A few weeks back I listened to a discussion on BBC Radio 4. One question concerned the wide difference that may exist between the salaries of senior management and the salaries of the lower paid workers. The audience, with the blessing of the panellists, abhorred such gaps. And I was mystified. Was the idea to raise all the workers’ salaries or to guillotine the managers’ earnings?
It is not clear to me why someone who is being paid the proper rate for the job should expect more money because his boss is affluent, or indeed less because his boss is skint. I would, in fact, prefer an affluent boss – there is a better chance that he or she is a good business person who will ensure that my job is safe.
No doubt there are senior managers who do not earn their keep, but on the whole they do. Someone who can build up a business, anticipate the markets, design saleable products and services, and organise distribution does tend to contribute more to the wealth of nations than the average routine worker. We have forgotten how the Industrial Revolution, and the foundations of Britain’s prosperity, was dependent on the inventors and the entrepreneurs who were rightly well rewarded when they were successful, and rightly fell into a ditch when they weren’t.
This urge for equality provides us with an example of the law of unintended consequences. Attempts to reduce the wealth gap in the pursuit of alleged justice result only in mediocrity. This damages the interests of everyone in society – and particularly those at the lower end. Justice and equality are not synonymous.
We do, of course, have a mechanism which reduces high incomes; it is called progressive taxation. Never in our economic history has the proportion of our tax take weighed so heavily on the higher incomes, or so lightly on the lower incomes. Yet there are many who claim that the burden should be even higher. This economic illiteracy is dangerous. Above certain levels, taxation rates actually lead to less revenue. The curve turns downwards as the high taxpayer is motivated to re-arrange his affairs, and there are plenty of legal ways in which he can do so. A state which is more interested in reducing incomes than in increasing tax revenue has started down the path of confiscation. And the law of unintended consequences bites again.
But what about those bogeymen – those terrible bankers? Yes, there have been crooks, as the Vatican bank amply demonstrated, and there have been those who endangered the state through greedy irresponsibility. We need the right regulation, but we must avoid killing the golden goose in the process. The industry employs upwards of two million people, is responsible for 10 per cent of our economic activity and pays £65 billion a year in tax. The EU is constantly looking for ways to cut it down to size, while we who benefit are resentful and ashamed of its success.
Beside the bankers on the naughty stool are those companies who do business here but pay their taxes elsewhere. Yards of newsprint have condemned their perfidy. It is rarely mentioned that several countries, including this one – to say nothing of Ireland – actually compete to provide tax domicile by reducing their corporation rates. Who is the hypocrite here?
There are other examples of unintended consequences. We have a rating system based on domestic property value (irrelevant) and not on household income (relevant). Stamp duty at high rates on domestic property discourages house moves, and inhibits the economic activity which this turnover stimulates. It prevents downsizing, and so releasing accommodation for others. And fewer sales lead to lower stamp duty revenue. Inheritance tax at high rates attacks our natural desire to benefit our children, and hits big families the hardest. Meanwhile, the worldly wise can turn it largely into a voluntary tax.
But what about the poor? Our primary duty here must be to provide what is required for food, clothing and shelter. This means that we need to raise the minimum wage to the Living Wage. It might take three years to achieve this to avoid unintended negative effects. Next, we must work hard to reduce relationship breakdown, which is a major source of poverty and of damage to children. Beyond such steps, we must offer opportunity.
Opportunity starts with education. A child who leaves school without fluent writing, reading and basic arithmetic has little chance of future success. And I note that Mr Gove, in his time, took the heterodox view that teachers should teach. No wonder he had to go. And we have much to do to reduce the cycle of deprivation through which successive generations reproduce inadequacies in the upbringing of children.
Such social programmes are expensive in the short term, and the benefits come in the long term. But they will not ultimately be a burden in a society which rewards success, because the tax revenue will be a by-product of greater economic activity and lower unemployment, rather than a fruitless raising of tax rates.
But I am not optimistic. We are leading up to an election in 2015. That means a race to the bottom in which votes depend on how enthusiastic we are to fleece the provident in order to satisfy the improvident. We have to choose between a society which champions success so that, in the long run, its weakest members benefit, and a society on a direct course towards mediocrity for which the weakest ultimately pay the price. An unintended consequence, indeed!
secondsightblogdotnet 
Agreed as far as the actual creators of wealth are concerned, but I have some reservations about the banking industry. Providing capital to entrepreneurs and requiring a reasonable fee for the use of it is clearly beneficial to both parties and to the economy in general. Much of the business seems however to be mere gambling on the day-to-day or minute-to minute fluctuations in the valuations of enterprises with no concern whatsoever for the participants therein, and so is simply parasitic. Do you know the rough proportions of these activities?
Yes, I wrote about these artificial transactions in my post last year “Breeding Money”. However it’s as well to notice that pensions and other funds (from which many of us benefit) are getting the advantages of many of these operations.
However banks are in essence the money exchanges on which a modern economy depends. They borrow money from those who have got it, at a price, and lend it out to those who need it – at a somewhat higher price. That may be to you and me because we want an overdraft to buy a car or to a huge business which needs available capital to succeed. It’s a risky business, as we have seen, but those who conduct it well tend to be able to name their own price (which is paid by their shareholders, we just get the tax).
Let me give you a personal example. I once needed to borrow a billion pounds to fund a new enterprise. Lengthy discussions, arguments about tiny fractions of a per cent. But the money needed was arranged, and so we started a mortgage company which enabled a large number of people to buy houses. The bank profited, we profited, the house buyers profited.
My point of course is that, while we need to control abuses and to ensure that the public don’t pick up the bill when things go wrong, we shouldn’t throw out the baby with the bathwater. For all their faults, the banks stand between us and a hand to mouth subsistence economy.
Not for the first time on his blog does Quentin defend those on the richer end of society, especially in terms of taxation, and pay lip service to those at the other end.
He also continues the myth, along with all of the media and all of the politicians, in the existence of the minimum wage.
What this country has is a minimum HOURLY rate and NOT a minimum wage. Many thousands of workers, especially women, are on an hourly rate, not out of choice , but because that is all that is on offer. Carers and those in catering are prime examples of this. A working week for them is 20-30 hours.
Now this is a big improvement on what went before ( £1 an hour being the going rate for thousands of workers, who we lump together as ‘low paid’ as though they are some kind of underclass, ) but even the minimum hourly rate was opposed by many of those who were in the upper bracket, including nearly the whole of the Conservative politicians at the time! And no doubt including a good number of the tax dodgers that Quentin infers have some kind of merit.
Incidentally it is not ‘irrelevant’ to calculate that in the vast majority cases those persons who can afford expensive homes can also afford to pay the most tax.
It is not the normal banking activities which result in the opprobrium of society; it is the reckless gambling in the currency market which should be stopped. Dealers gamble with other people’s money and take risks which they wouldn’t take if it was their own money.
In addition, banks lend money so that customers can buy shares. This was a contribution to the 1929 crash. It was outlawed in the 1930s until the 1980s. They also had a stupid policy of lending 120% on the value of property. They encouraged small businesses to borrow more than they could possibly repay and then foreclosed and bankrupted the businesses.
These practices were never allowed in the 1950s and 60s. It would have been frowned upon as bad business practices or fraud.
Many banking staff members did not, and do not, consider that they were working for their share-holders. All they were taught to think about was their bonus.
Many of the above-mentioned are still in place and still practised. Many older and retired bankers are disgusted with what went on and is still going on.
” Many of the above-mentioned are still in place and still practised. Many older and retired bankers are disgusted with what went on and is still going on.”
Definitely, Geordie, my father must be spinning in his grave.
An article in last week’s Catholic Herald, August 15th, page 7, by Carl Packman, entitled, Justin Welby’s Crusade is pure Chesterton, is very interesting.
http://www.catholicherald.co.uk/features/2014/08/21/justin-welbys-crusade-against-debt-is-pure-chesterton/
No good wringing hands unless you can think of solutions which don’t have unintended consequences. For instance what would be the effect of fixed foreign currency values? And what is the best alternative to allowing such values to be settled by the price at which they are traded? (Remember George Soros, whose speculation saved our currency back in 1992. He saw that our currency rates were unjustified, and so took trading action. If it had not been for him it is virtually certain that we would be using the euro and not sterling now.)
If you can find ways to control all bank abuse without destroying their vital functions, tell the Government. They would be delighted to know.
Quentin, I was posting at the same time as yourself so I missed this point. The obvious unintended consequence of raising minimum wages is that it increases immigration. I would guess that at least 30% of service jobs in London are now filled with immigrant labour.There is massive unemployment in the North-West but the London jobs are largely filled by European immigration. This is a structural problem that cannot be fixed by taxation or directly by government spending.
If I might ride out on a personal hobby-horse, one of the barriers to youth employment is that we no longer teach manners (appropriate behaviour) or correct speech. In a service economy, those who deal with customers need decent personal presentation to be effective.
Quentin, you have a short memory; before Margaret Thatcher came to power we had surtax where the highest paid were taxed at 97.5%! However the progressive tax system has always supported the idea that the broadest backs should bear the greatest load.
Your thesis that improving education will lift the poorest by allowing them access to better jobs has a fundamental flaw; we still need cleaners, security guards, hospital porters, restaurant and bar workers etc. There will always be a bottom rung of the ladder and, in a service economy we need 15%-20% of the workforce to be on it.
Our lowest pay rates are not equitable because the poorest paid have no capacity to negotiate, their value is determined not by worth but by what someone else will pay. The privatisation of low-end services often means that intermediaries make money out of the poorest and have a vested interest in keeping pay rates low.
The lot of the poor cannot be improved merely by taxing the rich, but we no longer have a society where the rich feel a responsibility to care for the whole of society, not just their own selfish interests.
Of course I agree that the broadest backs should bear the heaviest load. And they certainly do — in spades. But you must remember the Laffer Curve. If tax rates are nil there is no tax revenue; if tax rates are 100% there is no revenue (no one bothers to work, or they all emigrate). In between the two is the optimum level where the largest tax take is obtained. This is extremely difficult to calculate because there are unverifiable assumptions about behaviour. it would seem, as an educated guess, that a top rate of 45% might be about right. To be deliberately above that is the territory of confiscation.
I think the other concern is that the more you earn, the greater the options to avoid tax. I would not advocate tax above 40% net, but would advocate that tax concessions be tightly managed.
Banks are important of course but there are other issues here which concern me more. In Mrs Thatcher’s time there was a principle called “trickle down”. It held that greater prosperity at the higher levels, with corresponding expenditure, would gradually trickle down to prosperity at the lower levels. We don’t hear much about the doctrine now since it patently didn’t work out that way.
That suggests that the values in our society must change fairly radically if things are really to improve.
While, for example, recent A level results show that there is movement in the right direction, Government policy here is much opposed by many teachers. How do we get this right?
I see that Mr Cameron is now, right at the end of his tenure, talking about the importance of the stability of marriage. Is this just a vote catcher, or does he really intend to support marriage? If so, how? I am not yet convinced. Unfortunately few listen to the Catholic Church on marriage matters, but the Blessed Welby may be able to help.
I am glad to see that a system of apprenticeships is beginning to develop. That suggests to me that we might have a society in which a class of well-paid technical experts could thrive. Their contribution to society could be much greater than the incompetent “intellectuals” we see so much of nowadays.
I see that I have been unfair to Cameron. He did speak highly pf the importance of marriage at the 2008 Party Leaders Conference. However the Marriage Foundation said this: “Actions speak louder than words,” said Research Director Harry Benson. “Coalition policies during their first four years in government would struggle to pass a ‘family test’. We have a tax credit system that pays couples up to £7,100 more to live apart than together, a tax system that penalises single earners who choose to leave one parent at home, and a raft of government forms that pretend living together is the equal of marriage. In terms of stability, it is anything but.”
High rates charged by agencies cost the NHS a vast amount of money. We have a relative working in IT for a hospital. They charge the NHS over £100 an hour for his services, and he is paid £15 an hour. Surely something could be done about such excessive profit making at the expense of the country?
The NHS is often accused of gross waste. In the case you give, no one would have had any personal motivation to look for a cheaper source. So I imagine that the agencies would have no reason to be competitive.
Vincent, the case I mentioned, is one example illustrating common practice, which unnecessarily costs the NHS huge amounts of money. Why would there have to be personal motivation to look for cheaper sources? Surely the remit of those concerned, part of their job description, is to provide best value.
Quentin
It would be foolish to have fixed exchange rates as happened in the past. However market rates should occur due to genuine currency trading; not by gambling and speculation, which allow spivs to fix the rates by the minutest fraction but yield huge profits to these speculators (note the Libor scandal). It should once again be illegal for banks to lend money to buy shares.
We should have plea bargaining as in the US, so that fraud cases can be more easily resolved. It is no good fining the banks for fraud. This just harms the share-holders. The crooks who are given huge bonuses should be the ones who are fined or imprisoned or both.
These are just few suggestions. The government should know these things. They don’t need us to tell them, unless of course the politicians have a vested interest.
Since even you or I can trade in currency, it is hard to see how one could stop a bank from doing so.
Of course there has been crookery – I see that the Bank of America has just been fined £10 billion for misdescribing mortgage backed securities. The mystery here is how the leading rating agencies gave top verdicts to many such assets. (plenty of lawsuits around here) And what do we do about the alleged money laundering effected through the Vatican Bank? We may hope that greater awareness on the part of the authorities will curtail this sort of thing.
I would want to know more about lending money to buy shares before commenting. In itself it sounds like a reasonable financial arrangement. Borrowing capital rather than using one’s own is often advantageous, for a variety of respectable reasons. Buying shares is not a disreputable activity, and you and I will have benefited from it, directly or indirectly.
Why should it be illegal to lend money to buy shares? And (if there is a good reason) how would you do it?
When Income Tax was introduced by Pitt the Younger and reintroduced forty years later by Sir Robert Peel, it only applied to higher incomes. Now it is levied on incomes which are below the subsistence level, and in addition those who are paying it are also rooked by indirect taxation, which includes VAT at 20% on many items and high taxes on such things as petrol, alcohol and tobacco.
For most of my working life I paid ERNIC (and still do, despite the fact that I have already paid as much as I need to do) without a concomitant increase in benefits, and I shall be paying Income Tax until the day I die. Meanwhile those who live on handouts from national and local government are still entitled to vote for those who provide the service. In France in the 1830s there were some who complained that linking the franchise to property was undemocratic. Guizot’s answer was disarmingly simple – ‘Enrichissez-vous!’
I see two problems here, John.
The first is that the well-off are at a democratic disadvantage in that there will always be a majority in favour of taxing them.
The second is that many of the lower grades in society are there because they were not graced with great brains, or they suffered from poor upbringing. or from some other circumstance over which they have no control. Such success as I have had required initiative and hard work, but this was built on a foundation which was my good fortune, rather than my virtue.
Given human freedom and inventiveness, except for equality before God or the law, equality is indefinable and therefore unattainable. Attention to it as a political concept has removed the focus from seeking solutions to actual problems: hunger, homelessness, lack of nursing care, 60,000 children in a dysfunctional care system, ignorance, etcetera.
The equality bandwagon induces people to regards themselves as victims in a world where money “grows on trees” out of reach. They become impotent and sub-human waiting for the political handout; unable to contribute to the solution of their perceived problems.
The mania around the highly paid is a distraction from the immoral behaviour of the majority; from their excessive personal debt; from their call on the national debt which consumes goods and services to be paid for not by them but by their children and grandchildren. This was underlined last week by a leaflet from a prospective parliamentary candidate who evaded all the real problems by simply promising money to voters in various guises such as tax cuts, allowances and price fixed energy.
Sub-human, immoral, impotent, debtors, reckless consumers, every one of them riders on the equality bandwagon. Is that so Peter?
When I read on here that Quentin writes about his billion pound loan as though it was almost a normal transaction and Peter writes about sub-humans I find myself questioning what kind of blog this is.
Claret, it is a blog which allows people to express their opinions. I see that you made use of that facility when you suggested that my remarks about the poor were in bad faith (above).
Incidentally, I assume that you do not think that I was trousering that loan personally. I explained the excellent purpose for which it was used. If transactions of such size were not a frequent feature of our ecoonomy, you and I would be living in a tent on Salisbury Plain.
Sorry, I was wrong to use the phrase “sub-human”; there is no such category. I was clumsily searching for the idea of damage to the human psyche. The impairment of the innate sense of justice and truth in inter personal relations, in this case through being treated as subjects in a Pavlovian electoral process. There were analogous impairments in the populations in Eastern Europe under socialism where superficial relations were a gloss on a tumour of hidden motives; and in the Dhimmi populations of the Balkan states under Islam. I still revisit my vivid revelation on hearing loud uninhibited conversation in a restaurant in Munich airport when returning from Hungary in 1965.
There are a whole series of “bad” expressions to describe a caste of people who seem to have turned deprivation into a way of life. What is undoubtedly true is that the issue needs to be addressed. It is certainly no more Christian to exclude, isolate and demonise them than it is to abandon them on sink estates with junk food and large screen TVs.
Listening to Radio 4 last week- I can’t remember the gentleman’s name who was discussing politics, the subject I somehow think it was a retired MP discussing Labour.
Anyway he was saying when he was 17 he took a job on a milk cart, it must have been many years ago when milk tokens were exchanged for a bottle of milk.
They stopped at one ladies house who had a couple of children but no token,she asked for some milk for her children,so the older man on the milk round told her to go in and get a jug-so he poured a bottle of milk into her jug and then smashed the bottle and said ‘we will put that down as breakage’.
They came to another house and a woman came out and asked for some milk and he refused her.
So the 17 year old said ‘why did you not give her a bottle of milk’? His reply was ‘if she can afford fags she can afford to feed her children’.!
Sometime it is a case of not getting ones priorities right.
I start my Chemo on Thursday and the Consultant told me today that my liver was functioning better.Thank God and His Blessed Mother
Thank you too for all your prayers as I have not had any treatment yet..Only stents removed and new ones put in my Bile Duct.
St.Joseph
Be assured of my prayers. The fact that my liver is still functioning after nearly half a century of fairly hard work is a miracle in itself.
A TED talk by Richard Wilkinson on youtube discusses some of the possible harm that results from wealth inequality. I wont copy a direct link because I suspect it might insert the clip into my reply. There is some criticism of the points he makes in the comments. I can’t judge the relative merits of the arguments made as I know next to nothing about economics but I’d be interested in what others thought.
Delighted to see St. Joseph back!
Some figures which I have just read in last week’s “The Week”: “Good week for top executives, who are now paid 143 times more than their average employee, according to the High Pay Centre. In 1998, the average FTSE 100 index CEO received 47 times the pay of his or her average employee”.
Like Alan, I feel I know “next to nothing about economics”, but am puzzled as to how such an increase could be justified.
And that’s 143 times more than the *average* employee, not 143 times more than the cleaners and porters, in relation to whom the gap must be far bigger still.
Glad to see that you read ‘The Week’. It seems to be a most useful way to get a summary of what is going on in our complex world.
On the matter of salary multiples, it’s worthwhile remembering that nearly half their take goes straight back to us by way of taxation. That’s a gift from the shareholders to you and me. Don’t knock it!
Hard to justify? Believe me, the difference between a good CEO and a poor one will often be the difference between success and failure. They get made CEOs because they have a record of success, and, if they don’t fulfil their promise, they are out. They earn what they earn because, like top footballers and club managers, they bring in profit. Their price is simply set by their value in the market, just like the price of their workers. Nothing is more expensive than trying to save money by getting a second grade CEO.
Alan has a good point in raising the ‘eye of a needle’ question. A preoccupation with money is always likely to be a temptation to forget about human values. But it affects the whole of society. How often do you find that someone doing a job for you indicates that payment in cash might reduce the bill?
It does seem like a surprising figure Iona.
The TED talk I referenced before suggests a correlation between a variety of unwelcome social problems (health, mental health problems, drug and alcohol addiction, crime, teenage pregnancy and more) and high wealth disparity. Unintended consequences perhaps? It also lists a number of countries with much lower disparity where the economies don’t seem to suffer from any obvious mediocrity or poor motivation as a result of either lower base pay rates for top earners or higher taxation … but I’m certainly no judge.
On a different tack, I did wonder earlier how the whole “Eye of a needle” idea relates to this subject.
The issue of very high salaries has always puzzled me, and I have never had a satisfactory answer. Surely if differentials in pay were less extreme, the same amount of tax to fund government services would be available from the increased number of moderate incomes, and fewer low, non taxable incomes. A recent BBC news article describing the Swedish system indicates that this policy works well there.
Singalong, what you are missing here is that moderate incomes pay lower tax rates. So the same gross money applied further down the scale leads to reduced tax take. Don’t forget that nearly half of all income over £150,000 is taxed at 45%. Pundits who make a great fuss over gross, rather than net, incomes are making a debating point rather than attempting to display the real situation.
Quentin, you are quick to defend the high incomes of the wealthy and happy to ignore the problem of low wages, which has little to do with economic worth and much to do with the inability of low wage earners to negotiate reasonable terms. The fact that wages in this country are too low is amply illustrated by the number of people on low income who receive various “top up” benefits, yet few of these jobs would be lost or exported if wages were higher as they are not factory jobs but cleaners, waiters, dust collectors etc. Through this mechanism the government effectively subsidises the profitability of employers paying low wages.
Secondly, although we need to provide incentives to those who lead our economy it is difficult to justify high wages on the basis of need – otherwise the Prime Minister would demand a salary 10x-20x current income. People can also be motivated by the desire to serve, improve the world and maximise their own potential.
Perhaps the one anomaly that most accept without complaint (but minor jealousy) is the ludicrous incomes of premiership footballers, many of whom have incomes way above those of the CEO’s of our leading corporations.
Quentin, if we look at the US economy, it is the effective freezing of middle incomes that has persisted through the economic cycle that has profoundly impacted tax revenue. The middle classes now account for the lowest share of wealth since the late 60’s.
The problem we may have here is getting down to detail. There is a great deal of it, and we quickly get into complexity. Perhaps it will help if I remind you of the drift of my post. It was concerned with unintended consequences. My point is not that high incomes are desirable or not desirable, or whether the behaviour of banks is good or bad etc. The only specific change I recommend is ensuring that the poorest always have sufficient. And that we should have a society which applauds and encourages, prepares and rewards its citizens for success rather than turning green with jealousy at anyone who is successful.
What I am saying is that, although it is easy to get a blank sheet of paper and draw up changes for an ideal society, we have to be aware that in so many instances these changes have a much wider effect which means that ultimately they do more harm than good. But there is a socialist turn of mind which always believes that the ultimate authority of government can create paradise with enough regulations. It can’t, because it doesn’t allow for human motivation. The history of socialist societies has demonstrated this over and over again.
Quentin
It is not the market that sets CEOs’ salaries. It’s the cartel of top people who have the attitude; “You scratch my back and I’ll scratch yours”. Many of these highly paid executives fail to bring home the bacon, but they still receive their outrageous salaries.
“John Lewis” is a highly successful business which pays its chief executive 17 times the average salary. 143 times the average salary is the highest ever recorded. In the 1950s and 60s it was somewhere in the region of, I think, 24 times the average.
I have a degree in Economics and know a little about wages and I am not a left-wing loony. I believe CEOs should be paid a good salary but 143 times is indefensible.
Yes, certainly there are chief executives who have very high salaries, and there are companies which — for many different reasons — are not vulnerable to their shareholders feelings on the matter. There is even a movement for applying, presumably by statute, a maximum ratio between CEO pay and average pay. But what good would this do? Since it doesn’t, and shouldn’t, result in paying the workers above the market rate for their responsibilities, the money saved would simply stay in the company swelling share values or raising dividends. In that form the eventual tax take would be substantially lower than the highest rate on personal income. So people’s sense of justice (envy?) would be satisfied — but at the expense of the poorer members of society as a whole. This is exactly what I mean by unintended consequences. Sometimes we have to live with the undesirable because the solution is worse than the problem.
By the way, the ratio is 130:1; not 143:1. Doesn’t affect the argument, but accuracy is always desirable.
How do we make people feel society is fair, or that their contribution to national wealth is appreciated? Excessive incomes are not merely about tax burden but what they say about how we value individuals. A significant percentage of corporate shares are held by pension funds and life insurance funds so excessive executive pay is a tax on every individual.
” — but at the expense of the poorer members of society as a whole.”
Is there some evidence of this in a comparison between developed countries where the ratios of top/average incomes vary significantly? It seems (admittedly from just a quick internet search for information) that quite the opposite trend is indicated. I imagine, although I don’t know, that most of the problems I referred to earlier in the thread are felt more keenly amongst the poor.
There is an accepted index, the Gini Coefficient, which is used to measure inequality comparisons worldwide. If we look at changes since 1980, only China has seen a greater increase in equality than the UK. The US has seen inequality increase but Canada, France, Germany, Japan and Mexico have all seen decreases. Getting rich at the expense of the poor is an idea at odds with the way world economics are developing.
For the benefit of accuracy, I’ve looked up further info on Gini, wheras, in the UK, the pre-tax gini has increased by 20% since 1980 the after tax gini has only increased by 10% so the tax system is countering the increase in income disparity.