Hi ,
Wealth taxes are unavoidable this year at political party conferences – and it's entirely down to grassroots activists and public pressure. With more support than ever in the UK, will it be possible for the government to continue to resist the call?
Over the last few decades, the structural changes to western economies have encouraged wealth inequality to soar. Privatisation, deregulation of financial markets, and massive changes to the tax system gave the super rich huge power over our economy. With that power, they've made massive profits and reinvested them in "tax efficient" ways many times over. And it's important that we understand exactly where this wealth came from: it wasn't created in a vacuum, it was taken. The World Inequality Database, for example, shows how private wealth has exploded since the 1970s at the expense of public wealth. The UK is in a particularly bad situation here. You'll notice how that graph shows the UK falling from first to last place on the public wealth, and we and the US share the dubious distinction of actually having less public wealth than we do public debt.
The result is that while a new class of millionaires and billionaires is growing rapidly across the developed world, wages and living standards for the rest of us have stagnated – and we can expect to pay a much higher percentage of our income in tax than they do. Oxfam estimate that UK billionaires pay an effective tax rate of 0.3% on their wealth currently, which I think – I haven't checked this figure, but I'm pretty sure – is a lower tax rate than we're all paying.
In that context, taxing wealth seems like a sensible first step to reclaiming some of the wealth that has been taken out of public hands since the 1980s. Despite what opponents have said, this would not be a radical step. Norway already raises 1.2% of their total tax income from wealth taxes, which in the UK would amount to around £9bn for public services. Going back in after an unequal system has allowed a small amount of people to make huge profits and asking for a fairer share of tax income is not a radical or dangerous step! |