Seeing Graham Hobson’s piece, ‘More tax, more philanthropy’ (Alliance, December 2021), I wanted to add an extra nudge for readers in their thinking about taxes. I agree with Mr Hobson that ‘the most wealthy can afford to contribute more without affecting their quality of life’ and that tax ‘should not be seen as a fine to be avoided, but instead as a societal reinvestment’. However, I want to challenge the framing of wealth holders being at the mercy of the government on this issue.
Whilst tax reform is sorely needed, no one needs to wait for it to pay more tax. It’s already possible to make decisions and brief wealth managers to get a more reasonable tax bill, rather than structuring assets in ways that reduce it. It’s also possible, whilst tax on wealth income stays lower than earned income, to get paid through higher-taxed routes, even as an entrepreneur.
Could we reframe the payment of tax as a form of philanthropy? I’d say we can. Many people structure their wealth to give some away through civil society. ‘Tax philanthropy’ could be giving away tax advantages for the purpose of achieving impact through government. At I.G. Advisors we’ve already seen inspiring examples of our philanthropy clients pushing their wealth advisers to structure their wealth in less tax-avoidant ways, and we’re seeing a new ethos of ‘wealth minimisation’ too. Mr Hobson’s pride at his taxes funding NHS nurses is exactly the sentiment we need to drive greater tax contributions right now.
CEO, I.G. Advisors