The Guardian is doing well with its blogs today. Seamus Milne has a great one on the growing poverty gap in the UK. As he notes:
Only when the government begins to shift away from free market orthodoxy can the underlying trend to greater inequality be reversed.
Unfortunately, all the signs are that little of any of that is yet on the cards - even though Brown recently refused to rule out raising the top rate of tax. "We're still a very long way from that politically," one cabinet minister said yesterday. "There are powerful forces against us." For which read the bulk of the media and the most influential people in the country, who would all have to pay more tax.
There is in practice a lot that can be done without raising tax rates (something I do not necessarily propose, but to which I do not object). First we can end the domicile rule.
Second we can require transparency and accountability of tax havens. The abuse of the rich can only take place in the secrecy space provided by the world's accountants, lawyers and bankers in the artificial world of offshore. Collectively they are the suppliers of corruption services. Those are the services that are being used to undermine the state and which will unless curtailed undermine our western way of life.
So let's end the excuses and create some political will to oppose those powerful forces. Because as Milne concludes:
But perhaps the government is lagging behind an emerging consensus that something has to be done. Of course the rich will squeal. But when even the princes of private equity and the Daily Mail put the case for action over inequality, it's clear there's been a sea change. In any case, that action has become a democratic and social necessity.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
If people are seriously concerned, as they should be, about increasing inequality, they should always distinguish clearly between income inequality and capital inequality. Then they should always distinguish clearly between inequality of capital created, earned, saved or made by its owners and inequality of lifetime receipts of gifted or bequeathed capital unearned by its recipients. Then they should always think about the reform of inheritance tax – in addition to any other measures proposed. How else – in order to increase opportunity in a capitalist democracy without serously affecting incentives to create wealth – can inequality of the ownership of assets be reduced?
Dane Clouston
OPPPORTUNITY – The Campaign for British Universal Inheritance
Dane
In effect created wealth in the form of businesses ect is already exempt under Inheritance Tax
Richard
Yes. I was distinguishing between a business created by its owners and given away and the same business – or shares in it – received by beneficiaries who have done nothing to create it. Similarly with all the other exempt assets, including:
– all lifetime capital gifts given away more than seven years before the donor dies, with tapering to zero at three years
– all interests in unincorporated businesses and unquoted companies
– half the value of controlling shareholdings in quoted companies (such as the capitalised value of Philip Green’s widely reported £300 million dividend)
– half the value of land, plant or machinery used in qualifying businesses
– all agricultural land ‘in hand’ of farmers
– half the value of landoord’s tenanted land (or all of it if you can kick the tenant out of it with in two years)
– woodlands, until the timber is sold or cut
– Lloyd’s’ Names funds at Lloyds
– AIMs shares not quoted on other stock exchanges (treated, in a brilliant Inland Revenue one liner, “for this purpose as if they were not quoted”)
– half the value of capital gifts into discretionary trust, or the full amount if within the lifetime gifts exemption
All in unlimited amounts! (See”The British Inheritance Tax” page of http://www.universal-inheritance.org)
The distinction I was making was between the inequality of capital created by its owners, which is justified and necessary for incentives in a capitalist economy, and the inequality of lifetime receipts of gifted or bequeathed capital unearned by its recipients, which is nice if you can get it, but less justified and less necessary – or even counter-productive – for incentives. Which is why all donors should pay a 10 % tax on the luxury of giving and leaving – with intragenerational exemptions between partners, spouses and cohabiting siblings. And why there should be – with the same intragenerational exemptions – a negative (£10,000 at 25) and progressive (10% upwards) tax on cumulative unearned lifetime receipts, based only on the value of what is left and not on the type of asset – with transferable credits between the two taxes to avoid double taxation – in order to achieve the aim of spreading more widely the opportunities that come from the private ownership of unearned wealth in each new generation.
[…] George Osborne proposes to raise the Inheritance Tax limit to £1 million so, as he puts it, the family home is not subject to this tax.The UK is a country suffering an increasing poverty gap. As example, the proportion of wealth held by Britain’s richest 10% has increased from 47% to 54% in the last ten years.The reason is simple. We do not tax people’s houses. As a result they have rocketed in price. Now the only young people who can get onto the housing ladder are those whose parents can help them.Osborne’s tax change would only exaggerate this trend – giving more help to those who already have homes whilst denying those on low income and with no wealth any chance of getting on the ladder at all.This path leads to economic apartheid between a country of ‘have homes’ and ‘have no homes’. Inheritance tax has been the sole bastion for redistribution of wealth that has helped prevent this outcome. Removing the tax from homes will simply guarantee some will never get one.Is that what George Osborne calls tax justice? If it is, I don’t. […]