How to save the economy: A one-off 20% tax on the richest 10%
The super rich have a patriotic duty to help save the economy
By Peter Tatchell
Huffington Post UK - London – 22 November 2011
Britain faces the biggest crisis of capitalism since the 1930s, including the potential for economic meltdown and a second Great Depression lasting a decade or more. The government’s Business Secretary, Vince Cable, has suggested that we are facing a crisis similar to wartime, with our national future at stake. In these circumstances, we need bold, imaginative and radical measures to fix the economy.
Britain has a national debt of around £950 billion and a government deficit heading towards £200 billion. The government’s solution is swingeing cuts in public services and consequent massive job losses. It even claims that cuts are the only option left.
Not true. There are serious alternatives.
As well as closing tax avoidance schemes, which could raise an extra £20 billion a year, there is a strong case for a national emergency tax on the fabulously wealthy, which could raise staggering sums – enough to clear the government deficit, pay off most of the national debt, kick-start the economy and avoid the need for damaging, painful cuts in jobs and public services.
The current economic crisis is so grave that it merits a ‘save the nation’ one-off 20% tax on the personal wealth of richest 10% of the population, as proposed by Professor Greg Philo and the Glasgow Media Group.
The wealthiest 10% of the population have combined personal assets totalling £4 million, million pounds. This is a million pounds multiplied 4 million times. These are the people who have £5+ million homes (often several of them), plus private yachts and jets and vast art collections. They can easily afford a once-only 20% tax on their immense wealth. Selling off one of their six houses, a Lamborghini or a Jackson Pollack painting won’t cause them to suffer.
Such a tax would raise a massive £800 billion. This is enough to pay off the entire government deficit more than four times over - or it could be used to clear most of the national debt. A reduction in the national debt would dramatically cut the government’s huge debt interest payments, which amount to around £48 billion a year. This is a vast sum of money that would be better spent on schools, hospitals, pensions and job-creation.
Alternatively, and even more useful in terms of reviving the economy, the £800 billion (or part of it) could be used to fund the proposed Green New Deal.
Modelled on Roosevelt’s 1930s New Deal, which got America back to work and ended the Great Depression, this Green New Deal would create lots of green jobs in energy conservation, renewable energy, public transport and affordable homes; simultaneously helping remedy climate destruction and kick-starting economic recovery.
The Green New Deal could ensure that Britain leads the world in sustainable economics and green technologies, opening up new export markets and boosting our economic revival for many decades to come.
According to a YouGov poll in June 2010, 74% of the public favour a one-off tax on the richest people in Britain. Only 10% oppose it.
With great wealth comes great responsibility. The mega rich have the capacity and responsibility to help the country out of the mess we are in. They benefited disproportionately from the boom times. Now that times are tough they should contribute disproportionately to get the British economy back in shape.
Put bluntly: The super rich have a patriotic duty to help save the economy by paying more tax. If they love Britain, they will be willing to do this, in order to help us win through the current economic crisis.
Contributing more tax is in the interest of those with huge wealth. If the economy fails, their losses will be even more than the greater tax they are being asked to pay. By giving more to the exchequer now they would be doing the morally right thing for the country and its citizens. They would also, by helping save the economy, also save most of their own riches. It’s enlightened self-interest.
The 20% tax rate would be the average. People at the less rich end of the richest 10% may pay a wealth tax of only 1% or 2%, while those at the very richest end might pay 30%. Everyone would be assessed individually. No one would be made to pay in ways that caused them hardship. The tax would be assessed and collected in the same way as other taxes, such as income tax and capital gains tax.
A variation on this proposal is that payment of the 20% tax could be deferred until after a person dies. This would stagger the tax raised over many years; giving the government a steady stream of finance to reduce debts and fund economic regeneration over the long term.
Alternatively, the tax would be payable now but as an interest-free loan to the government, repayable after, say, 10 years – once the economy is back in shape and other tax revenues are healthier. Under this version of the scheme, the mega rich would lose only the interest and any potential appreciation in the value of the assets they sold to pay the refundable tax. They would not forfeit the capital they loaned.