From the FT this morning:
The message is simple: if we are to save the planet we have to tax the rich because they massively over-consume. It's as simple as that.
And remember that one of the reasons for tax is to correct market failure. This is a massive market failure, and tax has to play a part in correcting it.
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It wouldn’t stop Sunak taking private planes from one part of the country to another because he can’t rely on the trains, would it? The public will still be asked to pay for his plane trips from Darlington to Blackpool. The rich don’t realise they are the problem.
From what I can understand the ban on Usury in the three Abrahamic faiths was to ensure that nobody could monopolise a finite money supply.
The Jewish tradition of Jubilees had the same effect.
In the same way in a finite world there needs to be some sort of ‘Maximum Consumption’ in this case enforced via taxation so that you dot get a situation where some people are – literally in some cases, left with nothing
These figures are not new (the evidence is growing). On understanding I’m in that 10% (along with the majority of UK households) the moral responsibility to reduce our carbon footprint finally hit home. That’s lead to many changes and more careful choices.
Piketty’s report received some good coverage in The Guardian today. https://www.theguardian.com/environment/2023/jan/31/emissions-divide-now-greater-within-countries-than-between-them-study
I think Piketty is really targetting 1% – and most are not in that
If you believe this: https://inequality.org/facts/global-inequality/
The global top 1% (well actually 1.2%) of individuals have assets over $1 million, and between them that is nearly half (47.8%) of all assets. Then next 11.8% have assets over $100,000. More than half have assets under $10,000.
The ONS reckons that the 70% of UK households have net wealth exceeding £100,000, and 60% of households have net wealth exceeding £200,000. So that might mean that 60% to 70% of the UK population are in the global top 10%.
But only the top 20% of households have wealth exceeding £1m, which might get them into the global 1%.
See https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/totalwealthingreatbritain/april2018tomarch2020
So yes, most of the population of the UK are part of the problem, with their large cars and overseas holidays (often more than one of each) and all manner of other conspicuous consumption.
Thanks for doing that
Appreciated
It adds scale to this
Radio 4 More or Less this morning had an interesting analysis of the ONS data on wealth. A key point was that the combination of property values and the ONS attributed value of pensions as ‘assets’ would push a lot of people into the ‘millionaire’ bracket. That could be slightly misleading – the usual asset rich, cash poor situation. Not really what we are thinking of as the 1% with large amounts of disposable income.
So Im not sure that we can jump to the conclusion that ‘most of the population of the UK’ have multiple large cars and foreign holidays. And I’ve run a team at a major NGO working on ‘Sustainable Consumption’ and have a particular aversion to large SUVs! Consumption is a problem at most levels of society as expectations have built up over the decades. Shifting those expectations is a huge challenge. I’m of course excluding those living in poverty, and yes there is truly obscene consumption at the top end. Carbon budgets are an attractive approach though given that almost everything has a carbon element, challenging to implement unless one focuses just on the most ‘carbon heavy’ elements. Transport and housing obviously, but that should of course for example include meat – in carbon terms a bigger problem than flying, though less appealing as something to protest about.
I recall a conversation with a senior person from a major travel firm at a conference. I was there in my sustainable consumption role and we were talking to a couple of other environmental people who were giving him a hard time. He was gently chiding them for not giving him a much harder time about their cruise ships (and shipping generally) rather than just their aircraft. He saw their cruise ships as a bigger problem without the technological and fuel improvements that he was seeing in aircraft. (And no Im not pinning my faith just on aircraft technology). Shipping tends to go under the environmental radar.
Now to go and check out that ONS report properly…
I think I disagree Robin
Knowing you have a house worth £1 million, or a pension pot of the same same, and maybe both, does in most cases impact consumption, considerably
Good point Robin. Liquidity may be an issue, but the fact is that “asset rich, cash poor” people are in fact rich if they choose to liquidate some of their assets. By any standards, they are wealthy, whether or not they work to earn income or choose to invest in assets that produce regular income.
With the best will in the world, and accepting these are difficult emotional things, the widow living on a small pension in the million pound+ family home, which she may be unable to maintain properly with her small income, may be best served by moving on, releasing some equity, and freeing the house for a family to occupy again. Owner occupation is still around 65% and the same applies at all levels of the housing ladder. The children or grandchildren may have a different view, with an eye on house inflation increasing their expected inheritance. But you can’t eat bricks and mortar.
Similarly, the person with a million pounds in their pension is going to have a decent income if/when they take the pension (or could do so).
And here are the centiles for taxable income: https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax
Anyone with income below the personal allowance does not appear, which was £12800 in 2019-20. In that year, the 50th centile of taxable income starts at £26,000. The 90th centile was £58,300, the 98th centile was £125,000 and the 99th centile was £180,000. That is how concentrated income is at the upper end. And it is not very long before that level of income turns into wealth.
If you prefer ONS data: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2021
The bottom quintile (20% of households!) has median income around £14,500. For the top quintile it is £63,000.
As I said above, in the UK, something like 60 to 70% of households that are in the top 10% of wealth by global standards, and about 20% of households in the global top 1%. So who is flying on holiday to Spain, Greece, Turkey, New York, Abu Dhabi, etc? Many tens of million of people flying from the UK each year before the pandemic. And who is buying those SUVs?
But look, if you feel uncomfortable saying that anyone with £1m of assets is wealthy, let’s start at £10m or £100m and work down!
Not sure if this has been mentioned here before, but Ben Tippet at the University of Greenwich has done some work on a progressive wealth tax with teeth. eg https://gala.gre.ac.uk/id/eprint/33819/20/33819%20TIPPET_The_Case_for_a_Progressive_Annual_Wealth_Tax_%282021%29_v2.pdf
“We present a baseline progressive net wealth tax that only taxes the top 1% wealthiest households. Households with net wealth above £3.4 million (the top 1%) are taxed at a marginal rate of 1%; above £5.7 million (the top 0.5%) at a marginal rate of 5% and above £18.2 million (the top 0.1%) at a marginal rate of 10%. We estimate that this tax would raise roughly £70-130 billion a year after administration costs and tax avoidance/evasion: £70 billion if 50% of the tax is evaded and £130 billion if 15% of the tax is evaded. This is equivalent to roughly 9-16% of total tax revenues taken by the UK government each year.”
There you have it: wealth tax progressively, and raise tens of billions. Essentially taxing back some of the gains of the last 13 years.
I will read it
Perhaps the time has come for personal carbon allocations per year. The same allocation for every person, the allowance is not transferrable and applies to everything (since everything has a carbon footprint). The Guardian also covered the growing disparity in emissions within all countries, “developping or developed” (if indeed such phrases have any meaning any more). (perhaps one could even have negative allowances? – growing trees etc).
Such an approach might be a bit easier to implement than tax. As for exceptions etc – don’t need any. Example: the rural poor could have access to low-cost renewable energy which would furnish everything they need – including cheap low/zero-carbon heating and transport. The rich would own “stuff” that would be unuseable & could only be scrapped (large expensive cars). In the 1970s a friend picked up for a song a V12 Jaguar – following the oil price shocks. This approach would eliminate large amounts of barnacles that currently encrust society: 4x4s/SUVs, jet skis, large motorcycles (toys) & all the other toys that an assortment of imbeciles seem keen to buy. It would also drive the repair business, fix-it don’t replace it.
Won’t happen, far too many vested interests.
I thought about discussing that – rationing seems rational to me
Well said and fully agreed.