Tax avoidance or tax aversion? Why we need a vision

The investigation into the K2 tax avoidance scheme prompted understandable outrage. But rather than questionning the morality of the individuals involved, it would be more useful to ask why people try to pay less tax in the first place. Less about individual tax avoidance, more about our society-wide tax aversion.

It’s a serious issue – apparently costing the UK £69.9 billion per year – and it’s worth remembering it isn’t confined to the super wealthy (and let’s also remember not all rich people avoid tax). While Jimmy Carr may have admitted his terrible error of judgment, the dilemma he faced (in his case “I met with a financial advisor and he said to me ‘Do you want to pay less tax? It’s totally legal’. I said ‘Yes’.”) is the same one that leads many others to take cash payments, or to pay dividends instead of larger PAYE salaries, or to invest money off-shore. Let’s face it – rich or poor, we don’t seem to like paying tax.

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Stop talking about income equality – start explaining it

Budcus. He's a long suffering dog.

(Click for the full cartoon)

As debates continue to rage over public service cuts, bankers’ bonuses, and tax avoidance, the call for greater income equality is coming from some unlikely sources, especially politicians attempting to reassure a sceptical public that we’re all on the same side. While it sounds like a good thing (anything to do with equality is good, right?) do we really understand what income equality means, and the impact it can have?

Firstly, my contention is that income equality is a good thing (not least because it is has a close relationship with trust and community values, something that in turn promotes well-being and positive mental health). However, supporters of income equality will be keen to tell you that the benefits extend into almost every aspect of society – the economy, education, social mobility, life expectancy, infant mortality, imprisonment, addiction. Quite a claim. If true, why then are we not in relentless pursuit of greater income equality?

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Is how we talk the key to a better future?

When I started this blog I knew my knowledge of social and behavioural sciences was (at best) rudimentary but I assumed I was at least aware of the main subject areas to look into. Or so I thought, until I read Difficult Conversations: How To Discuss What Matters Most by three authors who work for the Harvard Negotiation Project, and then On Dialogue by physicist David Bohm. Suddenly, the subject of Dialogue has burst onto my social change radar, and I’d like to share it with you.

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Mindset for change – Muhammad Yunus and the social business

In 2010 Muhammad Yunus, founder of Grameen Bank, gave a talk at the RSA entitled ‘Building Social Business’. It’s an inspiring talk, and among his many insightful comments he describes the social business as simply an alternative – rather than an opponent – to the organisations whose policies or services (in this case, lending money) are the source of the problem.

It’s an important mindset. A customer-focused mindset that any business needs – social or otherwise. A mindset that says instead of competing with or challenging organisations, a social business is there to offer another option for people to try – “if people are interested they will use it, if they don’t think it’s interesting it will disappear”. The role of the social business – or anyone serious about positive change – is not to challenge other organisations. It is to stand alongside them and let the customer decide.

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What One Change?

I have a question for you. It’s the question behind the purpose of this blog.

What ONE change would have the biggest positive impact on our society?

Here are some pointers:

  1. Firstly… think big! This is about root causes – big ideas that change society.
  2. You don’t have to know how to implement your idea – this is about the what, not the how.
  3. Do explain why it will work. What are the social mechanisms at play?
  4. Please – no whingeing! This is about positive change, so please… be positive!

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The problem with happiness

“There is a paradox at the heart of our lives. Most people want more income and strive for it. Yet as Western societies have got richer, their people have become no happier.” So says Richard Layard in his 2006 book Happiness: Lessons from a New Science.  But the problem is not income, nor it’s addictive nature, nor the social issues resulting from widening gaps between the top and bottom earners. The problem, it seems, is happiness.

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Political manifestos should be legally binding

Mark Thomas - The ManifestoFinally I get the platform I dreamed of… If you haven’t heard of his Radio 4 program before, comedian and activist Mark Thomas is creating a People’s Manifesto, taking suggestions from his studio audience and then getting them to vote for the best. Although I initially submitted my policy suggestion as a joke in order to ensure I got a ticket to see the recording, the BBC went with it and invited me to introduce it on the show. You can listen to the program on iPlayer here until 7pm on Thursday Feb 18th (it’s worth a listen as there are some great suggestions and Mark Thomas is sharp and entertaining as ever).

However, the idea I suggested – making governments accountable to the policies in their election manifesto – shouldn’t really have been a surprise given I was already building the Vote For Policies website at the time.  Monitoring how closely governments deliver on their election promises is the next logical step ensuring we focus on policies when we decide who we vote for.

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The best argument against democracy is a five minute conversation with the average voter

Winston Churchill, presumably warding off more 'average voters'

Winston Churchill, presumably warding off more 'average voters'

So said Winston Churchill, apparently. Was he right? It’s not difficult to see his point, let’s be honest. I say this because I include myself in the ‘average voter’ category. In fact, as someone who would struggle to tell you what the main political parties actually stand for (I mean really stand for) I wonder if I could even claim to be in the ‘average’ category at all.

Or maybe I’m being too hard on myself. After all, I only have the benefit of 17 years of education. How can I be expected to understand the difference between policies of the political parties?  Just turning up at the polling booth is commendable enough, right?
Let’s face it, I doubt that Churchill would have changed his mind after a five minute conversation with me.

So if Churchill has a point, what’s the solution? Is he implying we should strip ‘the average voter’ of the right to vote? That would surely be a drastic step backwards, and my background in web usability reminds me that there is no such thing as user error, only usability error.  If we apply the same principle to politics, we can see the need for a more usable way of helping voters (like me) to make better use of their vote.

So how do we cut through all of the media spin, squabbling and negative advertising to make an informed decision about which party supports our vision for the future? Surely we would have to read through all of the party manifestos, extract policies for the issues we care about most, then compare them with each other. Who honestly has the time for that? And where do you start? If only someone else could do the leg-work for us… Maybe provide concise policy summaries from each party so we can pick those we agree with most, then find out which party they belong to. That would help us make a more informed choice about who to vote for based on real policies rather than personalities or media spin, right?

Well, guess what readers – someone has! This is my first foray into this arena, and I humbly offer you access to a very simple version of the kind of tool I have described above. More policies and parties are to be added so please offer your suggestions and feedback via the comments form on this post. If you’d like to get involved on any level, please also get in touch.

Try it here then post your comments!

Different problems, common roots.

Roots. You know the kind of thing. In an earlier post, I described a desire to see societal issues tackled by identifying the root of the problem. To reiterate this point I’d like to draw from The Spirit Level which describes this approach much more convincingly. To quote directly…

“The health and social problems which we have found to be related to inequality tend to be treated by policy makers as if they were quite separate from one another, each needing separate services and remedies. Continue reading…

Inequality – the root of all (social) evil?

As a surprisingly direct response to my previous post, the path to a better society may well lie in some incredible research published earlier this year in a book called The Spirit Level: Why more equal societies almost always do better. The book establishes, with alarmingly comprehensive evidence, that economically unequal countries have more of just about every type of social problem.

inequality_graph

The book draws on research into 22 developed countries, comparing the gap in income between the richest 20% and the poorest 20%. How the countries rank isn’t the main point of interest (although it looks pretty gloomy for us UK readers) – what’s really remarkable is that the rankings closely reflect how those countries perform in relation to 10 common social issues including crime, teenage pregnancy, mental health, literacy, and trust. I’ll attempt to summarise the crux of the findings in two simple points, but I urge you to read the book yourself and draw your own conclusions, or at least download the Guardian’s excellent visualisation of the book’s data (the origin of the above image) with accompanying summary.

1. Unequal societies have more social problems

Looking at the graphic above, the countries further towards the right hand side are;

– More depressed
– More obese
– Have more populated prisons
– Have up to 10 times more teenage pregnancies

(In total, 10 ‘social problems’ are identified – it’s not just restricted to the above four areas)

2. Poverty alone is not the problem

Inequality doesn’t just affect the poorest. The research reveals how the affluent miss out too. For example, while literacy and death rates favour the affluent in every society, the affluent in unequal societies are not as literate as they are in more equal societies. Being specific, the richest fifth in Finland are more literate than the richest fifth in the UK (identified as one of the most unequal societies of the free world). Neither do they live as long, and are more prone to drug mis-use and mental health issues. The conclusion – it’s not enough to focus on poverty.

So what’s the solution?

In light of this evidence, how do we make societies more equal?

The two of the fundamental routes to greater equality lie in

  • redistributing income via taxes and benefits – as is the case in Sweden, for example, and
  • reducing the difference at source (i.e. before taxes and benefits are applied to incomes) as is the case in Japan.

Whichever route or combination of routes is applied, what’s clear is that government policy has an overwhelming power to affect income equality. Their success, however, depends on a much greater awareness of the effects of inequality in our society. A cultural shift, and one which needs to be happen among politicians and the public alike.

An awareness campaign is therefore the primary aim of The Equality Trust (set up by the book’s authors), and which looks to be receiving increasing political attention. In calling for the ‘political will’ to reduce inequality, The Equality Trust reveal social factors which will play a key role in affecting change.

“Many people worry about what has gone wrong with modern societies without recognising how many of the problems originate in the effects of low social status and status competition which are exacerbated by greater inequality.”

And there it is. Social status and status competition. Issues whose significance are coincidentally also echoed in a report published by the World Health Organisation focusing on the effects of inequality on mental health (see PDF “Mental health, resilience and inequalities“). The report concludes that “greater inequality heightens status competition and status insecurity across all income groups and among both adults and children”. This may not be a surprise given the evidence discussed (mental health being just one of many social problems that fall foul of inequality), but there is reason to think that the approach to treating mental health issues could hold the key for the other social problems…

In her conclusion that “our mental health is incredibly sensitive to inequalities”, the report’s author, Dr Lynee Friedli, suggests there is “undue focus on individual solutions” to mental health, and that what’s required is a more broad-reaching “social solution”. Just as The Spirit Level describes the importance of social relations, Friedli also believe it comes down to the “a radical rethink” of the kind of society we want to live in. “For all kinds of complex reasons, we cannot adapt to inequality. [Research shows] that our response to injustice is written on our bodies. Those countries in Europe that have huge inequalities have to deal with this at a society-wide level. I’m an advocate of CBT, but no amount of CBT will address this. If we look at the population as a whole, mental health reflects the kind of society we live in.”

For me, Friedli’s observations are fascinating and lead me to the conclusion of this post. She describes individual mental health as a symptom of the health of our society. She gives support of CBT (Cognitive Behavioural Therapy) in treating individual cases, yet also describes the ultimate futility of any individual solution as long as we refuse to address the health of our society as a whole. It is this that raises the question in my mind as to whether we can use the process of CBT to identify to the root of society’s problems as a whole (to arrive at the question), and then address those issues? If we could, what questions would we need to ask ‘society’ to uncover its  flaws, and what would it reveal about the inter-relationship between income inequality and social anxiety – which one is the dominant force in driving the other?

I’m not a CBT professional, so perhaps the next move will be to ask someone who is. But what are your thoughts? Is income inequality the root cause of so many social problems or, since correlation does not imply causation, is there something that drives income inequality?