The report is here. It is by the TUC, which some of you will remember from your labor history classes.
It reaches a conclusion similar to something I’ve been arguing for a long time. I think Progressives are barking up the wrong tree when they approach poverty with the argument that the solution is Redistribution–ie Robin Hood policies that tax the rich and give to the poor. This mixes two memes. Sure the rich have too much income, and sure we ought to relieve them of some. Absolutely. Why? Because they are too darned rich.
And sure we’ve got too many poor people, and too many near poor, and sure wages for at least a third of our workers are totally inadequate. So we need to increase their incomes: wages and welfare.
But do not link the two. That is confusing. We don’t need no stinking taxes on the rich to increase incomes of the poor. Indeed, there is no accounting that allows you to use taxes to take income from the rich to give to the poor. (Despite what our rightwingers say, the IRS does not hold you up with a gun–it debits your bank account.)
Further, it ties poverty relief to a politically very difficult policy–at least in America. Why wait until we can reduce the richness of the rich before we reduce the poverty of the poor? Let us move forward on both fronts–but separately.
I am skeptical that we’ll do much to reduce richness by raising taxes, anyway. In America, it doesn’t work. The rich just get loopholes through Congress to exempt themselves. You can bet that the top 20,000 income earners in America will each get their own personalized exemption to any progressive tax hike. Read the great work by Bartlett and Steele. Never worked in the past, probably won’t work in the future. (Heck, we cannot even tax Apple.)
That is why I think that Predistribution is the right way to go, as the TUC argues. We need to:
1. Prevent the rich from becoming filthy rich. Don’t wait until they are already rich and try to tax it away. Anyone who’s had a baby knows that you keep the candy away from the baby; it is much harder to take it away once it is in the baby’s mouth.
2. Increase income of the bottom half of the population directly: Jobs For All (ELR/JG) and Higher Wages at the Bottom. Don’t try to do it through the tax system.