In the eight years between 2000 and 2008, the OBR found, the top 5pc of earners increased their share of the wage pool from 23.3pc to 26.4pc – generating an extra £7.2bn in tax. The top 5pc earn above £60,000, while the bottom 50pc are on less than £18,500.
\”If the recent trend of increasing income inequality were to continue it would potentially drive an increase in personal tax receipts,\” the OBR said in its Fiscal Sustainability Report. \”Conversely, a reversal of income inequality would lead to a fall in revenues.\”
We can\’t actually afford to reduce income inequality: we need the money from the progressive income tax too badly.
\”Future governments are likely to need to find replacement revenue streams to keep the tax burden constant, let alone to meet the costs of the ageing population,\” the OBR said. The report\’s central finding was that Britain needs an extra £22bn-£58.5bn of tax rises or spending cuts as the costs of the ageing population make the public finances \”unsustainable\”.
And we can\’t raise new money to do new things because we\’re going to have to raise money to continue doing old things anyway.
Although there is a way out of the first part. If the State did less, swallowed less on GDP, then we could work to reduce inequality. But that means those on the left side of the aisle having to make a choice: what do you want? Less State or less inequality?