On charity…

In the aftermath of Children In Need I thought I would post on charity.

What is it with charity that we now need someone to do something, i.e. sit in a bath of baked beans, to convince us to donate? Is the thinking here: “Obviously I was upset about the child with cancer, but I couldn’t help until someone sat in a bath full of baked beans”? Was charitable giving always like this?

We no longer see need in our own society, so someone has to make a performance to draw attention to it and stimulate us to give. Charity stunts are a proxy for the begging bowl on the street.

My post is also prompted by Peter Tatchell’s proposal that there should be a 20% one-off tax on wealth applied to the wealthiest 10%.

Hold on!

That means me, or at the very least close enough to make me worried. I fall pretty much on the boundary of the 10% in terms of income, and well inside in terms of wealth, based on the value of my house and I imagine on the basis of a couple of pensions pots. (see here for income and wealth distributions in the UK). Obviously I find this fairly objectionable. It’s not so much an objection to paying any amount more but being singled out whilst most people don’t pay any more.

I’m not alone, Adele (a popular singer) got herself into a degree of trouble for her comments on paying tax at a rate of 50%, this was in part because of the way she chose to express herself but in part it’s a very good point: she is seeing 50% of her (substantial) income being taken away and it doesn’t sneak out in PAYE fashion. She receives the money and then very obviously hands it over, PAYE makes the process of taxation almost invisible. You’re not paying anything like this rate, and neither am I, my rate of tax on income is approximately 27% (see this post). Her observation was she made relatively little use of the services the government provides and paid a great deal for them, so felt aggrieved. For your own private provision for full replacement you’re probably looking at spending £10,000pa on health insurance, £12,000pa schooling per child and £40,000 provision for your own pension which covers off the major areas on which government spends, and you’ll get a much better service.

The principle of progressive taxation, i.e. the wealthy paying not only more in absolute terms but more in percentage terms, is well-established (Adam Smith was an early proponent) but a focus on simply the wealthy misses out the wider point that everyone contributes something according to their income. So when times are hard it shouldn’t simply be a case of “soak the rich”.

There is an odd parallel between the Daily Mail reader and the Occupy movement, the Mail reader seems to believe that if only large scale Benefit Scroungers could be stamped out then all would be well and the Occupy movement believe that if only the 1% (or 10% if you’re Peter Tatchell) paid their “fair share” then all would be well.

The link between tax and charity is in seeing tax as wide-scale enforced charity; in the past services and support for large parts of the UK population were paid for by charity. This worked poorly because the provision would have been patchy and in many cases below what we would consider a minimum level.

When Britain created its welfare state it subsumed a lot of charitable giving, the state was saying – “you don’t need to give to charity now because we will carry out those activities once covered by charity.”

The Big Society is much derided but it is about something important: it is down to us to care and help, we don’t lose that responsibility by paying tax to the state. The problem for the individual donor is where to spend our charity pound, everybody wants to help pandas and kittens but the unemployed, not so much.

None of the above is an argument for reducing taxation or reducing the size of the state, it’s an argument that the state doesn’t care – we still all have that job.