In light of this week’s Millionaires for Humanity letter, is there any point in members of the wealthy elite calling for higher taxes in response to Covid-19?
Gary Stevenson, inequality economist and trader, says YES.
On Monday, 83 millionaires — myself included — signed an open letter calling on governments to raise taxes on people like us.
As someone who grew up poor in London’s East End and then made millions in the city betting on how inequality would prolong 2008’s financial crisis, I have spent many years studying inequality — and, unlike most, have experienced both sides of the coin.
Wealth inequality has increased enormously over the last 20 years, far out of proportion with income inequality. This is not just a social issue, it has clear economic consequences.
The rich save far more of their income than ordinary workers. This has driven asset prices upwards and left global central banks permanently failing to stimulate demand with neverending “emergency measures”.
Covid-19 will worsen this inequality. Data shows that high income individuals have accumulated significant cash savings during lockdown. In the absence of any redistribution, that will drive house and stock prices up even further, just as millions of low paid workers lose their jobs. Only a wealth tax can resolve this.
Miles Dean, head of international tax at Andersen UK, says NO.
Although it might have electoral appeal and may make the 83 signatories feel more comfortable with themselves, a wealth tax for the super-rich is unlikely to raise as much as those championing the idea think.
The number of UK billionaires is relatively small: according to Forbes, there are just 54 of them. Of the so-called “ultra-wealthy” with fortunes above $30m (£26.5m), only a few thousand live here. Fewer still are eligible to pay UK taxes since most are non-doms.
A handful of super-rich people pleading to pay more tax may seem commendable, but it is not the answer to the economic fallout from Covid-19. Some might cynically argue that the signatories should outline what steps they have taken to reduce their tax bill. Or for those who have inherited large fortunes, the steps taken by their relatives to mitigate against inheritance tax.
Very few people enjoy paying tax. The idea that the rich would be happy to pay lots more is fantasy.
Given the billions already spent on the NHS and the government’s apparent ineptitude over the Covid pandemic, the last thing that rich individuals should want is to give the government even more money that, in Boris Johnson’s words, “they can spaff up the wall”.
Main image credit: Getty