This graph is from the IMF Fiscal Monitor on tax issued last week:
Now tell me there is no case for taxing wealth.
And, yes, the disparity is not as bad in the UK than some places. So what?
This is literally a graphic description of an unjust world where all the alternative forms of security that once compensated for a lack of financial wealth - like workplace security, occupational pensions, social security, secure household tenure and more - are also being stripped away from those without wealth.
This inequality is not just not viable. It is deeply dangerous.
The time for tax justice has come.
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can’t we just enjoin the mega wealthy to be generous? Perhaps this would be as productive as Michael Fallon politely asking the energy companies not to put their prices up!
I’m sure those people populating the red bars sleep well at night and are entirely undisturbed by this.
Populace still largely narcoleptic and repeating mantra: ‘it’s them on benefits wot did it.’
Wasn’t that the whole Tory mantra, the trickle down effect?
We now know that does not work. They send all their extra money offshore to avoid tax, then blame the poor for having too much of what’s left.
Yes, Richard, time for tax justice. Are you going to lead the revolution, and how?
A lot of the wealth held in the UK is owned by Non doms. This is something that should have been sorted out by the previous government.
So would you support an immediate 20 percent rise to 60 percent on the top rate of income tax then, Richard? 🙂
50% and removing many allowances is my preferred option
Plus restrictions on use of companies to shelter tax
You would never get restrictions on using companies to shelter tax. There isn’t any way to Police that.
You have put up a graph that shows net worth held, yet you are talking about income. Net worth is about money invested in property and companies, not income.
I am talking wealth tax
And of course you can attack the corporate shelter – that is close company rules
So would everyone be required to pay 50% wealth tax?
No
Progressive wealth taxation is my proposal
It would be interesting to see where places such as Denmark fit in. According to Andrew Simms, Denmark has a more equitable society than most in Europe.
@Anthony Zappia. Here is the wealth inequality table (as measured by the Gini coefficient which is the last column on the right).
Out of the list, Denmark is the 3rd highest inequality of wealth. Higher than the US and much higher than the UK. Seems to go against Andrew Simms hypothesis somewhat.
http://en.wikipedia.org/wiki/List_of_countries_by_distribution_of_wealth
The current populist idea of declaring war on the wealthy will if escalated be very costly – largely to those in the middle who can’t play the tricks of getting their wealth out of the authorities’ reach!
There is a more just solution that taxes what really perpetuates and exacerbates the blatant disparity shown in the chart: Land! Apart from the fact you can’t hide your land in a secret account abroad there’s a really solid long-known principle behind it. If you want to learn more and have 30 mins …. http://www.youtube.com/watch?v=1pYSsME_h7E
Gareth, you obviously haven’t been reading Richard’s blog for long. He has endorsed LVT many times.
Hi Richard
The best figurative depiction I have seen of this is called (I think) the Pen Parade, designed by Dutch economist Jan Pen. I wondered if you had come across it?
One thing I was curious about on the graph is the UK figure of about 12% share of the lowest 50% of society, which is the figure you give in your book for the 1970’s. Given that this figure has been steadily declining in the ensuing period, would you dispute their figure, or am I missing something?
I quote it
I was surprised by it
A thought occurs… is the difference perhaps due to the opacity of accounting systems?… certainly the Gino co-efficients for the uk bear out your interpretations
Although a large proportion of this apparent disparity can actually be explained by the relative ages of adults in the population. Average baby boomers, like yourself, tend to have much more wealth that the young or very old as 50-65 year olds have generally got equity in their houses and some pension assets built up over the years and haven’t started to dip into their savings yet post retirement. Age alone accounts for much of the graph rather than, say, overpaid 30 something bankers. The ONS statistics on this a readily available.
This is utter nonsense
Yes it is a factor
But it does not in any way explain this spread and you know it
Why do you need to make untrue statements?
It’s actaully factually true. See slide 18 of the attached based on ONS research.
http://www.lse.ac.uk/publicEvents/pdf/20100216_Willetts.pdf
When you build in realative ages of the population and their wealth it supports my position. 80% of wealth (per ONS)is in pensions and houses and this wealth takes a long time to accumulate.
And the benefit is widely passed on
But the figures include what has been passed on as they are a measure of what people own now by each group.
I think there’s a very good point here by J Ledbetter. The ONS figures suggest that you need about £400k of total wealth to be in the top 10% of the population. Richard, as a successful and prudent 50+ accountant doesn’t that put you in the top 10% of wealth when you add up your house equity, pensions, ISA investments and other bits and bobs? Is your position that wealth tax be targeting people like you?
I am quite happy to pay more
And would
I know that would happen
So?
SO you are happy to pay a wealth tax on your house and savings.
I don’t understand your version of wealth tax. If your income is poor, I understand you are not poor. However a lady in London who has lived in her house for 30 years and is now 70 years old. She cant afford to pay half the price of her house in wealth tax, even though she might be on paper wealthier than you.
Do you think she should move just to pay tax??
No she need not pay cash now
The tax could be rolled up until death
Unlike the bedroom tax, might I suggest
Do you object to that as it forces people to move?
Perhaps you can call it, Grey Hair Tax as it’s snappier than Wealth Tax and also neatly indicates where the burden largely falls (plus a few footballers).
If you rent any house, you pay for the size. I the lady owns her house we shouldn’t even think we are in a position to involve ourselves in her affairs.
Even with the latest wealth tax that Mr Osborne has put on dwellings over two million hasn’t done anything to stop the foreign people investing in London. Its now seen as a safe haven, unlike the US currency.
These people don’t let out their houses or apartments, that’s too much trouble. They keep them closed. Some a few use them a month a year. Otherwise the don’t use them at all. All this does is remove places for rent, increasing rent on other places.
This starts a troubled cycle across the whole of the UK. We know what happens to bubbles.
If we take all this ladys money of her when she dies. The only people able to live in London will be foreign people. They don’t affect the UK economy.
The Ida that if you own an asset the state has no right to intervene is absurd
For example: you can own a car by can on drive it one road if licences and insured
Of course the state can impose conditions on ownership. All ownership right sat conditional, including th condition that all taxes must be paid
I agree. In my immediate family, 25% of the people own about 99% of the wealth. My 3 early twenties children own virtually nothing.
And that is, you think, a valid sample?
Well, Jonny Maddox example is pretty common throughout society, ie average middle aged people have much more wealth than the average 20 somethings as a general rule. This is because middle aged people have been in work for 25 plus years longer, paid into pensions and house prices have risen dramatically over that time. So there’s a relative over population of young people in the low wealth groups and a relative over population of older people in higher wealth groups. Why is this so surprising (or utter nonsense)?
Of course that pattern exists
Except it only exists for a few, who replicate themselves from generation to generation
It’s the absense of the random factor that makes all you say utter nonsense
But the ONS figures are averages for each age bracket, so the random extremes cancel as there’s a convergence to the mean. You also implicitly accept my point with your answer to Mary Snell’s question.
Convergence does not mean that the outliers do not exist and in this case have massive disruptive capacity
Shall we use statistics properly?
Richard, aren’t outliers by definition fewer in number? So the clear majority of people in the 10% group are people average people who cluster around the mean but – as a general rule – are simply older than those in the 50% (generally younger) group?
I would be foolish to deny an at factor
But are you really suggesting all old people are wealthy?
Where is your evidence?
No, not all but a large number must be comparatively wealthy compared with their children per slide 18 of the Willetts presentation linked above. They are comparatively wealthy as they been alive longer and accumulated wealth over that period. Remember Willetts figures are averages so they are not unusual or scarce individuals but the majority.
And this entirely misses the point that most wealthy parents will use their wealth to benefit their children who will behave in that knowledge
But the point isn’t “how people behave” in the graph you’ve posted, it’s “how much wealth do people have”. Age is clearly shown by statistics to play a large role in wealth distribution, so any graph which takes no account of that should be approached cautiously.
Myth making.
The emotive issue of older people is always thrown into the argument, but this is a debate about tax justice, and justice is as they say blind. The treating of old people as sacrosanct is both selectively misguided and destructive. Is an old lady living alone in an eight bedroom mansion with three acres of land, receiving the same pension rights, access to free medical care, free bus passes, winter heating allowances and the rest, either helpful or just? Over 50,000 households are now facing eviction due to the bedroom tax. Most of those are low-paid working families struggling to keep their heads above water. Many are disabled and have a genuine need for a spare room for overnight caters, and/or medical equipment. Almost all of them have nowhere else to go.
Older people regularly move for a number of reasons, to sheltered accommodation, for instance, into care or nursing homes, sometimes just to release the equity in their homes.
Richard is absolutely right that taxation could be rolled up to the death of a person, but in my experience the same people who are so vociferous about the wealth of the elderly are usually equally vocal about their inheritance, which makes me for one question their motivation!
Richard, if you’re happy to pay more tax, why not just do it? Seriously. You can send HMRC a cheque.
What I am seeking is reform of the system as a whole, not government by donation
…and you really think fatuous, playground comments like this have a place in a discussion of tax justice and wealth inequality?
So let’s imagine Richard, or even everyone who’s circumstances resemble Richard’s, voluntarily opts to send a cheque to HMRC, do you really imagine that would make even a percentage point of difference in the face of the BILLIONS that are being avoided or evaded nationwide?
Vacuous statements like this always start to appear when people realise that maybe, just maybe, their own little pile might be affected.
“Share it, fairly, but don’t take a slice of my pie”
60% top rate tax now! And while we’re at it, put up capital gains tax too! There seems to be a strange attitude on this country that only the workers are supposed to pay their fair whack of income tax; that if we make the wealthy pay their fair share, you will discourage enterprise and discourage the best people and they might move to other countries!
On the first point, why is that never applied to working people, that is, only paying good wages attracts the right people? Rather it is pay them as little as you van get away with.
On the second point, good!! I will help the buggers pack!!
What’s wrong with leading by example?
I mean, if it’s not denied that you can indeed send HMRC a cheque over and above your actual tax liability then why wouldn’t you do it?
Why do you need a system to do it for you?
I support government funded by taxation
Charity is not a viable alternative
I do not support it
To talk of the wealth of the top 10% is I think a bit misleading. This figure is skewed by the unbelievably high wealth of the top 1% (or even the top .1%.)
And don’t let’s forget that if you earn £60,000 pa you’re actually you are in the top 5% of earners . . . .
I agree that there is much that is unfair in the distribution/ownership of wealth in this country. But the statistics are skewed by the above, and also by the large number of very poor immigrants who have yet to acquire much in the way of savings. And the small number of wealthy non doms who can afford to pay £50M for a London house.