Equitable taxes

Bibliography

We may have democracy, or we may have wealth concentrated in te hyands of the few , but we cannot have both. (Louis Brandeis)

The society that puts equality before freedom wil end up with neither. The society that puts freedom before equality will end up with a great measure of both (Milton Friedland)

Definition of Equity

An article by Harry Jones in November 2009 Equity in Development: Why it is important and how to achieve it suggests some points related to equity which I note wityh little editing:

Equity comes from the idea of moral equality, that people should be treated as equals. Thinking about equity can help us decide how to distribute goods and services across society, holding the state responsible for its influence over how goods and services are distributed in a society, and using this influence to ensure fair treatment for all citizens

There are areas of considerable consensus can be identified. In order of priority, these are:

1. Equal life chances: There should be no differences in outcomes based on factors for which people cannot be held responsible.
2. Equal concern for people’s needs: Some goods and services are necessities, and should be distributed according solely to the level of need.
3. Meritocracy: Positions in society and rewards should reflect differences in effort and ability, based on fair competition.

The five core priorities for addressing equity at the national level are:

1. Providing universal public services for fair treatment. This means prioritising universal access to public services, such as health and education, and improving their quality by improving their delivery and strengthening underlying institutions. Infrastructure and law and order are also crucial. Services should be free at the point of delivery wherever possible, and where this is not possible, arrangements should be made to ensure that poor people are not excluded.
2. Targeted action for disadvantaged groups. Government expenditure should favour disadvantaged regions or groups. Quotas can support access to employment for specific excluded groups. Services targeted towards these groups are crucial (e.g. girls’ education), as is providing assistance at key stages of development, such as early childhood. Empowering these groups is also vital, as well as strengthening organisations such as producer organisations, social movements and trade unions.
3. Social protection. Social protection should be provided to ensure that nobody drops below a minimum level of wellbeing, beyond which unmet need will create cycles of disadvantage. Options include: payments such as social insurance or basic income grants; conditional transfers to promote human development; minimum wage policies; guaranteed government employment programmes; and labour market regulations to those in employment.
4. Redistribution. ‘Downstream’ action is required to improve equity by reducing inequality. Progressive taxation can help, if the additional fiscal space created is used to fund interventions that will support equity. Other priorities include lowering taxes on staple goods and applying taxes on property – inheritance taxes are key. Land reform is also crucial and redistribution may be required to provide the poor with productive assets.
5. Challenging embedded power imbalances. Power relations can cause and sustain inequity. Tackling harmful power relations takes time, and the empowerment of disadvantaged people must be combined with improving accountability mechanisms and reforming democratic institutions. It is important to build a vibrant civil society and an independent media. Addressing unhelpful attitudes and beliefs can also help foster social cohesion and build a pro-equity social contract.

The interventions listed above have had a proven impact on poverty, inequity and human development indicators.