Author Archives: Michael Taylor and Ruth Coleman-Taylor

Since 1979, when Margaret Thatcher came to power, politicians – sadly including many in our own party – have denigrated taxation, reduced the levels of income tax and switched tax from income and wealth to consumption. All mainstream political parties have perpetuated the myth that you can have low taxes and good public services. When I first worked, in the late sixties, the basic rate of income tax was 33% and the top rate was 98%. This had persisted since the war, regardless of which of the main parties was in power. The basis for these levels of taxation was the need to pay for public services, including a good number in public ownership. There was also a view that the gap between the bottom and top of the income scale should not be too large. Broadly people accepted this post war settlement, except of course for a few very highly paid individuals – like the Rolling Stones, who went to live abroad.

Mrs Thatcher, a disciple of economist Milton Friedman, changed all that. Tax rates at the top plummeted to 60% (and later to as low as 45%) and basic rates declined a little. Soon taxation on consumption was to rise and there were new taxes too. The argument used was that income tax was stifling enterprise and that letting people keep more of their own money would incentivise them to invest and develop new businesses. The corollary was that there was less money for public services and an inexorable squeeze on those services was started by Mrs Thatcher, continued by John Major and compounded by Gordon Brown. The coalition made it worse.

At the same time inequality started to get worse. Over time the ratio of top earners pay to shop floor workers’ pay went up from about 4:1 in the immediate post war years, then to 10:1 and much more in some cases, even as high as 50:1. Peter Mandelson may have been relaxed about people getting filthy rich as long as they paid their taxes, but the effects of this huge widening of inequality has had devastating effects on our society, as detailed in ‘The Spirit Level’ by Kate Pickett et al.

The reductions in income tax continued, urged on by the millionaire owners of the press and media. Despite the big increases in personal allowances the gap between the top and bottom has continued to grow and with it the breakdown of the caring society some of us still remember. The politics of envy, stoked by the advertising industry, create a society filled with anxiety, mental illness and violence. In many areas people don’t even know their neighbours, let alone love them. Gated communities tell you just how uncaring we have become.