Sir, – John Thompson (October 6th) seeks a cleverer way to help the working poor and points out the problems of seeking wealth redistribution simply by increasing minimum wages. It seems to me that if we accept that the current and growing income gap between top and bottom earners is unhealthy and dangerous to society, we should look at reducing maximum wages.
There have been suggestions that employers be precluded from paying top earners anything from 10 to 40 times more than the lowest-paid earners in their organisation.
These suggestions take no account of the varying sizes of organisations or of the possibilities of contracting out functions such as cleaning to low-pay firms and high-grade functions to self-employed consultants.
I would like to suggest the introduction of a social cohesion tax. It could contribute to improving the situation and would apply to the public, private and voluntary sectors. It would not preclude other taxation measures, such as taking more low earners out of the income tax net, increasing the level at which middle-income earners pay the present higher rate of income tax, introduction of a financial transaction tax or introduction of a more sophisticated form of wealth tax than the present property and inheritance taxes.
The social cohesion tax would be a very high rate of tax on very high incomes, to commence at a multiple of the minimum wage. Very high earners would be encouraged to support increases in the minimum wage as any improvement would enable them to keep more income out of the social cohesion tax bracket. With a minimum wage of €15,000 a year and a multiple of 40, the very high rate (say 70 to 80 per cent) would start at €600,000 a year. With a multiple of 30, the start would be at €450,000 a year. The multiple could be reduced over time.
All taxes pay for community services. Some taxes also have social engineering features; high taxes on tobacco encourage a healthier lifestyle.
The social cohesion tax is meant to encourage social cohesion. I would not expect it to succeed overnight and I recommend that a first call on funds raised would be to close loopholes in the system. – Yours, etc,
IRENE ALLEN,
Bray,
Co Wicklow.