The Guardian's letter page this morning has two responses to an article by Dr Faiza Shaheen, who is now the director of Tax Justice UK, calling for a wealth tax.
Because both, directly or indirectly, call for the measures in the Taxing Wealth Report 2024, I share them here, with particular thanks to Ian Lovegrave, with whom I am in regular correspondence:
Faiza Shaheen is misguided in her advocacy of a wealth tax (Rachel Reeves needs to find cash fast. A wealth tax really is her only viable option, 22 August).
There are far more practical policies available to tax wealth as part of the progressive narrative. These are based on the idea of taxing the income from wealth rather than taxing wealth directly.
This is the approach of Prof Richard Murphy's Taxing Wealth Report 2024, which estimated a tax yield of £90bn a year from its proposals. The Green party included around £48bn of these proposals in its Manifesto 2024. It should adopt the remaining proposals too.
The Green party has also suggested that all tax subsidies to private pensions should be ended. That could be done at once or phased out over the life of a parliament, by lowering the maximum limit allowed for tax relief. That would yield a further £50bn a year and would also ensure that the value of stocks and shares were not inflated by the pension subsidy to the benefit of the rich.
The upshot would be that £140bn a year could be added to the tax yield, disproportionately affecting the rich, from these eminently practical measures. This makes far more sense than the will 'o the wisp pursuit of a wealth tax.
Ian Lovegrove
ManchesterFaiza Shaheen proposes a wealth tax, but predictably does not give any indication of how one could be delivered. She glosses over the fact that it would be overwhelmingly complicated to define wealth, and then calculate it for UK citizens – instead, she says, this challenge is “not insurmountable” and we should give “more resources for HMRC”. I'm sorry, but we need better than that.
Faiza also fails to mention that while other countries have wealth taxes, they are used to replace other taxes – for example, a wealth tax exists in Norway, but it does not have inheritance tax; a wealth tax exists in Switzerland, but they have a capital gains tax that does not apply to most assets. Faiza also fails to mention that many other countries have tried a wealth tax, and have abolished it because it did not work.
We are in desperate need of real ideas and real solutions, and I am afraid Faiza Shaheen provides neither.
Michael Watson
Unsurprisingly, I agree with the sentiments expressed.
I am also disappointed that Faiza has fallen for the nonsense promoted by her predecessor at the organisation she has joined.
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Do these letters highlight one difference between you and Gary Stevenson? Much as I admire Gary’s passionate and persuasive advocacy of “taxing wealth not work” it does seem to me that the Devil is in the detail. It could take years to devise a wealth tax regime and it will no doubt be riddled with unintended loopholes. In contrast, your report could be implemented with a rapid stroke of the legislative pen, provided the political will was there. In that respect, Gary should be encouraged to continue his narrative because it is starting to catch the attention of some in the political class BUT when it comes to implementation it is your report that should be followed and that should start ASAP. It may be that in years to come a one off wealth tax could be devised along the lines Gary suggests but we do not have the luxury of time to wait. What none of us can do is to sit back and watch the wealthy neoliberal elite pillage us into poverty.
You hit a nail on its head.
There’s wisdom there.
Even with the serious differences (that shouldn’tbe ignored), the two approaches can be complementary at this stage in the battle for hearts and minds of the public and (slightly later?) for the spreadsheets of the policy wonks.
– “tax wealth not work!” – GS
– “do it THIS way!” – RJM
The two approaches – taxing wealth directly and taxing the income from wealth – are not really complementary. They could be only if taxing wealth directly was not problematic but the fact that it is makes it impractical and stupid to try both approaches at once.
Good political judgement dictates that a progressive government does the relatively easy stuff first, that is implement the practical policies of the TWR. That would require an increase in resources for HMRC and Companies house, as the TWR recognises and that will take time. Good sense says do not waste these resources on a contentious Wealth Tax and the expensive litigation it would entail.
After the TWR proposals have been implemented, then take stock and decide what further measures, if any are needed. They might or might not then include a Wealth Tax.
I agree with that approach.
Why make it hard to achieve the goal of taxing wealth unless, of course, you don’t want to tax wealth because your campaign job is dependent on not achieving that goal? Forgive my cynicism. It is based on too much observation of campaigners who know they have no transferable skills and therefore are invested in keeping campaigns going, but not succeeding.
It’s nice to see you referenced.
Might it be more more efficient/effective to develop a tax set up which is equitable and transparent throughout our society?
Might such include “reverse taxation” so that those who are not wealthy enough to support themselves, and any children properly, may LIVE decently?
Might context be kept in mind as our nation is reported to be the 6th wealthiest in the World in terms of private wealth. [Wikipedia]?
Might a/the root cause/problem be the intrinsic predatory nature of the dominant socio-economic policy of Austerity/Neo-liberalism/Group self-seeking Monetarism?
Might such predatory capitalism, dominating and dominant since the Thatcher governments, seriously weaken our nation through its increasing the wealth and power of the few by disconnecting/transferring the wealth of the regular citizenry, and their children, to the already wealthy few and by reducing/damaging the vital infrastructures which are necessary for a robust nation?
P. S. Might Austerity/Neoliberalism have significantly weakened our armed forces when there is a real/perceived danger from Russia?
P. P. S. Might it help if there were a form of return to the “Semi-symbiotic”/symbiotic capitalism as used by Lloyd George and the Atlee government?
Yes, in a word.
Imagine for a moment that a radical government, committed to fair taxation, had been elected in 2010.
Suppose they had decided to make some changes to income tax — a tax free allowance of £10k and increasing bands of 10%, 20%, 30%, 40%, 50% up to a maximum rate of 60%.
They would, of course, have abolished employees’ national insurance.
It might have looked something like this:
Year 2010
Tax rate
0% Up to 10000
10% Up to 20000
20% Up to 40000
30% Up to 70000
40% Up to 110000
50% Up to 160000
60% above 160000
And suppose they’d been honest and indexed those thresholds with inflation by now they would look something like:
Year 2025
Tax rate
0% Up to 17339
10% Up to 36780
20% Up to 69358
30% Up to 121375
40% Up to 190731
50% Up to 277427
60% above 277427
A band 6 NHS worker, like a specialised cardiac physiologist or a charge nurse, would be just into the 20% rate rather than approaching the 40% rate.
What a shame we got Cameron and Osbourne instead.
I am not sure you would have raised enough tax.
But noted.
One example. Mr X paid £20 million for his Rembrandt painting, but now declares he is unsure of its attribution. If he’s right, and it is from a pupil of the great man, it may only be worth £900,000, as he now claims. Does HMRC have either the expertise or the resources to challenge the owner’s valuation?
Multiply this nonsense by the vast number of items owned by the ultra-rich (never mind the assets owned through obscure offshore holding companies with no apparent connection to anyone) and you have a nightmare of legal wrangling which will take literally decades to resolve in most cases.
No, stuff trying to value assets, just do all the straightforward things recommended in the TWR.
You get it….
Those are the games
Oh dear, the preview looks rather mangled. I had carefully formatted the two tables…
These previews are rubbish, but the post looks ok.
Thanks
Would this perchance be the same Ms Shaheen who the Labour party treated so disgracefully prior to the last general election (over fake reports?) which allowed Iain Duncan Smith to keep his seat?
Yes