How to kickstart the UK economy – at zero cost to 99% of us

[Tony Gosling]

How to kickstart the UK economy – at zero cost to 99% of us
[]


By imposing a capital gains tax charge at 28% on 
the seriously rich 0.003% we could create 1.5m jobs over the next two years

Michael Meacher - guardian.co.uk, Thursday 31 May 2012 16.03 BST
http://www.guardian.co.uk/commentisfree/2012/may/31/how-to-kickstart-uk-economy

'Since the 2008 collapse, gains of the richest 
1,000 persons escalated by no less than £155bn, 
considerably more than the current total UK 
deficit.' Photograph: Graham Turner for the Guardian

When today even the EU's leading economic 
officials Manuel Barroso and Olli Rehn are openly 
urging growth policies rather than further 
retrenchment, the game's surely up. But before he 
takes a very deep breath, it's worth bearing in 
mind that a £40bn programme of infrastructure 
works and housebuilding could be generated at no cost to the exchequer at all.

The untapped source for this funding would come 
from taxation of the seriously rich. This group 
can be variously defined as stretching from the 
top 0.003% of the population (the richest 
thousand persons) to the top 10%. Whichever 
category is used, the wealth of the ultra-rich is 
far, far greater than most people realise – which 
may explain why it is never discussed in this era of austerity.

According to the annual Sunday Times Rich List, 
the richest 1,000 persons now sit atop of £414bn, 
a sum more than three times the size of the 
entire UK budget deficit. The richest 1% of the 
population, about 300,000 persons with an income 
of more than £3,000 a week, are estimated to 
possess wealth of about £1tn. The richest 10% 
control wealth of about £4tn. To put these 
figures in perspective, Britain's total GDP is £1.45tn.

Consider first that minuscule group in the 
stratosphere at the top, Britain's thousand 
richest. In 1997 they held assets of £99bn, but 
they took full advantage of New Labour's being 
"intensely relaxed about people becoming filthy 
rich" to nearly quadruple this to £336bn by 2010. 
That process of gargantuan enrichment now means 
that in order to get access to this exclusive 
club, one needs personally to command assets of 
at least £450m to get into the top 200, £750m to 
get into the richest 100, and no less than £1.4bn to break into the top 50.

It's not only that the very rich have colossal 
wealth, they also overwhelmingly monopolise it. 
The richest 1% of the population own a quarter of 
total UK wealth, and the richest half control no 
less than 94% of total wealth. Ownership of land 
is even more skewed: 69% of it is owned by 0.3% of the population.

Yet in the absence of a wealth tax, a mansions 
tax, a land value tax, or a supertax on excess 
gains, the super-rich are being required to make 
hardly any contribution at all to deficit 
reduction, even though many of them were directly 
involved in causing the financial crash in the 
first place. That is even more remarkable when 
there has been a real terms 6% drop in the income 
of the population as a whole since the 2008 
collapse, yet over the same period the gains of 
the richest 1,000 persons escalated by no less 
than £155bn, considerably more than the current total UK deficit.

The most recent incomes data shows this trend is 
continuing or even growing. Data published in 
January showed that the bottom tenth of earners 
got a 0.1% rise in pay in the previous year (that 
is, they had to take a real terms pay cut of 
nearly 4%) while over the same period the rise 
for the top FTSE 100 directors was 49%, nearly 
500 times greater. The average annual pay of FTSE 
100 chief executives is now about £4.5m, which 
works out at £84,615 a week. This compares with 
their low-paid workers on about £240 a week, a ratio of 352:1.

Even this is not the whole story. The very rich 
also largely monopolise the system of tax 
reliefs. In the case of pensions, this amounts to 
£21bn a year, of which two thirds is concentrated 
on the top 10% of the population. Equally, tax 
avoidance and evasion is very much the perk of 
the extremely rich, who command the armies of 
accountants and lawyers in order to organise it 
on an industrial scale, which is reckoned to cost the taxpayer £25bn a year.

What, then, should be done? In the short term, 
the most feasible approach is to impose a capital 
gains tax charge at the current rate of 28% on 
the topmost layers of wealth, the £155bn gains 
amassed by the 0.003% over the last three years. 
That would yield £43bn, more than enough to 
generate the public investment to create 1.5 
million jobs over the next two years. This could 
then steadily be extended to the remainder of the 
top 1%, which would provide the funds to widen and deepen the early recovery.

A wealth tax and land value tax, the details of 
which would have to be carefully drafted, should 
then follow in the medium term, and would achieve 
several purposes. They would resuscitate a public 
sector ravaged by the Tory ideological assault, 
curtail the grossest excesses of inequality that 
have disfigured the last three decades, and lay 
the foundations for an industrial and 
technological revival without which British 
living standards cannot be sustained. And all 
this without burdening the remaining 99% of the population.

http://www.guardian.co.uk/commentisfree/2012/may/31/how-to-kickstart-uk-economy 
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