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September 09, 2012

Comments

Anonymous

Yes, I agree.

I suppose changes to the tax system could make a difference. For example, making only the first £50k of an individual's wage/salary deductible for corporation and income tax purposes. This might suppress wage growth at the top end.

Coupled with this, a negative income tax, administered through PAYE, could be introduced. Low wage earners would be the sole beneficiaries. However, I guess this qualifies as redistribution, not predistribution.

Perhaps it is a mixture of both predistribution and redistribution that is necessary.

Tom P

On the point about restraining CEO pay, one thing Labour is signed up to is employee representation on remuneration committees.

It's a small reform but a) has the potential to influence exec pay at source (rather than expecting dispersed shareholders to clear the mess up afterwards) and b) starts to blur line in UK Corp gov whereby management accountability is, in theory, solely to shareholders.

Many people are dismissive, but it's a step towards wider employee representation. After all the last time Labour was seriously entertaining ideas about employee involvement in corp gov was Bullock, right?

Anonymous

@Tom P

It would be good if such a reform could be enacted. Better still would be to have 50:50 employee:shareholder representation on remuneration boards, similar to the German model of corporate governance, with tie breaks left to the chairman via a casting vote.

If my memory serves me correctly, it was the Trades Unions who rejected Bullock's 2X + Y formula for employee representation on Boards. I just hope this time around they embrace employee board representation wholeheartedly.

aragon

Yes this is the same kind of Tosh advocated by the Conservatives, merit with the dice heavily loaded to favour the top one percent (or 0.1 percent).

Wage ratios are not in the tend but in the thousands.

Now amount of upskilling will offset outsourcing / immigration or the wage / income ratios.

Yes: Anonymous tax is tyhe only solution to income inequality, but we need to distribute more wealth to the lower paid through wages, as this is seen as more meritorious than through benefits including negative income tax.

The marginal tax rate of 100 per cent is the solution that dare not speak it's name. (All income earned or unearned).

No wonder I am ostracized by the Labour party.

Anonymous

@aragon

It is perfectly feasible to have an income tax that approaches 100% (but never quite gets there) as incomes get large.

There is a very interesting scheme currently being proposed as part of a PhD submission for a comprehensive income tax based on average lifetime income received to date, per hour worked. Such a system integrates benefits and income tax and taxes very high earners at close to 100%.

A further beauty of the scheme is that an individual's tax rates are lowered as more hours are worked - hence unearned income and legacies get taxed at 100% unless the beneficiaries have contributed their labour to society at some point during their lives.

Such a system rewards hours worked but also has flexibility to credit the disadvantaged with hours to compensate for reduced life chances caused by, say, disability etc. Those who award themselves very high incomes will suffer very high tax rates (approaching 100%) irrespective of the number of hours they work.

All this should appear in a book which I hope the author will get published soon.

I suspect this scheme will be superior to IDS's Universal Credit scheme which I suspect will fail.

Tom P

@anonymous

Yep, unions weren't big on employee directors in the past. Suspect it's a mixture of not wanting to be part of potentially negative decisions and also a fear of displacement. But times are much changed since them.

Interesting to read Tony Crosland on this actually. He said no point reforming corp gov in an employee-friendly direction as the TUs already had power and the notional accountability to shareholders didn't mean much in practice. Again, it's a different world now, so I personally think Labour should pursue this.

Employee reps on rem comms is a stepping stone. Agree something like co-determination is a much more meaningful goal.

pablopatito

"But if everyone has high skills, there'll just be more people stuck in jobs for which they are overqualified."

Not in a global economy, surely? Why can't low skill jobs be exported, or filled by low skilled immigrants, whilst high skill jobs are imported.

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