Whenever one talks of raising taxes and increasing benefits, a lot of people have this quite understandable reaction: “Why should people who work hard to earn money give it to people who don’t?”
But there is a good reason that every civilised country in the world has a progressive tax system — one where people with high incomes pay a higher proportion of that income in tax. It is that, other things being equal, there is a tendency for rich people to become richer and poor people to become poorer — and progressive tax systems are intended, at least, to ameliorate that tendency and prevent it from running wild.
But why does this tendency exist?
Suppose you come to me and offer me a gamble. We toss a fair coin. If it comes up heads, you give me £10, but if it comes up tails, I give you £8.
I will accept that gamble, because I stand to win more than lose. The expected value of the gamble is £1 — that is, 0.5 × £10 + 0.5 × -£8. If we played the same game a thousand times, it is a mathematical near-certainty that I will come out almost exactly £1000 ahead.
Now suppose you offer me the same gamble, but this time the payoffs are much higher: I could win £1M, or lose £800k. This time, there is simply no question to be answered. I don’t have £800k, so I can’t play the game. Even if you improved the payoffs so I could win £10M for a gamble of “only” £800k, it makes no difference: I simply can’t buy in.
The intermediate case is more interesting. Suppose you offered me a version where I could win £10k or lose £8k. This gamble, I could just about afford to take, if I wanted to strongly enough and was prepared to make sacrifices. But even though I could play this game, I won’t — because at my level of wealth, losing £8k would mean a lot more to me than winning £10k. The £10k win would make me happy, but the £8k loss would make me much more unhappy.
Now the world is full of gambles with a very good, reliable chance of paying off. We call them investments. And the problem is, you only get to benefit from them if you’re already wealthy. The best investment in Britain for the last couple of decades has been property in London. (We bought an end-of-terrace three-bedroom house in Bermondsey for £75k when we married in 1993. According to Zoopla, its present value is almost exactly ten times that. The flat we moved out of in 2005 is now worth 2.2 times what we got for it.) But property speculation is a game for people with hundreds of thousands of pounds to spare.
At the other end of the socioeconomic scale, of course, there are lots of ways poor people tend to get poorer — not just in the passive sense of missing out on opportunities to get richer, but in ways like being charged by their banks when they go overdrawn, suffering the costs of moving home if they can’t make the rent, and so on.
Here is why this is a problem: the distribution of wealth in any economy is an inherently unstable situation. Any given family will tend to get increasingly wealthy (if it’s already wealthy) or increasingly poor (if it’s already poor). Over time, if left to its own devices, a society will tend towards extreme bifurcation into a wealthy elite and a poverty-stricken underclass.
And that, in the end, is not in anyone‘s interests. A society consisting only of rent-collectors and wage-slaves lacks a middle class — which will mean in the end that it lacks all sorts of important professions: doctors, lawyers, merchants, researchers. Ultimately of course a deep enough divide between Haves and Have-Nots leads to revolution — which is very bad for the Haves and rarely works out well for the Have-Nots, either.
So to avoid that scenario, we have some degree of wealth redistribution: taxation and benefits — which in the broad sense includes not only direct cash payments, but also the public provision of infrastructure like universal health-care and education that the rich have less need of, as they can buy those things privately.
To be 100%, the goal of such redistribution is not, and never has been, to make everyone equally wealthy — no-one wants that, even though Jeremy Corbyn’s political opponents often like to mischaracterise his position in that way. Every sane political observer recognises that some degree of wealth inequality is not only inevitable, but actively desirable — as an incentive to work, to innovate, to create wealth that will benefit broader society.
The question is how much inequality we are happy with. In the 1980s, the managing director of a big company would likely earn about ten times that company’s average salary; now it’s more likely to be about a hundred times. Is that good? Is it bad? On this question, much political philosophy hangs, including taxation policy.
My big problem with our present Conservative government — well, one of my many problems with them, but let that pass — is that they are happy to tolerate, or even sustain, a much higher level of inequality than I think is good for society. And I think that 90% of people on the street would agree with that, if the question were taken in isolation. But admittedly, that does raise the question of why so many of them vote for a Conservative party that is quite up front about its intentions.
 Does every civilised country in the world have a progressive tax system? I can’t think of one that doesn’t, but let me know if I missed one. (On the other hand, I could always go ahead and define a civilised country as one that has a progressive taxation system.)
 Do people with high incomes pay a higher proportion of that income in tax? That is certainly the idea. In practice, rich people will often hire high-priced tricksy lawyers who will identify loopholes that will allow them a legally acceptable way out of paying the tax that (I would argue) they morally owe. This is course is just one more way in which the rich tend to get richer.
 I fully recognise and freely acknowledge that I am on the wealthy half of this equation. The very fact that I can talk about properties we used to own in London makes that point. Nevertheless, I am in very much favour of more of my own wealth being redistributed downwards.