Make no mistake, I am not a particular fan of Jeremy Corbyn. The increasing narrow-mindedness of the Labour party under his leadership, the response to the antisemitism and sexual harassment scandals, and the general disintegration of the party over the last year are all red flags when considering a potential Labour government.
But core principles held by the Labour leadership are more straightforward than fraught intra-party politics. They are left-wing for sure, socialist in nature – and they seem to have frightened the super-rich beyond measure.
Under a Corbyn government, all inheritances above £125,000 would be taxed; a 45p tax rate would be levied on income above £80,000 and a 50p rate on incomes above £123,000. Ideas for enhanced workers’ rights include a 10% share of big firms for employees and a four-day working week.
All this appears to have sent high-net worth individuals into a panic. Wealth advisers claim that their clients are already making arrangements to transfer their money out of the country should a Corbyn government come into power. Some wealthy families have plans to leave the UK if Labour wins the election, including high-profile figures such as Phones4u founder John Caudwell. These individuals threaten to take themselves – and their economic contributions – out of the UK and move to tax havens such as Monaco. And there is no denying that super-rich individuals contribute much to the UK’s coffers: for 2016-17, nearly a third of all tax raised was paid by 381,000 taxpayers earning over £150,000 a year.
But while the biggest earners certainly contribute in terms of income tax, vast amounts of the UK’s additional wealth (coming from property, inheritance and assets mostly) remains largely untaxed. The situation is such that while the poorest 10% of taxpayers lose approximately 47.6% of their income to taxes – both direct and indirect – this figure drops to just 33.5% for the richest 10% of households. That’s just 33.5% of a much larger income and overall wealth.
Indeed, we have been lenient on wealth in this country for a while – be it that of individuals or big corporations. The UK already has a low rate of ‘top-earner’ tax when compared with many other European countries. As for corporation tax, EU average rates are 22.5%, while corporations in Britain pay just 19% of their non-ring fence profits. Admittedly, there are arguments to be made that more corporation tax can ultimately be collected when levying a lower rate (this is more likely to prevent corporate dishonesty or offshoring), but the UK is already on the lower end of the spectrum.
Yet the real issue at the heart of this often goes unexplored. While people argue over the realities of wealth inequality in the UK today, with some saying it is not harmful at all, why is it that the UK’s super-rich can so brazenly eschew the thought of paying more tax? Why is it that they can openly and without shame admit that they would rather leave the UK than pay towards a better society for those less well off?
The strange thing is that so many of these super-rich boast about the amounts of money they give to charity. John Caudwell himself has professed that he will leave 70% of his money to charity; individuals like Jeff Bezos, founder of Amazon, pledge billions to fighting homelessness, and yet front corporations that continually underpay tax. It seems that the super-rich have contrived to paint tax as a dirty concept, one that robs them of well-deserved money that they could otherwise voluntarily bestow on worthy causes.
This negative portrayal of tax is bolstered by narratives such as the perennial claim from the Conservatives that keeping taxes low is something done ‘for hard-working families’, when all the statistics show that these are not really the people who benefit. Across the pond, on the extreme end of unashamed, Donald Trump boasts that managing to avoid paying tax makes him ‘smart’. Such ideologies fester, and influence thinking across a wide spectrum of society.
But tax ought to be seen as a social duty. It may not be an optional payment, but that is why avoiding it is so thoroughly reprehensible. The rich may boast of their philanthropy, but the prevalence of this charitable behaviour only serves to convince us that being a caring society is not obligatory. As the belief in robust taxation is gradually eroded, society loses out on feelings of solidarity, communal responsibility and compassion with it.
Because while the super-rich remain unconvinced about paying what they owe, they cling on to a belief that they alone deserve their wealth. And this is neither true nor fair. The society we live in is heavily dependent on workers who are not adequately compensated to function as it does. Our public services – police forces, safe roads, and healthcare to name a few – benefit rich and poor alike. To forget this is to forget that society is collective.
But trends towards rising inequality in the UK suggest that this has already been forgotten. And so perhaps the only way to tackle this is to transform our thinking. When the super-rich complain about paying more taxes, it is up to writers and commentators to critique this instinct. When they suggest that they will simply offshore money that they would rather not pay tax on, then this should be treated as a source of shame. Theft often makes people pariahs in society; avoiding tax is theft too – and mostly perpetrated by those who have no need to steal.
