Tax the spending of the rich and give the money to the poor

Perhaps Julian Le Grand (Essay, 26 July) is too timid when he proposes that taxation policy alone is impotent to prevent the advantages of the privileged being transmitted down the generations.

To this economics layman it seems that the same principles could be applied to all areas of social services.

Let the wealthy purchase educational excellence from whichever provider they wish, but tax the transaction to provide grants for several of the less well-off to enjoy the same opportunity. Let them purchase mansions, and use the tax thus collected to provide social housing in otherwise unaffordable locations. Encourage the purchase of private healthcare to yield ring-fenced taxation revenues with which to strengthen the NHS.

Of course, in each case the derived revenue must be used, and seen to be used, for the direct benefit of the underprivileged, selected on merit. Otherwise the huge resentment that would ensue from the already wealthy and those who aspire to be so would be politically impossible to withstand. And governments should be prevented from raiding the ongoing windfall to bankroll their fundamental obligations by the agreement of a minimum "baseline" funding from general taxation. As a result of these measures, together with Le Grand's proposal to encourage widespread distribution of the proceeds of a deceased person's estate, over the long term a society with greater equality of opportunity, and narrower extremes of wealth and poverty, would emerge. The effects of inherited privilege would wither, as the meritocracy would be renewed in each succeeding generation.

Income tax, now politically untouchable, could remain so. The wealthy would be free to spend as they wish and bask in the knowledge that their purchases would give some degree of extra opportunity to the less well-off. By tuning the level of taxation applied, the divergence of living standards between top and bottom could be halted or even reversed.

Simon Gray
Prestwood, Buckinghamshire

This article first appeared in the 02 August 1999 issue of the New Statesman, America says: never again!