Taxing work to pay for social care would make Britain more unfair – .

Taxing work to pay for social care would make Britain more unfair – .

A lot of people in today’s society don’t seem to care about incentives and efficiency, but they are concerned about equality. It is widely accepted that due to its special characteristics, the use of NI to fund social care would be inequitable from one generation to the next. That’s right, but it doesn’t seem to me to get to the heart of the matter.

The general impression seems to be that if an elderly person is taken into care and they have to sell their house to pay for it, then they are the loser.

Yet by the very nature of their position, if the state does not foot the bill for their care, they are not the ones who, in a significant sense, would lose out from the sale of their property. Rather, it would be their children who would now inherit a smaller sum than they would if the state picked up the bill.

We are therefore in the position where the tax rates of most workers should be increased in order to protect the wealth situation of that proportion of the population who will inherit the wealth from their parents.

Due to the sharp rises in house prices relative to average incomes, encouraged by QE policies and ultra-low interest rates, it becomes difficult to get a foot on the real estate ladder. And a large part of the young adults who find this difficult will themselves be the children of parents who do not own their property either.

Official policies have already done a lot to make the distribution of wealth in this country more unequal. Using NI to fund social services would make matters worse. Where is the fairness for individuals and families who do not own real estate having to pay more taxes in order to protect the wealth situation of others wealthier than them?

Roger Bootle is President of Capital Economics

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