“he not only puts forward the case that it will contribute to narrowing the gap between rich and poor, but that it is morally correct.”

I don’t quite understand this sentence.

Would it be morally correct if it did not narrow the gap?

None of the candidates, not even Diane Abbott.

“Is there any credible candidate among the Labour front-runners social democrats”

OK, so we’re talking about social democracy then. Right.

“His comments on taxation confirmed that he is still weeded to the idea of a regressive taxation system,”

We do have a regressive tax system, yes. However, if we compare ourselves to what are generally regarded as successful social democracies (the Nordics) then our tax system is less regressive than theirs is. They have higher VAT and lower corporate and capital taxation than we do.

“service sector employment the driver of the economy, replacing skilled and well-paid labour,”

You rather need to rethink that. What is it that makes you think that “service sector employment” is lower paid than other forms of employment?

Yes, sure, Miccy D’s isn’t highly paid on the frontline: but nurses, doctors, lawyers, accountants, webmasters and so on are all also in service sector employment. I’d be fascinated if you could actually come up with evidence that the service sector, in general, pays less than, say, manufacturing, in general.

In regards to the last comment, just because Sweden has higher VAT, its tax system is far more progressive in terms of both higher taxes on high incomes and also universal transfers. Although, this since the 1990s it has become less progressive, we have one of the worst tax systems in Europe. Hence us being the most unequal.

Secondly, I would point you towards this study by the TUC http://www.tuc.org.uk/touchstone/lifeinthemiddle.pdf. Since de-industrialisation unskilled service sector jobs have not replaced the skilled and semi-skilled jobs of the pre-Thatcher period. Real wages at the bottom have actually shrunk.

In answer to the first question, I should have made it clearer that any social democrat would regard it morally correct that higher earners pay more in taxation than the poor. Which is currently not the case.

“In regards to the last comment, just because Sweden has higher VAT, its tax system is far more progressive in terms of both higher taxes on high incomes and also universal transfers.”

Tsk, tsk, you’re not supposed to do that you know.

Move from the definition of “tax system” to the definition of “tax and benefits system”.

The tax systems in both Sweden and the UK are regressive, although theirs is more regressive than ours. The benefits system in both countries is progressive, although theirs is more than ours.

The tax and benefit systems in both countries are progressive: theirs more than ours.

“we have one of the worst tax systems in Europe. Hence us being the most unequal.”

Not really: we are one of the most unequal countries in Europe before the effects of the tax and benefits system (a gini of 0.51 or so, as compared to the US and Sweden at about 0.48 each). It isn’t just the tax and or benefits system, it’s the underlying structure of the society as well. A large part of that being the huge preponderance of London in the economy.

“Since de-industrialisation unskilled service sector jobs have not replaced the skilled and semi-skilled jobs of the pre-Thatcher period. Real wages at the bottom have actually shrunk. ”

That’s entirely different from what you originally said. Your original statement was that service sector jobs pay less than non service sector jobs. I asked for evidence that this was so. You’ve not, as yet, provided that.

“higher earners pay more in taxation than the poor. Which is currently not the case.”

Higher earners most definitely do pay more in taxation than the poor. 39% (the average tax rate of the top 10%, no?) of £100,000 is roughly £35,000 more than 40% of £10,000 (the tax rate and income of the bottom 10%….well, not really, but just used as an example).

Agree with your analysis, James. Although there are still a few months available for the candidates to change their policy positions (remember how Harman started tacking left when Cruddas’ popularity became more evident in the DL contest!) if the election was held tomorrow I’d be first preferencing Miliband Minor.

The problem with Ed M is that however good his policy positions might be his actual performance on Newsnight was poor. The Labour party has just had a leader who was undoubtedly a (if not the) dominant political figure of the past 20 years but who had an inability to communicate and connect with an audience using the visual media, it cannot afford another one. Cameron’s grasp of policy seems poor but he is an excellent communicator, which is absolutely the key to success in current politics.

The nuances of policy are really not that important, my problem is that I dont find any of the candidates especially good or comfortable in front of a camera. Until the Iraq war I supported Tony Blair not because I believed he matched my own political views but because he clearly had an ability to lead the Labour Party to electoral success. Currently none of the candidates have shown any indication of similar abilities.

Despite feeling that Ed M’s policy positions appeal to me more than D M’s I am more likely to vote for David simply because I think he would make a better (though probably flawed) leader.

At current levels (i.e. before the 50% band bites) the tax contribution for income tax looks roughly like this:

The top 1% of earners contribute 24% of all income tax collected.

The bottom 10% pay only 0.6% of all income tax.

That looks progressive and fair (some might say ‘more than fair’). So, if income tax is running on a social democratic model, it must be other taxes that are causing the distortions you allude to. What are they, and how would you change them? If you are not satisfied with the relative income tax contributions, what proportion of income tax should the well off be paying?

Personally, I’d like to see the bottom 10% taken out of income tax altogether. And since they contribute only 0.6%, that seems doable. Apart from that, I can’t see that the system can reasonably be represented as grossly unfair.

If anything, it seems overly reliant on the contributions of a small number of top earners. The same top earners whose bonuses everyone seems determined to slash…. thereby kissing goodbye to a huge chunk of revenue.

[anybody interested in social spending (benefit systems) and poverty should find this excellent post interesting: http://lanekenworthy.net/2010/06/07/social-spending-and-poverty/ ]

The Labour party has just had a leader who was undoubtedly a (if not the) dominant political figure of the past 20 years but who had an inability to communicate and connect with an audience using the visual media, it cannot afford another one.

Have you considered Ant or Dec?

Or both?

Making the tax system fairer isnt about discussing how much a tax band contributes to the overall tax revenues of the country. Of course they will, they earn more. Its about making it fairer so that people pay a fair share. Examining the distribution of tax across all households (measured in 10 deciles groups), the highest decile pays a smaller proportion of gross income in tax than any other decile except the second, third and forth, which pay about the same proportion. For evidence of the regressive nature of our tax system I point you towards

http://clients.squareeye.com/uploads/compass/documents/Compass%20in%20place%20of%20cuts%20WEB.pdf. Compass publication late last year, explains in full detail how regressive the tax system is in the UK and how it can be made fairer.

In terms of /proportion/ of individual income paid as tax (income, NI, VAT, etc), it would appear that the british tax system is regressive (TUC link @4 has a pretty graph saying so, anyway).

Which is the best measure to use probably depends on whether you want to know who’s supporting the nation’s finances most (flowerpower’s figures, wherever they come from) or who is hardest hit by the tax system.

James Maker @ 11

Of course they will, they earn more

There’s no ‘of course’ about it. There are very few highly paid people and a heck of a lot of low paid workers. I’ve found many people are very surprised to discover that 1% of taxpayers deliver 24% of all income tax raised. That’s only 290,000 individuals shouldering the burden of nearly a quarter of the public services income tax pays for. Given that the lower paid have a higher propensity to consume services such as transport, health and state education, it might be worth exploring a different dimension of the notion of ‘fairness’ by working out how many people in society pay their own way (and the fares of a good many others less fortunate themselves) and how many are net beneficiaries or free riders. A little more gratitude and a little less vilification of those who contribute most wouldn’t go amiss.

@Flowerpower

Given that the lower paid have a higher propensity to consume services such as transport, health and state education

Um, something like 93% of the population use (or “consume” to use your rightwing newspeak) state education. It’s hardly a last resort for the poor and huddled masses as you make out.

A little more gratitude and a little less vilification of those who contribute most wouldn’t go amiss.

LOL! *doffs cap*

@ Mr S Pill

something like 93% of the population use (or “consume” to use your rightwing newspeak) state education.

Yes, I’m aware of that. My point is that the 7% who don’t use it are picking up almost half the tab, while more than 50% of those who do use it contribute next to nothing….well, a mere 12% between them.

doffs cap

Nice to see the habit of deference hasn’t wholly atrophied.

Mr S Pill:

Your post about the small percentage of pupils who attend fee-paying schools prompted me to look up how much privately financed healthcare there is in Britain:

“The share of the health market held by private medicine has shrunk by 4% since Labour came to power, newly published data reveals today. The proportion of scheduled surgery which is privately funded stood at 14.6% in 1997/98, but by last year had slumped to 10.6%, health analysts Laing & Buisson said. Their research found there were an estimated 912,300 privately funded inpatients and daycases in 2008, compared to 7,720,700 publicly funded cases.”
http://www.guardian.co.uk/society/2009/oct/29/private-healthcare-market-labour-laing-buisson

On the evidence, private healthcare, as with private schooling, is very much for a small minority only. Since private healthcare means paying twice for healthcare services, this is perhaps not very surprising.

The split between private and publicly funded healthcare for OECD countries is shown in this chart:
http://titania.sourceoecd.org/vl=1117295/cl=29/nw=1/rpsv/factbook2009/10/02/01/10-02-01-g1.htm

Btw a friend, who has private healthcare insurance, was astonished – as I was, by the size of the hospital bill presented to her insurance company when she had a cardiac pacemaker and a defibrilator fitted a few months back.

Our obsession with an economy built on a type of privatised Keynesianism, with personal debt, consumption and service sector employment the driver of the economy, replacing skilled and well-paid labour, was an essential cause of the financial crash.

Exactly.

Falls in real income levels – primarily due to globalisation -plus low interest rates and loose credit equals asset bubbles. You can the same process all over the wetern developed world but particularly in UK, US & Australia. Without the consumer gearing up in an unprecendented fashion we would have been in a deflationary spiral post ’97. This is not a sustainable way to run an economy.

My red line is Iraq, so David Miliband has no chance of getting my vote. Those who say this issue is in the past miss the point – if we elect someone who supported an immoral war in 2003, he might very well support an immoral war in 201?.

Funny how ‘Social Democrat’ has become a codeword for ‘Soft Lefty’ in recent years.

Ed Milliband was not the first leadership candidate to support a high pay commission. Diane Abbot was the first leadership candidate to endorse the calls for a High Pay Commission when she signed Early Day Motion 191 in the last parliament. http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=39731&SESSION=903

Neither Milliband signed this motion.

Please correct.

Our obsession with an economy built on a type of privatised Keynesianism, with personal debt, consumption and service sector employment the driver of the economy…..

And yet – as Tim Worstall has pointed out – manufacturing output is higher now than it was in 1990, higher than 1980, twice what it was in 1960 …. before we had to compete with all those Asian manufacturing nations.

“Our obsession with an economy built on a type of privatised Keynesianism, with personal debt, consumption and service sector employment the driver of the economy…..”

I haven’t got a clue about what that is supposed to mean. The financial crisis was not unique to Britain although there are particular features of the crisis in Britain which are verging on unique – such as the seize of the budget deficit relative to UK national GDP, the extent of the bubble in house prices and the size of the consumer debt mountain.

There are concerns about the risk of another recession, a stagnant economy or, in the extreme, even deflation from early steep cuts in public spending but cuts there will have to be sooner or later because continuing the budget deficit is not sustainable.

Alistair Darling, the previous Chancellor, was quoted saying before the election: “we will cut deeper than Margaret Thatcher”
http://www.guardian.co.uk/politics/2010/mar/25/alistair-darling-cut-deeper-margaret-thatcher

Well *technically* government spending rose during the Thatcher years (mostly because of the huge rise in unemployment) so *technically* any reduction in overall government spending would be ‘cutting deeper than Thatcher’.

An issue in the 1992 election was that taxes as a percentage of UK national GDP were then much the same as when Mrs Thatcher was elected PM in May 1979. The structure of the tax system changed but the overall tax burden was much the same.

As for unemployment, it wasn’t until the final quarter of 1995 that Britain’s ILO standardised unemployment rate declined below that of France, Germany or Italy.

Bob I am sorry to bother you but was it true the only government to cut spending in real terms was Callaghans 1978 government.

Contrary to the Left’s myth making machine, the true facts of Margaret Thatcher’s ‘cuts’ are these:

Between 1979/80 & 1989/90:

Total government spending increased by 13%

Health spending increased by 31.8%

Social Security spending increased by 39%

Criminal Justice/Policing increased by 53.3%

meanwhile

Defence spending was cut by 3.3%.

Hardly the impression you’d get from the standard left-wing narrative.

@Flowerpower

Health spending increased by 31.8%

Social Security spending increased by 39%

Criminal Justice/Policing increased by 53.3%

Well, yes. If you have a policy that says unemployment is fine and dandy so long as inflation is kept down then health, social security, and crime spending is all going to rise. Because if you’re unemployed you’re going to use health services more, obviously use dole etc more and potentially turn to crime (although interesting that that’s the highest spending of the three – typical Tory view). That’s actually the, um, left-wing narrative. What throwing people onto the scrapheap of unemployment does for society at large is a different story, one which we are still reaping the harvest of today.

How much did the State spend looking after General Pinochet at Thatcher’s request?

Mr S. Pill @ 27

if you’re unemployed you’re going to use health services more….throwing people onto the scrapheap of unemployment ..

But during the Thatcher years the average time an unemployed person spent on the dole was 9.6 months. Tough – certainly; but probably not long enough to impact their health… and a far cry from the ‘scrapheap’ analogy.

“But during the Thatcher years the average time an unemployed person spent on the dole was 9.6 months. Tough – certainly; but probably not long enough to impact their health… and a far cry from the ’scrapheap’ analogy.”

Depends on what happened in those 9.5 months. Lost their house, their self confidence and were they re-trained.
I also imagine that figure was much higher for men over 45.