{"id":84172,"date":"2025-07-21T07:31:11","date_gmt":"2025-07-21T06:31:11","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=84172"},"modified":"2025-07-21T07:31:11","modified_gmt":"2025-07-21T06:31:11","slug":"why-has-inequality-grown-and-how-can-we-make-sure-that-the-rich-contribute","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/07\/21\/why-has-inequality-grown-and-how-can-we-make-sure-that-the-rich-contribute\/","title":{"rendered":"Why has inequality grown, and how can we make sure that the rich contribute?"},"content":{"rendered":"<p><em>This is a summary of the presentation I intend to make to a Citizens' Assembly this morning:<\/em><\/p>\n<hr \/>\n<p><strong>Talk to the Citizens\u2019 Assembly <\/strong><\/p>\n<p><strong>21 July 2025<\/strong><\/p>\n<p><strong>Summary<\/strong><strong>\u00a0<\/strong><\/p>\n<hr \/>\n<p><strong>Why has inequality grown, and how can we make sure that the rich make their contribution to society?<\/strong><\/p>\n<hr \/>\n<p><strong>\u00a0<\/strong><strong>Why has inequality grown?<\/strong><\/p>\n<ul>\n<li>Let\u2019s start with data on UK wealth from the Office for National Statistics:\n<ul>\n<li>The bottom 10% (about 5.4 million adults) had an average wealth of <strong>\u00a312,835<\/strong> in 2022.<\/li>\n<li>The top 10% had <strong>\u00a32.35 million<\/strong> on average.<\/li>\n<li>The top 1% held over <strong>\u00a35 million<\/strong> each on average.<\/li>\n<\/ul>\n<\/li>\n<li>In total, <strong>58% of UK wealth is owned by the top 20%<\/strong>, and <strong>37% by the top 10%<\/strong>.<\/li>\n<li>This shows starkly that we have <strong>massive wealth inequality<\/strong> in the UK.<\/li>\n<li>What does that mean in real terms?\n<ul>\n<li>The bottom 10% only have some personal property \u2014 no financial security at all.<\/li>\n<li>The top 10% have over <strong>\u00a3300,000 in the bank<\/strong>, enough to absorb almost any shock.<\/li>\n<li>This is the difference between <strong>having wealth and being permanently vulnerable<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<p><strong>How did we get here?<\/strong><\/p>\n<ul>\n<li>Historically, wealth was accumulated by:\n<ul>\n<li><strong>Enclosing land<\/strong>, claiming it and charging rent.<\/li>\n<li><strong>Colonising other nations<\/strong>, enslaving people and extracting their resources.<\/li>\n<li>Exploiting <strong>mineral resources<\/strong> without paying for environmental damage.<\/li>\n<\/ul>\n<\/li>\n<li>Today, extraction continues through:\n<ul>\n<li><strong>Monopolies<\/strong> \u2014 water, trains, energy, mobile phones \u2014 all protected by the state.<\/li>\n<li><strong>Banks and tech companies<\/strong>, which dominate markets and extract profit daily.<\/li>\n<\/ul>\n<\/li>\n<li>Meanwhile, the <strong>system is rigged<\/strong> in favour of wealth:\n<ul>\n<li>In my 2024 Taxing Wealth Report, I showed average tax rates by income group.<\/li>\n<li>The richest pay <strong>lower average tax rates on total economic gains (earnings plus wealth increases)<\/strong> than the poorest.<\/li>\n<li>On new wealth gains from 2011-2019, the richest pay about <strong>4% tax on average<\/strong>.<\/li>\n<li>This creates a <strong>rank tax system that promotes inequality<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li>In fact, every taxpayer in the top 10% <strong>receives an effective subsidy<\/strong>:\n<ul>\n<li>Through tax relief on pensions, they get <strong>nearly \u00a39,000 a year on average<\/strong>, more than maximum Universal Credit or PIP payments.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<p><strong>So, how do we make sure the rich pay?<\/strong><\/p>\n<ul>\n<li><strong>Not through a wealth tax<\/strong>, at least not yet. After 42 years in tax, I know:\n<ul>\n<li>Wealth taxes are easily avoided, hugely costly to administer, need immense political capital, and would likely raise only around <strong>\u00a310 billion a year<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li>We can raise far more, more easily, by fixing the existing system:\n<ul>\n<li>Ending <strong>pension tax subsidies for higher-rate taxpayers in the top two income deciles<\/strong> could raise <strong>\u00a314 billion<\/strong>.<\/li>\n<li>Charging the equivalent of <strong>National Insurance on investment income<\/strong> over \u00a35,000 a year could raise <strong>\u00a318 billion<\/strong>.<\/li>\n<li>Applying <strong>VAT to banking services<\/strong> (mostly used by the wealthy) could raise <strong>\u00a38 billion<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li>The real key is to <strong>close all the loopholes, anomalies, allowances and low tax rates<\/strong> that currently let the wealthy dodge tax.<\/li>\n<li>Only when that is done should we even consider a wealth tax \u2014 and we are <strong>nowhere near that yet<\/strong>.<\/li>\n<\/ul>\n<hr \/>\n<p><strong>In summary<\/strong><\/p>\n<ul>\n<li>Inequality has grown because wealth is heavily concentrated and protected by systems of extraction, monopolies, and tax privileges.<\/li>\n<li>The wealthy pay less tax on their rising wealth than ordinary people pay on their earnings.<\/li>\n<li>We can make them pay more by reforming existing taxes:\n<ul>\n<li>Scrapping pension tax subsidies for the rich, taxing investment income like work, and making banks pay VAT.<\/li>\n<\/ul>\n<\/li>\n<li>That\u2019s a fairer, simpler way to make the rich contribute, without the pitfalls of a premature wealth tax.<\/li>\n<\/ul>\n<hr \/>\n<p>I look forward to your questions.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is a summary of the presentation I intend to make to a Citizens&#8217; Assembly this morning: Talk to the Citizens\u2019 Assembly 21 July 2025<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/07\/21\/why-has-inequality-grown-and-how-can-we-make-sure-that-the-rich-contribute\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[204,35,211,16,147,106,97,209,222],"tags":[],"class_list":["post-84172","post","type-post","status-publish","format-standard","hentry","category-economic-justice","category-economics","category-education","category-ethics","category-inequality","category-politics","category-tax-justice","category-taxing-wealth-report","category-wealth-series"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/84172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=84172"}],"version-history":[{"count":2,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/84172\/revisions"}],"predecessor-version":[{"id":84174,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/84172\/revisions\/84174"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=84172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=84172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=84172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}