corner to see right back to the origins and be prepared to discard the past. There are the majority of people that sit within the norm sufficiently well as to not raise concerns. Then there are people that are well below the norm and, compassionately, need special considerations. Then there are those above the norm that require particular attention.

Below the norm people from time to time struggle. Whether from their own duplicity, bad luck or simply an act of god, they fail to cope. So often it comes down to failing to make financial ends meet. It is in all our best interests that they get some immediate relief, a crucial chance to sort themselves out. Extend them that lifeline to get back on their feet. Moving on from there, from whatever the cause, we cannot let any citizen slide into destitution. We just cannot stand by as another human fails to cope, to find the basics of shelter, food and clothing. Two situations then,  the first, hit the crisis button and immediate temporary relief whilst indepth investigations as to cause and remedy are conducted and your self-recovery attempts are monitored. Your crisis, your solution with the state in the background with advisory help. Not a state orchestrated rescue plan or a state ordained way of life, see also From Cradle to Grave. Second situation, you fail to manage your own recovery and slip further into the financial abyss. Until that point when others decide you need to be taken in. Given the minima of security, shelter, food and clothes in a community, with respect for privacy, for the family unit, though not necessarily your own personal private space. A scaling of support dependant on your willingness to help yourself and help all those possibly undesirables you now find as your companions, but always with that encouragement to work out your solution to your own problems. Shades of the workhouse. Inescapable, but a workhouse comparison diffused with compassion and support for the individual to find their own solution.

If we consistently fail to cope, it is right and proper that others begin to make decision on our behalf. It is the price of getting it wrong. One key questions is whether we are paying our way or living beyond our means. Your view is that you are perfectly entitled to a settee, or a wall screen HD TV, or convenience foods or an annual holiday. Others, that is the we of our society, may well judge that your life expectations are out of kilter to any realistic income. If you are unable to earn enough to pay for your desired lifestyle the State will make up the difference. Great. The downside is that the States view of what is required to sustain you or your family will be set eventually very low. A crutch for those in need but, and a very important but, not so comfortable that any one would choose to depend on it. There has to be that bottom line incentive, to get yourself out of your difficulties. It is your job, not the States job. So a sliding scale then, with interventions all along the way, from sustaining you in your present life style for the short term to a gradual reduction to a bare bones basic. Until the final support of some community based last resort shelter. Achieved simply with a tax credit as an income source. Scrap all the other benefits and allowances and special needs. We, this our society, decides a norm, below the norm, tax credit, on the norm, tax neutral, above the norm, tax debit.

Before turning to those in tax debit, an aside. It has to be all about our personal choices. If we choose, let events put us in a place, where we are a single parent, that is a personal choice. That choice has financial consequences which flow directly out of that choice. If we are born disadvantaged in some way, those are the consequences we have to live with and those are the limitations we have to find a sustainable life style to live within. That may well mean having to rely on support of the family, friends or community around you. Life does not come with  any entitlements. It is up to you to make the best of whatever the start you are given. It is not the states function to reinstitute you to some idealised lifestyle. Crisis support all the way for those crisis situations, caught out by the freak events of chance. Does your finding yourself in a relationship with a person with abusive traits amount to a crisis or a lack of judgement or necessary caution?

For people earning above the norm they pay the debit tax. Remember be are talking here about a pro-rata tax on wealth creation, see Tax, salaries and rewards and That Extra Mile. The more you have invested in skills or equipment the less you pay and the less you have invested in plant or people then the more. That pro-rata rate also on a sliding scale. We as a society will decide that no one shall take home a disposable income of more than 10 times, or 100 times or a 1,000 time more than the norm, whatever. We as the society set and control the divergence between the poor and the richest. The minority rich can only accumulate their wealth with the acquiescence of us the majority poor. We take pride in the unique opportunities our society offers. Those rich that recognise these benefits and are willing to make their contribution back into the society that nurtures them, will stay. Those other rich who are only interested in ever richer pickings will go elsewhere. When the 100% tax point is reached, that is you have arrived at the maximum rich to poor discrepancy society can tolerate, the options become simple. You either have to diversify and invest into less profitable enterprises or you spend on humanitarian good causes. This is a tax on wealth generation, not on the value of the pile of golden eggs but how much income is derived within this society from those eggs.

Society wins all round, it entrepreneurs are handsomely rewarded. The more successful they are the more the state recoups. A successful society is ripe for harvesting wealth. An equitable society that looks after all citizens is a just and stable society. Citizens that are motivated to self seek solutions are mobile and willing to try new opportunities. Win, win in principle. Our resourcefulness can mitigate the inevitable downsides. Better to try than continue to fail.

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