“You earn more than me. That makes you a member of the Privileged Elite and I hate you!”

15th April 2016

“You earn more than me. That makes you a member of the Privileged Elite and I hate you!”

Wow! What a week that was! A British political soap opera played out in a style only we can.

On Monday we could not see the Prime Minister’s tax returns; “A private matter” we were told. Nothing to see here, so move along. By the weekend those with nothing better to do could have spent hours poring over Cameron’s last 6 years of tax returns. It was open season for those who champion transparency and those who love to hunt down perceived privilege, tax avoidance/evasion and excess wealth.

We are now in the middle of a media feeding frenzy. Politicians rush to publish their tax returns – if they can find them! But why stop at politicians? Jeremy Corbyn has called for political journalists to do likewise.

Where does it stop? Why not extend it to business people, judges, lawyers, professional footballers? I have an idea – why don’t we all put our tax returns on the web so we can check each other out?

Hunting down cheating (definition down to personal choice) and those with more wealth than we think they deserve could become a national pastime. Throw in tax avoidance (again with definition down to personal choice) and we have a new Saturday evening TV game show – Cheat or No Cheat, perhaps.

Don’t get me wrong – I firmly believe we should all pay our taxes, that those with the broadest shoulders should bear the greatest tax burden, that tax evasion should be cracked down upon and tax avoidance made as difficult as possible. Corporate taxes should be paid at the rates which apply in those countries where profits are generated and not shipped abroad to countries with more friendly tax regimes.

There is however a trap here that some in the Labour Party are gleefully walking into. There is risk of conflating wealth with tax avoidance and evasion; that wealth of itself is a bad thing and should somehow be discouraged; that we should all be reduced to some kind of common denominator.

Wealth creation is a good thing. It should be encouraged, rewarded and recognised. Wealth creators should be given incentives such as tax breaks and enjoy high status and esteem within our society. Wealth creation is a skill in its own right. For example, Monarch Airlines were on the verge of going out of business until an organisation with skills and experience in turning around failing organisations acquired it, reorganised and reshaped it and Monarch is now a profitable company providing jobs and paying taxes. Something similar seems to be happening as I write in the Scunthorpe steel industry. Morrison’s convenience stores went on the same journey.

It is from the application of innovation and new skills that wealth arises and it is from that wealth that the taxes are taken that provides the healthcare, education, road network etc that benefits us all. In short the more wealthy we are as a society the better the common infrastructure can be.

Labour needs to make a clear distinction between its policies on inherited wealth and those who become wealthy from their own hard graft from a standing start. We need more Lord Sugars and J.K. Rowlings and fewer Zac Goldsmiths!

It is right for the Labour Party to champion fair tax policies and transparency and be firmly against opportunities which allow some to avoid tax but not others. Many small businesses in this country would have paid more corporation tax last tax year than Starbucks, Facebook, Amazon and Google put together and that is not fair. Failing to index link the 40% tax threshold is also unfair as it sucks more and more people into what then becomes a punitive tax system.

Labour needs to make a clear distinction between its fairness & transparency policy on tax and its policy on wealth creation. The question should not be “is wealth creation a bad thing?”, it should be “how do we generate wealth and distribute the gains for the betterment of wider society?”

One of the constant criticisms of the left is that it is good at spending but not so good at generating the means from which that spending comes. Eventually a Labour government will return and be faced, as in 1997, with a massive job of rebuilding services like education, health, transport and personal care upon which we all depend. There needs to be forensic attention given to how this bill will be met and that can only be through innovative approaches to wealth creation and support for the those with creative skills irrespective of how much they earn (as long as they pay their taxes!)

Labour can ill-afford to become an enemy of wealth creators.

By Keith Nieland

Please note: articles and posts on ‘Middle Vision’ reflect the views of the individual authors and not of all involved in ‘Middle Vision’

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One thought on ““You earn more than me. That makes you a member of the Privileged Elite and I hate you!”

  1. Hi Keith,

    I agree with most of what you say, but not with the following: “Failing to index link the 40% tax threshold is also unfair as it sucks more and more people into what then becomes a punitive tax system”

    The 40% threshold is less punitive than many think, because 40% rate payers are paying substantially less national insurance.

    We are still running a substantial deficit. In future, the state will have further pressures due to an ageing population, more health expensive treatment, and higher general expectations from public services.

    If we keep ruling out ways of raising additional tax revenue, then we’ll either have to make additional cuts, or we’ll run up larger debts, and the next generation will have to make these cuts, just to be able to pay the extra interest on the debt.

    The base 20% rate now seems to be politically untouchable, and other ways of increasing progressive tax revenue raise smaller amounts. However, when added together, they could still help a lot. Income tax is the most progressive form of taxation. I’d be sorry to see the broader sweep of progressive taxation become politically untouchable as well.

    – George


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