I knew I was taking a risk in creating a video about the recent report by Thomas Piketty and Gabriel Zucman on the possibility of a world wealth tax, and their claim that it could solve both global inequality and climate change.
The risk is something that I have faced for a long time. I was a co-creator of the Tax Justice Network. I created its most successful idea in the form of country-by-country reporting. I represented it in negotiations at the OECD and many other fora. As a result, I helped deliver massive tax reform a decade ago that fundamentally changed the operations of many tax havens and multinational corporations. I was, however, always aware that my deeply technical and analytical approach to tax justice, which was always pragmatic in the sense of being based upon analysis of the realistic prospects of effecting change, never won the hearts and minds of all in that movement.
Why? That was because there were many in the tax justice movement, then and now, who were more dedicated to their own gesture politics than to tax justice. They believed identity signalling and political positioning are much more important than achieving real-world outcomes. I was not willing to bend to that way of working, which now dominates the tax justice movement, even though the takeover of that movement by those with these priorities has resulted in the deliberate destruction of much of its effectiveness.
For example, the desire of idealists who had never worked in tax to deliver solutions for global tax justice through the United Nations, which has no capacity to make such changes, rather than through the OECD, which they see as the rich countries' club and, therefore, an unacceptable ally, has led to a global fight over process on tax justice, and a loss of any momentum towards change.
John Christensen and I, on the other hand, worked with, or through, the OECD and delivered far more change than we could ever have reasonably expected as a result. The change in focus has led to the current collapse in the tax justice movement's effectiveness and to its failure to make any real progress for maybe a decade, with that failure remaining highly likely as no mechanism for delivering success exists. The focus on process rather than outcomes is failing.
That has consequences. The current Piketty and Zucman plan is one of those: they can put forward a patently unworkable plan, knowing it will never happen or be tested in reality. Abstract academic thinking can replace real demands for reform when you don't expect to change anything, as this movement no longer does, given that it has destroyed the opportunity for that change by creating conflict between the UN and OECD, with neither being capable of delivering progress as a result.
The same is true in the UK domestic environment. The call for a wealth tax is a deliberate sideshow. It is probably politically undeliverable by anyone right now, whereas the proposals I made in the Taxing Wealth Report can be put in place without difficulty, with much greater revenue potential as well.
Wealth taxes have emotional appeal within gesture policies, but pragmatic reform of existing taxes is likely to be much more effective. It is, then, an unfortunate fact that, for much of the tax justice movement, playing to emotion would appear to be much more important than actually delivering real-world change for the benefit of people at large.
Pointing this out has had a high price for John Christensen and me. Neither of us is now welcome in tax justice circles, and so on much of the left anymore. We are outsiders, rockers of the boat, non-conformists, heretics, or just bloody awkward. We are even thought to be just nasty for pointing out that there are better ways to do things, even if they are not quite as pure as many on the left would demand. Because we placed our focus on realistic ways to transform the well-being of people around the world by changing tax systems for their benefit, we have both been ostracised by much of the tax justice movement.
Trust me, it would be much easier to play along with these changes in the tax justice movement than to criticise them. It would also be much easier to go along with the calls for a wealth tax rather than say there are better options available. If I were looking for a quiet life, that is exactly what I would do.
I do, however, remain completely committed to tax justice, and I am not, and never will be, a gesture politician. My aim is to effect change. One of the ways in which I wish to do so is by using the real expertise I have in tax and tax system design in ways that can tackle the problems that we face, including around wealth. If, when doing so, I have to be candid about proposals that will distract from the achievement of real progress, which is what I am doing by criticising proposals for undeliverable wealth taxes, then so be it. I have no intention of changing my opinions to secure popularity.
It was only through the dogged determination of John and me that the tax justice movement was sustained for long enough to create the gains we secured. I am not now changing tack to win the support of that movement as it now is when doing so would, I think, be at a cost to the people of the world who need real tax reforms, and not gesture politics. And it is for the reason of that same dog determination that I will now criticise proposals that I think unhelpful, and not apologise for doing so.
So, I repeat, I knew the risks. The comments on my video suggest it has not been very popular and that the sentiment is that I should work within the tax justice tent rather than criticise it as it is now, but that is something I could not do with a clear conscience. That is because, in my opinion, the tax justice movement, as it is now, has become incredibly successful at just one thing, which is sustaining the current economic status quo. It does so by distracting attention from reforms that are possible and instead diverting focus into campaigns that can never, and I do mean never, deliver any real-world benefit.
I am amongst the very few people in the world who have the experience to make that claim. I delivered real changes at a world level intended to create tax justice. I know how to do that. A world wealth tax cannot deliver it. Nor is a focus on one in the UK very useful when many better options are available. In that case, do not expect me to change my mind on wealth taxes any time soon. That is not in my plan.
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Before I had heard the arguments I was a general supporter of a wealth tax and I think that there will be many who have not gone into – and perhaps have little interest in – the details of implementation (to be clear, I am certain that working with the existing tax structure is preferable). I have always understood that ‘the Wealth Tax’ is a sort of rallying flag for the idea of taxing those with inordinate wealth and indeed it has galvanised many more people as a result of its simple message.
There is Brexit-like parallel here where the leave message was simple and emotionally appealing while the remain message was tied up in the technical benefits. The sad bit is that everyone in the taxing wealth camp is after the same thing!
Making detail sexy is a tall order, particularly in a complex area like tax so the flag is, in broad terms, a good thing to wave. It would be far more helpful though if it represented the general approach rather than a specific route.
There is, too, a somewhat punitive element to the label and something like a ‘Fair Tax’ would be more difficult to argue against and guard against the implication that tax is primarily for the wealthy.
Thank you
Well, you changed at least my mind yesterday.
Wanted to write a comment about why a wealth tax is absolutely needed but while writing I understood your arguments even more and in the end couldn’t post the comment anymore.
My idealism just couldn’t compete with your realism….
We need realistic (and furthermore caring) people like you who firmly stand for something.
The right knows how to fight idealism, especially from the left.
But I believe that they can’t take on realism, the real “common sense”.
Thank you
Well,….. awkward moment but I have to correct myself:
Didn’t want to post it yesterday but….. obviously accidentally did in the end….. “^^
One of the clear questions is how much this steady adherence to Neoliberal policies is influenced by how the Chancellor of the Exchequer has in recent decades most commonly been an Economics graduate of some description? If not that, then perhaps a wealthy businessman (like Zahawi) who would be likely to feel that the status quo worked just fine.
Now, on the one hand, I’m inclined to criticise political parties for appointing ministers who haven’t got relevant education or experience for roles, so it makes sense that most would have such a background. The first problem seems to be that Economics courses seem wholly focused on promoting a neoliberal worldview, so there is a singular approach likely to be promoted from that background.
The second is the lack of specific push-back that represents the public. You might argue that this is actually more of an issue for a Labour government than a Conservative one, because with a Tory government a Labour Shadow Chancellor might be expected to look for where Tory policies are damaging to the public. When it’s a Labour Chancellor pushing neoliberal policies, however, the Tory Shadow Chancellor is trying to push spending plans even further in a Neoliberal direction.
Even when a left-leaning party gets power, the concern about fiscal credibility results in a neoliberal chancellor so it starts on the right of the party and veers further in that direction from there, creating an anchor on social improvement reformation by the party.
What’s the solution? That’s what needs to be answered, but it might involve being brave enough to have a non-PPE Chancellor. Alternatively, a new role that focuses on inequality, social cohesion, societal harm, etc, to provide more voice to those needs.
Thank you
I thought this piece from 10 years ago worth sharing. https://www.theguardian.com/uk-news/2015/dec/08/fall-of-jersey-how-tax-haven-goes-bust “Murphy, on the other hand, is combative – he advised Jeremy Corbyn during his leadership campaign for the Labour party – and has no such reservations. “They have for 10 years refused to accept that, fundamentally, their business model is, to use a technical term, fucked,” he told me.” Nice and succinct!
🙂
I got replies to a couple of yesterday’s comments on your video, I have linked to this blog post
Thanks
Hi Richard – as such a big influencer, and your work has helped me greatly over recent years, blowing your own trumpet will just play to your followers. My beef with your piece was that you had nothing to say about the thrust of the report or its many other facets, not even the not insubstantial contribution from an income tax, and so, by ignoring those, your many followers will not even bother to read it, ie baby & bath water.
As it happens I agree with you over the problems of the wealth tax but the vision of radical changes in working hours, material/resource throughput and priority activities is worth a consideration.
You can no more have a global income tax than a global wealth tax. That fundamentally misses the point of tax. The report is just wrong.
You are quite right to stick your neck out on this one. Sometimes well meaning people get it badly wrong.
I think a lot of those people who are giving you push-back in the comments or angrily clicking away are exactly the people we could win over next – I’m talking the kind of people who might have had their political awakening (or re-ignition) through someone like Gary Stevenson. These people are primed and ready to hear your message of a Politics of Care. I think most of them already want this – but more importantly, these people are ready to be won over by your answer to the question: “how do we pay?”
While the wealth tax camp do slip in to “taxes fund spending” narratives, their core message is “failure to tax wealth properly is causing asset inflation, making your family poorer and corrupting our democracies”. This is not a tax and spend argument incompatible with MMT. This is self-defence argument, and on that I think we are all aligned.
Ideas like: we are not at the mercy of the rich for financing, that the bond markets cannot hold us hostage, that whatever we can do, we can afford – their audiences are ready to hear it, if they trust you.
I think if the video started with “we need to tax wealth because [reasons you have in common with wealth tax camp] but this is not the way to do it. I will explain why and what could be done instead”, it would have gone a long way to build TRUST with an audience who favour a wealth tax. Sadly, some of these people might have now dug their heels in, but I still think we can win them over.
There will be another day for that.
I support your approach from a lefty position. I have used the argument in the past as to valuation of assets, and how it is almost impossible to implement in general with the rich, and how much easier it is to tax income from assets. I get into arguments with some of the younger Green Party people; I always tell then the ultimate way of dealing with the uber -rich is 1789. “Eh?, Watcha on about?” 🙂
🙂
“ I get into arguments with some of the younger Green Party people; I always tell then the ultimate way of dealing with the uber -rich is 1789. “Eh?, Watcha on about?”
I’m not young I’m old and have no idea what you are on about. So…
Watcha on about?
They’re ‘on about’ France and “Qu’ils mangent de la brioche” and guillotines and that.
French Rev?
1789 – The French Revolution.
I think it’s encouraging that there seem to be more politicians and commentators saying they support taxes on wealth but not a wealth tax, which I suspect is at least partly due to your thinking percolating.
Let’s see
I’ve had an 18 month battle at work, trying to get people to see that working from home 100% of the time undermines the natural pedagogy that helps teams learn and work together as well as the fact that you cannot work on complex development projects and dodgy contractors without actually going out to look at what the hell is going on. Now, face to face working is creeping back and hopefully GOYA (Get Off Your Arse) management might make a come back.
You were right then and nothing has changed now All we have in Piketty & Co is yet another ‘accommodation’ – something that sounds fair, but in practice is not as Mark Twain said, supporters of the wealth tax please note:
‘It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. ‘
He also said this which I think you will like:
‘A tax is a fine for doing well, a fine is a tax for doing wrong.’
🙂
In this age of instant ‘hits’, algorithms that determine the news cycles and what is liked/disliked on social media, it gets even harder to get reasoned messaging across especially when others seem to be ‘hogging the spotlight’ and have the networks supporting them.
However, if academics and ‘think-tanks’ don’t change their ways, and remove themselves from their own isolationist ego-centric bubbles promoting themselves and actually had the interests for the greater good as their core mission; working in collaboration with other groups to obtain some consensus, having the realisation that their won’t be a ‘one glove fits all approach’ for the global community which is nevertheless still interconnected.
It is going to be hard to change that mindset, but as long as the messaging stays consistent, clear to understand, free of unnecessary jargon that can can be used by some to appear pseudo-intellectual and knowledgeable (though can make others just switch off or become confused); continue onwards sharing your knowledge, educating, challenging ideas, and interacting with those people willing to do so.
Tax is a specialist field, and we’re lucky you share your expertise for the greater good
….perfect is the enemy of good
springs to mind, think it was Voltaire.
Thanks
We need more bloody awkward people in the world. I have that reputation at work and have effected positive change through it. And at my age, I no longer care about the label.
Keep it up.
🙂
Richard, I’ve been drawn to your ideas because they propose incremental change, change that can be done with existing systems in place. Wealth tax proposals, to me, always seem to have an undercurrent of revolutionary thinking. We can’t just bring down inequality, we need to crush the rich. History shows that it never ends well. One of the few countries that has ever achieved non revolutionary re-distribution of wealth has been America, between the 1920 and 1940’s. We need something like that again because if we have revolution, the aftermath goes to whoever moves quickest.
I was for a wealth tax, I believed and still do believe that something should be done about the very few that have unassailable amounts of wealth beyond what anyone could ever need. However when I watched your first video I had to swallow the bitter pill that even though I believe they’re too wealthy and something should be done, the practicality of taxing a person’s wealth is impossible and potentially unfair, even if I think the people with this much wealth don’t play fair at all.
I showed your original video to a friend who subscribes to this wealth tax agenda and he really didn’t like it. He was very scathing and I told him that as unfortunate as it is, you are right but he wouldn’t and still won’t accept it. I fear that people are too radicalised to accept reason when it comes to the obscene amounts of wealth some have and how to deal with it. I think this is why Mr Stevenson has essentially refused to work with you despite you being a tax expert that he should be talking to and he keeps asking for.
I responded when he sought advice.
He did not come back to me.
Thank you.
We are all tempted by scapegoats, whether they be the obscenely rich, foreigners, those on social security or Reform voters – depending on our ideology.
Grossly accelerating wealth inequality is patently and visibly unjust and the public can see that very clearly.
Piketty has the data on that, and his speciality is capital wealth especially the French historical context.
“Capital in the 21st century” was the first economics textbook I read, while I was managing a foodbank and it played its part in my economic education, on things like markets, protectionism, and capital versus income.
Having said all that, I am convinced by your arguments and practical experience, that we should be focussed on taxing the income and financial behaviour of the wealthy, rather than trying unsuccessfully and inefficiently to tax their assets. It can and should be done, and only those more ideologically comitted to ideological class warfare, than to making the world a better place, will oppose it.
Tax the wealthy, but not with a wealth tax.
KUTGW!
Thank you
I have enjoyed Gary Stevenson’s podcasts, but his position on a wealth tax has puzzled me for some time.
He say we need a wealth tax to solve the inequality problem. Stevenson also says he does not have a wealth tax and he needs experts to design one for him.
But does it make sense to propose something so specific if you do not have a fairly clear idea how it would work?
No, in a word.
That is cart before horse.
Whether a World Wealth tax is feasible or not I don’t know but one ought to be implementable in the context of UK politics.
Have you not argued elsewhere, Richard, that we have to recognise today’s politics is quite a lot about feelings and emotions. So please don’t pillory those who think that a wealth tax has a symbolic value which sends a statement about the obscene inequality of the times we are living in. It should be judged on more than pragmatic value. The following are the further main problems I see with your position:
There need be no demand for immediate asset valuation acciracy. With an annual tax, that will come with time, with bedding in, increasing skills and experience.
There will be much readily available evidence as to the approximate value of estates and their hoards – evidence that can be demanded as necessary if an officer is investigating self-declared valuations.
Saying it is “too difficult” is exactly what the super rich want to hear. You say you have faith in the functionality of the state, so be confident, consistent in that and endorse the ability and capacity of the tax authority, if properly resourced and motivated, to deliver. Someone with your experience could help set it up.
There’s no reason for it to be the only wealth tax measure but it’s surely better in the list of them than out.
I have no problem with a wealth tax when everything better has been done first.
Why are you keen on such a deeply suboptimal solution? Read the Taxing Wealth Report.
Thanks for the advice. Mine to you is read my comment first – properly.
I did. Now answer my question.
Stephen PR – I read your post. You have decribed the taxation of assets as:
“Symbolic”
Without “immediate asset valuation acciracy.”
Relying initially on “approximate value of estates..”
I cannot equate such vagueness with the real (and seriously under-resourced) reality of HMRC tax collection.
As the TWR2024 makes clear, there is an easily, accurately measurable, large amount of real, rather than symbolic, taxable wealth waiting to be hoovered up with a minimum of legislative fuss, under Richard’s proposals.
If the energy expended in promoting “symbolic” “inaccurate” taxes went into accurately collecting REAL ones, we could make the world a better place, at the cost of a bit of symbolic ideology.
Thank you
The two underlying points I’m making are
1) that you’ll never get a super wealth tax that is perfect but that is not a reason to let unproductive hoards of wealth shelter from taxation. The super rich are now in position to keep outbidding the rest of us for all the assets going, and increase their hoards. The absence of a super wealth tax then sends a very symbolic and favourable suggestion to them – keep it up chaps!
2) I’ve never once argued against the other wealth taxing measures Richard advocates. So when I’m “straw-manned” with that as if I’m advocating the super wealth tax as a substiture for them makes me suspect a lack of objectivity. There is a popular movement for a super wealth tax which there are good reasons to support and there are better reasons for getting behind it than there are for shunning it.
My last word – as you very clearly are a troll from your email address onwards.
Why oppose it? Because promotion of a wealth tax distracts attention from real achievements we could make. I always suspect that major funding foundations on whom some on the left rely – with names from old US industrial corporations – promote such ideas very deliberately so that the left waste time on no-hope causes. And you are arguing that is exactly what they should do. Why? But don’t bother replying – I have blocked. Bring a real name and email address if you want to reply.
No, because your question is not dialogue. It’s a dismissal of the careful points I made which you would have deployed to dismiss any point of criticism of your position.
So, I invite you again to read and respond to mine, if you will.
I have. You are trolling. There is nothing else to say.