This video, made by me and my son, Thomas, is an introduction to the Taxing Wealth Report 2024:
The transcript is as follows:
I wrote the Taxing Wealth Report for three reasons.
The first was to show that the claim being made by UK politicians that there is no money left is wrong.
I have proved that. The report suggests that up to £92bn of extra tax could be raised each year in the UK, and on top of that, up to £100bn of additional funding for investment purposes could be found by changing the rules on tax incentivised savings, like ISAs and pensions. There is money left.
Second, I wanted to show that the wealthy people of the UK and those who have the highest incomes, and of course the two groups largely overlap, are undertaxed at present. I did that by looking at their incomes between 2010 and 2020, i. e. after the global financial crisis of 2008 and before Covid hit. In that period, they enjoyed quite phenomenal increases in the value of their assets, which were very largely untaxed. The average tax rate on that growth was just 4. 1%. whereas the average tax rate on income during that same decade was 32.1%. The result that I have estimated is that £170 billion a year is undertaxed on those with wealth in the UK. There is, then, ample capacity to charge those with wealth and high incomes in the UK to more tax, and they will still be better off than those on lower incomes.
Thirdly, I wanted to show that we could solve the problems that this under-taxation of wealth gives rise to, not by creating some grand new schemes like a wealth tax or land value taxation or anything else, which will be incredibly complicated to put in place, to negotiate, and even to manage in the future, but simply by changing the existing rules within our tax system, where they basically provide massive subsidies to those with wealth.
Again, I think I have shown that. In thirty separate recommendations in the report, I outline a whole range of changes to our tax system:
- to income tax
- to national insurance
- to value added tax
- to corporation tax
- to inheritance tax,
- and to capital gains tax,
- as well as to the UK out system as a whole,
- plus one or two other changes which will, in fact, reduce the taxes paid by the wealthy at present because they're unfair.
Now, put all that together, and I came up with the Taxing Wealth Report. It's a big document. It's 126,000 words in all. But there are summaries which are available. The report as a whole suggests that we can tackle the unfairness inside the UK tax system by making some simple changes to it.
Let me demonstrate what those simple changes might be. For example, if we charged capital gains - that's the profit people make on selling assets - to tax at the same rate as income tax in the UK we could raise another £12bn pounds of tax a year
If we charged a VAT on the supply of financial services to people in this country - and of course, financial services of the sort that I'm describing are almost entirely consumed by those with wealth - then we could raise £8.7 billion of extra tax a year.
If we applied the national insurance that is made on people's earnings right across the board on all incomes at the same rate then we could raise maybe £10bn pounds of extra tax a year, having allowed for some of the recent cuts that Jeremy Hunt has put in place.
If we were to reduce the subsidies to savings in the UK, in particular the subsidy that is given to the pension contributions made by those who are higher rate taxpayers in the UK each year, so that they only got tax relief at the same rate as people on basic rate income tax, then we could save £14.5 billion pounds a year of money that is spent by the government to make the wealthy wealthier, which makes no sense at all.
And we could make one final change in these big number changes that I'm noting here. If we charged the equivalent of national insurance on investment income - that's from dividends, rents and interest plus payments from trusts and capital gains - if we charged the equivalent of national insurance on all of those sources of income at 15 per cent - which is still lower than the combined rate of national insurance paid on earnings when you put together the employees and the employers' rate of national insurance - then we could raise £18 billion pounds a year.
I hope you're beginning to get a feel for what I'm saying in this report. By simply removing the anomalies within the tax system by smoothing off the rough edges which make it very unfair at present, we could transform the tax system and make it fair.
And we could make this country a fairer place by providing people who work for the public services with the pay rises that they deserve.
We could properly fund education.
And we could properly fund social care and the NHS.
We could even bring the water companies back into public ownership and fund the necessary transitions in investment that are necessary so that we have clean water and beaches in the future.
And we could, if we made the changes that I propose to pensions and ISAs - where I suggest that the money that is invested with the benefit of tax relief should be used for public benefit itself - in other words, that tax relief should result in some gain to society and not just a gain to those who are saving - then we could raise up to a £100 billion to fund the climate change transition.
Now, in fact, the total numbers that I am talking about - £92bn of extra tax and £100bn for investment - are bigger than any government could possibly want to spend at present, or could realistically spend, because there aren't the resources for that amount of money to be spent upon in the UK economy without creating inflation.
So what does the Taxing Wealth Report really do? It provides politicians who are looking to answer that question that journalists always ask of them - which is “How are you going to pay for it?” whenever somebody's got a good idea - with a whole range of options that they can choose from to suggest how they will indeed pay for the changes that we need to make our society fairer.
We don't need to do all the changes in this report to still have a massive impact upon our well being. Some will do.
That's why I think this report is important. That's why I hope you will read it. And that's why I hope you will follow this series of videos, which are going to explain some of these changes in more detail so that you can see just how fair they are, and how it is true that the wealthy in our society should pay more to make sure that we all, the wealthy included, have a future that we can rely upon.
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At about a minute the caption says ISIS -I think it should be ISAs
well done. A great contribution
We will see if we can edit that – but this is the sort of thing we will learn how to do better
Thomas has been through a massive learning curve to get this far
I appreciate that and I am sure most will not even notice.
I have shared the post with a Lib Dem Councillor who says he will share it.
Sent it to a recent Green Party Candidate
and to someone I know who holds office in the local Labour Party.
I shall try CiF when an opportunity arises.
Guess what-I am not going to bother to the prospective Conservative candidate.
Thanks
There may be a CiF piece next week…
The subtitles were perfect apart from the two instances of ISAs becoming ISIS, one near the start and one near the end.
Altogether an excellent introduction to the report, kudos to you and your son. I’ll be sharing this far and wide.
Thank you
We will learn and get better at this
I will read the report in due course but that was a fabulous introduction. What impresses me most is the notion that we already have all the tools to transform society for the better. Tax can be used to direct money to where it’s needed and away from those who would hoard it for themselves. The fact that more money would become available than could be spent is very significant. It poses the political question: what are our priorities? If money can go towards things society really needs, we may stand some chance of achieving a carbon neutral economy with well-funded utilities. I thank you for your contribution.
Thanks Martin
Richard,
You did a good podcast with Craig Dalzell for Common Weal on the Taxing Wealth Report. I want to focus on the section around 14 minutes in to 20 minutes (including Craig’s intervention), which very effectively summarises the inequality problem, especially in the bias to VAT, and the significance of VAT. A Blog, or even extended Twitter thread (I refuse to allow Elon Musk to take property rights in the alphabet – he will be charging rent for its use, and claiming copyright over the letter ‘X’ next) I think would very effectively illuminate the underlying issue, encapsulated powerfully by the way a regressive tax like VAT works with distorting and compounding effect in favour of the wealthy, and against the poorest; and with damaging effect in Scotland, where the government is deprived of the resources it manages to generate through VAT if it tries to tackle inequality; to ensure it can’t.
I thought this section highlighted how to use the circulation of money effectively to enhance prospects for the poorer, by using their propensity to spend, against the propensity of the wealthy to hoard. In particular the example of Scotland highlights the key real effects; higher spending among the poorer pushes up the relative VAT take (compared with rUK). The huge irony here is that Scotland does not receive the increase in VAT tax take, because VAT is no devolved (deliberate tactic by Westminster). So what happens? Scotland has no real borrowing power, so can only generate income from tax, and that almost inevitably means raising income tax (deliberate tactic by Westminster); which Unionists then use as a stick to beat the Scottish Government for overtaxing middle earners, compared with rUK. Its a ‘set up’. It always was. The idea was to curb Holyrood, shoot the SNP fox; and to hell with Scotland, its people and the poor.
John
I will pick these issues up in future videos / podcasts here
Great work both!
The journey of getting the messages of the Taxing Growth Report has begun. Enjoy the adventure in reaching and influencing audiences new and old. Shifting the narrative, from ‘How are we going to pay for it?’ being an empty and unanswered question to becoming an answerable question. The report evidences, ‘We can pay for it’. There are technical choices in how this might be achieved, and political choices around doing it……or not.
Importantly, it’s possible.
Content aside (excellent), to my mind you have the intro and outro nailed. Suggest you give each episode a series number; this provides an effective cue to seek out the series. YouTube text. Suggest add in you credential as the UK’s #1 Accountancy influencer, with two or three name drops of media channels you regularly contribute. That’s instant authority today.
Thanks
I have shared this with Thomas
It will take some time to digest the Taxing Wealth report! Initially, I think now, the important ‘take’ is that it provides a menu for the development of a fairer, more productive, and for everyone, more fulfilling opportunity to create a better, life-enhancing economy; funded effectively and constructively with least harm for most people. As you have said Richard not everything could or should be attempted or attempted in full, just because it is in the menu. It will require careful implementation and execution to achieve effective results. Everything will be questioned and challenged. Opponents will not stop short of the lie direct, of prevarication, gerrymandering, obfuscation, or anything that defeats the proposal, at any cost.
My own sense is that your proposal can offer a flexible structure in application – above all, results oriented, and not ideological; by which I mean not only that an item is simply carried out, or not carried out; but may be introduced in part, or perhaps phased in over a period (for example in equalising pension tax relief with income tax basic rate – Ch.6); it could by brought in with a phased cut in the rate, toward an eventual equalisation of rates. This could even be simultaneously equivalence matched by a phased reduction of the basic income tax rate (or higher basic tax allowances) to pass part of the benefit from the change, directly from high earners to low earners, to enhance their spending and discretionary spending capacity. Why do I say this, since it is easy to see my suggestion negatively, and suspiciously – as equivocation rather than equivalence?
My argument is twofold. The wealthy will contest everything to defend what they have; and they largely own the media; or at least dominate the news agenda. They largely own or can insinuate themselves into political parties when they need to, and “change shape like Proteus”*. Politicians are weak; instant followers, not leaders – and easily led by money and power. I believe that what I am sketching here may allow a faster political return for policy makers undertaking the change; by demonstrating some quite rapid benefits, and weaken the relentless case against change that will inevitable follow. Second, it establishes a principle of flexibility in the package. It cannot be defeated by opponents claiming it requires to be ‘all or nothing’: it demands an examination of the whole tax structure; and the most telling fact of all is that in Britain tax has been allowed to become an unwieldy, distorted, defective and Byzantine Gordian knot; that everyone can see is grossly sub-standard, ill-designed and deeply flawed. The Taxing Wealth Report provides a framework for fresh understanding of the issues and provides usable solutions.
*”I can add colours to the chameleon,
Change shapes with Proteus for advantages,
And set the murderous Machiavel to school.
Can I do this, and cannot get a crown?
Tut, were it farther off, I’ll pluck it down.” (Henry VI, Part II, Act 3, Scene 2). I am afraid I have come to think this neatly encapsulates the methodology of the British mainstream Press, a little too closely.
John
Apologies – a family birthday last night
Thanks for the comment
How to use this is the big question now
But this morning’s video is already going really well on TikTok
Richard
Excellent content IMO, but – doubtless a personal quirk – I found the the bouncing-ball-singalong-effect subtitle highlighting rather irritating.
I get that
But, lots of people watch social media in public spaces with the sound off and read the captions so they are essential, everyone says
Sorry…..
I suspect this is a result of using the default auto-generated captions Google adds on upload to YouTube. They are shown as speech to text type translations (hence the one word at a time display that I suspect Bob is describing as karaoke-like – and also explains the ISA to isis interpretation another commenter observed). I am certain most regular users of YouTube that use subtitles understand when they are auto generated, and can make sense of these quirks. I personally think it is amazing that every upload has subtitles by default, this wasn’t the case 5 years ago. These will do perfectly for now.
Further down the line, Thomas might want to look into options around uploading your own subtitles, especially if you have written a script anyway or are using a lot of abbreviations or terminology that may not be well auto-scripted. If nothing else, for his own skills as I think most video bloggers end up loading their own for the finesse factor when they get good enough. Here’s they page on it anyway:
https://support.google.com/youtube/answer/2734796?hl=en#zippy=%2Ctype-manually
He’s done a great job with this one regardless.
Actually, these ones were done on Descript. But the point you make is right – and we have discussed it. However, this week we were working under massive pressure and we just did not have time to get this right. However, he has a bit of a perfectionist streek in him, which I like, and I have no doubt he and I will look at this. He’s already pushing me on ideas and I like that.
I am a long time lurker of this blog and I love it. Everyone here is intimidatingly knowledgeable!
Richard, your explanations are incredibly accessible, so it makes me happy you are trying out other media to reach more people. It is always nice to see a talking head.
I do worry that the populace has been so disconnected from any sense of democratic power that even though you have a very sensible proposal to improve taxation… if there is no feeling of control over how that tax is then spent, the general public will likely just shrug their shoulders with indifference. We just don’t understand what ‘they’ are doing, or trust they will do what they say.
This is not meaning to be a negative comment, just genuinely seeing the elephant in the room re: achieving the dream, and I’d like to see some talk about that too I suppose.
Accepted
This is the theme of work I have done and will be doing with GIFT. See https://fiscaltransparency.net/making-tax-work/ and https://fiscaltransparency.net/gift-principles/
Thanks for this important public service explanatory video. In future can you place a direct link to the video itself as that is what I will want to place on the Bright Green website for interested parties to access it directly. I found the link here: https://www.youtube.com/watch?v=Iuknxb3yNQQ
Keep up the great work.
Ok