Preface for a book I might never write: Arguing for the
CLIPH-rate tax
Lately I’ve
been teaching or planning courses about distributive justice and I’ve mapped
out a book I’d love to write if I had the time. It's probably about third on my list of projects though I sometimes mentally change the order of priority.
In fact, I wouldn't be starting from scratch. As well as having taught some of the theories, I could use a couple of pieces I’ve published, and
I have written some blogs on the topic too. However, I thought it might be nice
to note down the idea here, just as no doubt countless authors have written a preface but never completed the actual book.
The basic idea is to write a three-part (or even volume!)
work presenting the argument(s) for my CLIPH-rate tax system from three
different theories of justice; Egalitarianism, Consequentialism and desert
theory.
Egalitarianism
The egalitarian argument is the easiest one to reproduce as
I’ve already written a couple of pieces about this, in
an edited
collection and in my article “
Arguing for
hourly averaging.” Resource egalitarianism is the theory of distributive
justice I find most compelling, and so this has been my primary concern up
until now.
However, not everyone is convinced by egalitarianism and I
think that it is possible to make strong arguments for the CLIPH-rate tax from
two other theories.
Consequentialism and prioritarianism
Consequentialists about distributive justice believe that
the economy should be designed to bring about the best total consequences. The
good consequences could be subjective welfare, preference satisfaction,
freedoms or some mixture of goods. Consequentialism is a totalising theory;
bring about the most good. It therefore doesn’t matter how the goods and bads
of society are distributed. Someone might be very badly off both absolutely and
relatively under a consequentialist system and they would have no grounds for
complaint (except by rejecting consequentialism). For many people, this is
enough to reject consequentialism; everyone is just a means to bring about the
best total consequences.
In fact, consequentialism does not have to ignore
distributive matters entirely.
Prioritarianism is a
consequentialist theory which gives priority to those who are worse-off when
undertaking the consequentialist calculation. The weighting towards the
worse-off could vary; with greater emphasis on maximising the total amount of
good or with greater priority given to those who have less. Prioritarianism
seems to make consequentialism a lot more acceptable, though it doesn’t fully
resolve all concerns about it.
How can you argue for the CLIPH-rate tax along
consequentialist or prioritarian lines? I’ve made some points in previous blogs
and in my book about the ways that an economy with the CLIPH-rate tax at its
heart would combine incentives to work, save and invest with a great deal of
redistribution to assist those on low incomes. Consequentialists, and
particularly prioritarians, would want to ensure that there isn’t an
impoverished class of workers at “the bottom” of society. Raising the standard
of those who are badly off should bring about better total (let alone
prioritised) consequences if we accept that nearly everyone gets declining
marginal utility from resources. A poor person will get more utility (or
whatever other good you specify) from a £10 gift than a rich person would. A
successful economy should therefore focuses on making the worse off as well as
possible, where this can be done without damaging overall economic productivity
too much.
I would like to do more to show that the CLIPH-rate tax can
both help to enlarge the pie while ensuring that everyone gets a decent slice.
Hour credits are a key part of the tax calculation, and the only thing that
someone can do (by choice) to get more hour credits is to undertake more work.
The incentive to work is therefore built into the system. Meanwhile the tax
calculation should generate as much taxation from unearned income as possible,
representing the ideal form of taxation.
This is because the CLIPH-rate tax should do a good job of taxing
not just unearned income but, relatedly, all forms of
economic rent. Economic
rents accrue to someone when they get more than they need in order to make the
economic transaction in question. So if a landlord is considering renting a
room and would accept £100 for it, but can get £200 due to high demand, then fully
half of the rental income they get is
economic
rent. If this landlord has a tax rate
of 50% they would still rent out their room, but instead of their getting the
economic rent, it would go to the government. This revenue can be used to assist
the less fortunate members of society, increasing their happiness.
That is a summary of the theory anyway, and I’d like to have
more to back up my claims. It would be great to work with economists to help
make the case.
Desert theories
I also think that a very strong case can be made for the
CLIPH-rate tax from the perspective of desert theory. In a CLIPH-rate tax
economy people get more income if they either get more hour credits (more hours
worked) or have a higher income. Income made from working will therefore
generate much more of a reward than unearned income, something which chimes
well with desert theory.
Desert theories aren’t particularly popular with political
philosophers, though they seem to be more popular with the general public, who
often talk about particular people getting more or less than they deserve. A
dodgy banker, crook or tabloid “benefit/welfare queen” could be said to have
much more than they deserve. On the other hand, people might claim that nurses,
kindly and charitable soul, or other hard-working person get less than they
should.
Philosophers have delineated a few different bases for these
desert claims. One is that some are more productive than others and should be
rewarded accordingly. This is the
productive
contribution desert base associated with
David Miller,
Jonathan Riley and
Gregory
Mankiw.
A second desert base holds that people who do more
burdensome jobs should get more than others. This is the compensation for
burdensomeness desert base associated with
Julian Lamont.
According to this theory, the person who does
dangerous or unpleasant work deserves more than others who have less burdensome
jobs. Someone working very hard in the cold on a North-sea oil rig with a high
risk of death deserves much more than someone who works in a comfortable
office.
The third desert base has features from the two above and
attempts to get around the problems they have. This is that people who put in
more
effort should get more than
others. This view is associated with
George
Sher,
Wojciech
Sadurski and
Heather
Milne. There are issues with all three desert bases though they all have
some intuitive appeal. One is the extent they link to what people earn on the
labour market.
I believe there is strong case to be made that the
CLIPH-rate tax does a very good job of tracking these desert bases. Under a
CLIPH-rate tax system people will get more if they get more hour credits (work
longer hours) or if they have a higher income, and particularly if they do both
these by working longer hours for higher pay. This seems to track all the
desert bases above, since market pay rates reward productivity, burdensomeness
and effort, and the hourly element also represents a productive contribution,
the burden of giving up one’s time and an effort. Meanwhile, people who receive
mostly unearned income from gifts or economic rents will be taxed very highly.
Other theories
I don’t think that there is much traction in arguing for the
CLIPH-rate tax from libertarianism, though perhaps it might work from a few of
the less common versions of left-libertarianism. Nevertheless, it would be a
stretch and I don’t find libertarianism compelling anyway so I can live without
trying to make that argument.
Sufficientarianism is another theory that is plausible.
While I’m sure it’s possible to make an argument from sufficientarianism I’m
not sure whether it is worth attempting it. After all, there are lots of forms
of sufficientarianism and many people advocate a pluralist theory anyway
(sufficientarianism + some other theory). Plus I don’t see why the CLIPH-rate
tax particularly does any better at getting people above thresholds except
perhaps for the consequentialist/prioritarian reasons set out above. Let me
know if you disagree and think I should write about this.
Prospects and next steps
What are the prospects for ever writing this book? We’ll
see. I might be able to do it fairly quickly if I could devote a chunk of time
to it, but other things always seem more pressing. Perhaps I can start with a
few journal articles and see if anything develops from there. Maybe this is as
far as it will get? If so, its nice to have a record at least.
And if anyone has any suggestions or wants to collaborate do
drop me an email.
