Deficit crisis: let's really be in it together
A one-off tax of the rich has strong public support and would solve the UK's economic crisis at a stroke
- Greg Philo
- guardian.co.uk, Sunday 15 August 2010 19.59 BST
How can the sixth richest nation in the world be contemplating cuts in school meals services and regressive forms of taxation? In the political and media commentaries on the national crisis and the need for cuts, there has been very little discussion on how much wealth there is and why "we" as a nation are apparently so poor. Actually the economy keeps growing, and we are becoming richer than we were before the financial crisis.
The total personal wealth in the UK is £9,000bn, a sum that dwarfs the national debt. It is mostly concentrated at the top, so the richest 10% own £4,000bn, with an average per household of £4m. The bottom half of our society own just 9%. The wealthiest hold the bulk of their money in property or pensions, and some in financial assets and objects such antiques and paintings.
A one-off tax of just 20% on the wealth of this group would pay the national debt and dramatically reduce the deficit, since interest payments on the debt are a large part of government spending. So that is what should be done. This tax of 20%, graduated so the very richest paid the most, would raise £800bn. A major positive for this scheme is that the tax would not have to be immediately paid. The richest 10% have only to assume liability for their small part of the debt. They can pay a low rate of interest on it and if they wish make it a charge on their property when they die. It would be akin to a student loan for the rich.
The tax would be extremely popular. We commissioned a YouGov poll of over 2,000 people to test attitudes. There was very strong support, with 74% of the population approving (44% strongly approving). Only 10% did not approve, and agreement was spread right through social groups, with those of the highest income being slightly more supportive than the lower. The strongest support came from those over the age of 55, with 77% in favour (47% strongly). This is an extraordinary result given that there has been no public discussion of this proposal and that the very negative consequences of the alternatives are only just beginning to emerge.
There are strong economic arguments for this tax. A key problem for the British economy is that much of the nation's resources have been directed into inflated property values, which is where many of the bonuses ended up. This is in effect dead money but the tax would have the effect of re-circulating it as government spending, which could stimulate growth. The deficit would thus be further reduced as the unemployment resulting from the proposed cuts would be avoided – thus no increase in unemployment pay and no loss in tax revenue from the unemployed. This proposal offers a real alternative, to move debt off the government's books, using money that is largely trapped in the housing market, from people who will not miss it.
There will be arguments against it. It will be asked whether such a tax can be collected, but it is easier in some ways than income tax. The rich tend to minimise their declared income, but wealth is more publicly displayed, whether it is multiple properties or million-pound rings from Graff. Will they take their money somewhere else? It seems unlikely that the top 6 million people will up sticks to live in Belize. The current rhetoric of crisis, national interest and "everyone must share the pain" will contribute to demands for strict enforcement. If people have substantial assets, want to live here and to be British, then they will have to pay their bit. The public will have little time for non-doms, exiles or what will be seen as unacceptable attempts at avoidance. It is economic war, as Vince Cable says, but this is a move away from using the poor as cannon fodder.
At present David Cameron is arguing for policies that may radically reduce growth, put up unemployment and affect the bottom 6 million people hardest – those who literally have no wealth at all. He is doing this when the Conservatives received just 3% more votes in this year's election than they did in 2005. There is no popular mandate for what is being proposed, certainly not from those who voted Liberal Democrat. The consequence of what they are doing is likely to be serious social unrest. The British people are not passive and it is a myth that they will accept policies that they see as profoundly unfair. The new Tories might look back and remember what happened to the poll tax.
Contact us
Close
- Report errors or inaccuracies: reader@guardian.co.uk
- Letters for publication should be sent to: letters@guardian.co.uk
- If you need help using the site: userhelp@guardian.co.uk
- Call the main Guardian and Observer switchboard:
+44 (0)20 3353 2000
Printable version
Send to a friend
Share
Clip
Contact us
Article history
Contact us
Close
- Report errors or inaccuracies: reader@guardian.co.uk
- Letters for publication should be sent to: letters@guardian.co.uk
- If you need help using the site: userhelp@guardian.co.uk
- Call the main Guardian and Observer switchboard:
+44 (0)20 3353 2000About this article
CloseDeficit crisis: let's really be in it together | Greg Philo
This article was published on guardian.co.uk at 19.59 BST on Sunday 15 August 2010. A version appeared on p24 of the Main section section of the Guardian on Monday 16 August 2010. It was last modified at 14.00 BST on Tuesday 17 August 2010.
's comment
Comments in chronological order
Comments are now closed for this entry.
Staff
Contributor
Showing first 50 comments | Go to all comments | Go to latest comment
- (4203294)
-->Cameron will never Tax the rich no true blue will .
I remember the poll Tax ,yep judgment day is coming soon
- Recommend? (213)
- Report abuse
- Clip |
- Link
- (2535941)
-->A one-off tax of the rich has strong public support and would solve the UK's economic crisis at a stroke.
A one off tax of all their assets on the arseholes that allowed us to get in to this mess would be more likely to get my support, I don't think it was the rich that spent millions of pounds that we didn't have on vacuous projects, or gave away billions in overseas aid,sign up to the EU costing us more money it was the bloody politicians specifically Brown,Blair and new labour.
If I was rich and I am not I would get out of the country before this happened and take all my assets with me, thus leaving behind those that normally end up paying for the largesses of government the working classes.
- Recommend? (155)
- Report abuse
- Clip |
- Link
- (2404390)
-->You're right of course, but I expect this will be called blasphemy by the scissors brigade.
- Recommend? (121)
- Report abuse
- Clip |
- Link
- (701294)
-->The new Tories might look back and remember what happened to the poll tax.
The difference between the poll tax and the current cuts is that the poll tax made a section of society pay more, whereas the cuts give people less. It's a lot harder to build up a steam of anger when your benefits don't go up with inflation or when the Sure Start scheme is no longer there than it is when you get a demand for hundreds of pounds.
- Recommend? (43)
- Report abuse
- Clip |
- Link
- (2404390)
-->I don't think it was the rich that spent millions of pounds that we didn't have on vacuous projects,
No, it was the rich that made billions of pounds on vacuous projects.
- Recommend? (290)
- Report abuse
- Clip |
- Link
- (4161360)
-->This would never work. The rich will avoid paying this tax. Always have, always will. Tax is for the little people. Did you know that foreign billionaires can reclaim the VAT on goods they have bought here?
- Recommend? (112)
- Report abuse
- Clip |
- Link
- (2550613)
-->Tax till the pips squeak? Idiotic socialists never learn do they? Spend, spend, spend...
- Recommend? (134)
- Report abuse
- Clip |
- Link
- (2493848)
-->I've been praying for someone to suggest this for a long time.
Those of us at the bottom of the financial ladder live with the 'pain' and anxiety of being poor every single day of our lives, and now it's going to get worse - in what used to be called the 'national interest'. Let the wealthy elite who've benefited from the politics and economics of the last few decades take the hit for once. Let's see how much they 'love' their country and care about its long-term future.
Thanks. Greg.
- Recommend? (339)
- Report abuse
- Clip |
- Link
- (3939004)
-->excellent article
There is no popular mandate for what is being proposed, certainly not from those who voted Liberal Democrat.
with the news that one david blunkett is about to join the coalition to hound the benefit cheats i feel like one giddy kipper for putting my faith & vote in the lib dems.
world's gone mad.
- Recommend? (161)
- Report abuse
- Clip |
- Link
- (2517409)
-->The banks should have been punished in Osborne's budget. Also a more determined approach to local authority fat cats. The people would feel that the government was on their side, and be more likely to co-operate with austerity measures.
As it is, we see the idiots and the greedy getting away with it, and the rest of us having to pay for their excesses.
- Recommend? (72)
- Report abuse
- Clip |
- Link
- (4070286)
-->That's not the kind of radicalism we voted for! We voted to bend over, silly! Now that's radical, if you compare our complacency, apathy and antipathy to previous generations. It's never been done before! Let's see what the autumn beings, and May day. Maybe we'll surprise ourselves and demand such a measure. Or we're too busy thinking we're all bourgeois now (a pernicious fallacy).
- Recommend? (36)
- Report abuse
- Clip |
- Link
- (3110889)
-->It would be nice to see the trickle-down so ardently promoted by those with belief in the free market, turn into a deluge.
It would be nice to see dead money pumped into the system.
I have often wondered where all our alleged GDP goes.
- Recommend? (87)
- Report abuse
- Clip |
- Link
- (2555514)
-->Taxes are always popular amongst people who don't have to pay them so I'd take your 'overwhelming support' as a 'well it's not me' rather than as any deeply thought out economic policy.
Aside from the logistics of this and the fact that people who are organised enough to accumulate wealth are usually organised enough to keep it - what then?
Do we just skip the cuts and run up our shiny new credit card anew?
What happens if we get in trouble again? Do you really think there will be any 'rich' people around next time?
I think this a splendid idea for those who regard their fellow human beings (and their money) as nothing more than cells on a spreadsheet to be tinkered around with at will.
But a unworkable idea in the real world.
- Recommend? (166)
- Report abuse
- Clip |
- Link
- (3561239)
-->How can the sixth richest nation in the world be contemplating cuts in school meals services and regressive forms of taxation
Well, duh, because it is governed by a bunch of privately wealthy right wing ideologues for whom ordinary people are just numbers on a spreadsheet and an after-dinner joke. They really, truly, honestly don't care.
Excellent article. You could also mention that the Cons really do not have a mandate for their destruction of the public sector and only hobbled over the line propped up by the Lib Dumbs. I was delighted by Cleggy's defensively aggressive article today on how great the coalition is. If you need to parade it in public ...
- Recommend? (265)
- Report abuse
- Clip |
- Link
- (4025562)
-->Excellent idea,
why only a 'one off tax' though.
- Recommend? (87)
- Report abuse
- Clip |
- Link
- (3869765)
-->An idea with legs to my mind Greg. Very logical. Probably not really that fair, but then as we all know - life isn't fair. It's just that usually it isn't fair for the poorest, rather than the richest. Wahay, Let's do it! Deficit problem solved.
- Recommend? (108)
- Report abuse
- Clip |
- Link
- (3833877)
-->I propose a referendum on the Rich Tax next May- forget AV- I want to see the workforce in HM Customs and Revenues Trebled and a concrted effort to tax the Ashcrofts and the Greens.
- Recommend? (125)
- Report abuse
- Clip |
- Link
- (3561239)
-->OK, I posted before I got to the end - you did mention the lack of mandate. Now for my humble pie.
- Recommend? (10)
- Report abuse
- Clip |
- Link
- (2442906)
-->It's not "an extraordinary result" at all. People generally support taxes that they think other people will have to pay. Non-smokers tend to support high taxation on cigarettes; non-drinkers or light drinkers tend to support high taxation on alcohol, etc etc. This has long been observed by poll analysts and politicians alike. Sometimes governments gleefully seize the opportunity to exact more tax from whatever hapless demographic this approach points them towards. Sometimes they don't. When they don't, it's generally because they recognise that there are considerations other than a public eager to see others taxed until the pips squeak.
- Recommend? (100)
- Report abuse
- Clip |
- Link
- (4040354)
-->Why should anyone pay for Labour getting us in this mess. A better off tax would be those on Labour and their supporters. They are the ones who got us in this mess.
- Recommend? (123)
- Report abuse
- Clip |
- Link
- (4178372)
-->I have just read David Mitchell's article about the £140m flat in Knightsbridge. I suggest what people really want is fair distribution of wealth not a one-off tax and they want to see a real enforced banking regulation. Nothing else will do!
- Recommend? (99)
- Report abuse
- Clip |
- Link
- (945060)
-->Brilliant idea - wont happen but excellent!
- Recommend? (46)
- Report abuse
- Clip |
- Link
- (3046235)
-->Let´s not forget that in the past year of economic crisis in which we have all had to dig deep The total wealth of Britain´s 1000 richest increased by a third.
Funnily enough, Adam Smith, the economist erroneously used by the neoliberal right to justify all manner of noxious practices has this to say on taxation
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state
- Recommend? (206)
- Report abuse
- Clip |
- Link
- (2950232)
-->Good idea, most welath in this country is the result of inheritance (from land forceably taken by people's ancestors lest we forget) rather than entreprenurial activities. Why should the fact that someone declared themselves to be a baron a couple of hundred years back mean that their ancestors never have to work a day in their life.?
Perhaps it would be easier to implement it via a land tax based on the rentable value of what property they own, this would be payable whoever owned it and wherever they were registered for tax purposes. If it causes people to get out of property than this is a great thing for the economy - rent seeking is the most economically stifling activity there is,
- Recommend? (99)
- Report abuse
- Clip |
- Link
- (1503361)
-->The greasy fat cats Cameron represents would never do this. They have engineered the crisis precisely to wrest as much of the common wealth of the people away from the majority as possible. Decades of half-hearted redistribution through the welfare state is to be reversed and the pittance bestowed on ordinary workers recovered by the bosses. If they really wanted to help out, they only have to pay the taxes already levied on them, which they have spent billions in avoiding and evading. That won't change either. In fact Osborne has further facilitated it by slashing the inland revenue so that it will have even fewer resources to hunt the defaulters down. The rich are throwing us overboard, and waving bank notes as they lean out of their penthouse cabins to speed us on our way.
- Recommend? (95)
- Report abuse
- Clip |
- Link
- (1805073)
-->A one-off tax of the rich has strong public support
Hows the public support for bringing back hanging ? Maybe you you bring that back at the same time. And deporting all illegal immigrnts with no appeal - that'll have popular support also. There must be more things .....
- Recommend? (107)
- Report abuse
- Clip |
- Link
- (2442906)
-->
