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Today’s super-rich are wealthier than in Victorian times

by In Wales Sun Sep 7th, 2008 at 05:14:31 AM EST

Taken from a TUC Press release on the eve of their Annual Congress in Brighton;

The TUC pamphlet – Do the super rich matter? - shows that the wealthiest few in the UK now own as much, if not more, than their equivalents did at the end of the nineteenth century. This surge in wealth at the top has overturned the advances made in a century that saw the gap between rich and poor narrow as a result of progressive taxation, the growth of trade unions and regulation.


Do the super rich matter? calls for a series of policies to reverse the trend including a new minimum tax rate for those earning more than £100,000.

The TUC will say that a minimum rate of tax – which should start at 32 per cent for those earning between £100,000 and £150,000 and rise to 40 per cent on salaries of more than £200,000 – would not increase any tax rates, but would limit the tax reliefs and tax avoidance measures open to the well-off and could raise £5 billion.

We've been calling for those tax loopholes to be closed for a great length of time. Yet still the Government keeps on playing into the hands of the rich at the expense of the entire economy and any hope of genuine progess on addressing issues around social justice.

The main source of the new wealth has been the growing power of “financialisation”. The most obvious example of this is the huge profits made from selling sub-prime mortgages wrapped up in exotic financial instruments. These turned out to be near worthless and led, not just to many losing their homes, but to the credit crunch which is now causing world economic slowdown.

Soaring corporate pay has not secured any significant improvement in the nation’s productivity and innovation record. Today’s new rich tend not to have made their money by building firms and products but to be those who have taken “advantage of today’s more pro-rich culture to grab a larger slice of the cake by taking giant risks with other people’s money and ensuring someone else pays when they call it wrong”.

If the celebrity rich are excluded, most of today’s super-rich come from relatively privileged backgrounds.

So, the growth of the super rich section of society can be shown to be socially divisive, damaging for the economy, increasing inequalities and on a moral level, deeply unfair.

Can the blame for the credit crunch be put on the super rich, for their reckless risk taking with other people's money, pocketing the profits and passing on the losses?

What about the house price bubble and the difficulties in getting a mortgage or finding affordable homes?

It's about time that the trend for Robin Hood in reverse was stopped with a fairer tax system that sees better redistribution of wealth going where the money is needed.

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The trade unions point out what the media fails to:

Despite claims from Business Minister John Hutton that the Government is powerless to close the widening wealth gap, this report lays out a range of economically and politically feasible measures that could cap unjustifiable fortune building at the expense of others and secure a fairer distribution of rewards:

  • Banks should run higher levels of capital requirements to improve countercyclical policy.
  • Greater transparency is needed in the extent of risk inherent in financial products.
  • Private equity companies should have the same disclosure requirements as public companies.
  • International controls need to be strengthened.
  • Bonus payments should be deferred until the performances of those receiving bonuses become clear.
  • Institutional investors need to take a greater role on pay, while remuneration committees need to be strengthened.
  • The Competition Commission should launch an inquiry into the fees charged by investment banks.
  • The Government needs to reassert a commitment to the principle of progressive taxation.
  • New rules should limit the tax relief available on leveraged loans.
  • Inheritance tax should be replaced with a lifetime receipts tax.
  • Capital gains should be treated as income.
  • A much more concerted attack is needed on tax avoidance by, for example, introducing a minimum tax rate for those earning over £100,000 and taking a tougher stance on the non-domiciliary rule.
  • The Government should finance either a regular independent social audit that analyses the impact of increasing wealth concentration on wider life chances or establish a permanent Wealth Commission parallel to the Low Pay Commission.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Sep 7th, 2008 at 05:44:47 AM EST
Where's the tip jar/seed comment?

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Sep 7th, 2008 at 05:45:02 AM EST
[ Parent ]
Done!
by In Wales (inwales aaat eurotrib.com) on Sun Sep 7th, 2008 at 05:58:35 AM EST
[ Parent ]
We've had plenty of discussion about equality issues on ET this week, and here is the crux of it all in many ways - that massive gap between the rich and poor and the greed of the rich to keep getting richer no matter what the impact on wider society is.
by In Wales (inwales aaat eurotrib.com) on Sun Sep 7th, 2008 at 05:58:23 AM EST
the growing power of "financialisation"

aka The Anglo Disease.

The globalisation of finance and the growth of tax havens allow the super-rich to blackmail nation states by threatening to pull out and go totally offshore if tax rules are not fixed for their benefit. We need international response to that, yet the marketistas in charge of the EU insist that countries within the internal market should practise tax competition.

If the UK were to show the way as the TUC suggests, that might have some influence on the rest of Europe. As things stand, there's a fat chance of that...

by afew (afew(a in a circle)eurotrib_dot_com) on Sun Sep 7th, 2008 at 06:00:20 AM EST
There are a couple of good articles in the Sunday press.

One re fairness in taxation, and the other in connection with central vs local taxation.

Firstly, Ian Bell, in the vaguely left leaning Glasgow Herald, writes a thoughtful essay on

Is there any such thing as a fairer tax?

which I felt deserved a response in the online "Comments", as follows...


A good starting point would be a tax on privilege.

Exclusive rights of use of a Commons, such as land, non-renewable energy or even the "Creative Commons" of intellectual property,all fall within this category.

As does the privilege of Limitation of Liability enjoyed by investors.

So, a tax on Land Rental Values (or "Location Benefit Levy") is not a bad start. In Denmark it used to gather in - relatively painlessly, and completely unavoidably - around 30% of the tax take, although this is withering on the vine now that the people who own Denmark are in power.

Those who cannot afford to pay in cash could simply give up a minor %age of equity - a variation on Professor Bell's concept.

A "Carbon levy" into an "Energy Pool" dedicated to direct investment in energy production and energy savings would be infinitely preferable to the completely fatuous idea of monetising something completely without value - ie CO2 - which is brought to us by the same people who brought us the Credit Crunch.

And why not abolish Corporation Tax, and replace it with a "Limited Liability Levy" collected at the clearing level on gross corporate revenues.

That would put an entire industry of professional tax advisers out of business overnight.

Secondly, there is an interesting piece from Michael Portillo in the Sunday Murdoch

Brown's fallen into Salmond's tax trap

which is as relevant to Wales as it is to Scotland.

I entirely agree with Michael Portillo's view of Salmond


In Scottish politics Salmond performs with an elegance and fluidity that make his opponents look elephantine, like a latterday George Best weaving his way around the flat-footed defenders of a political Raith Rovers.

that he runs political rings around everyone else. IMHO Salmond is the most accomplished UK politician there now is.

Portillo's take on central vs local taxation is based upon bitter experience in government, and worthy of reading on that account.


I became minister for local government just after the Thatcher government introduced the poll tax to England, the year after the Scots had started to pay it. I defended it then and later under Major I worked to scrap it and replace it.

Having thought hard about local government finance, I am convinced that an income tax supplement must be part of any equitable local tax system. I admit that earners would pay more and high earners much more, but greater social justice is not a powerful argument against it.

More importantly, raising the money in that way would enable local government to grow in scope and importance. By comparison with almost every country I know, we suffer from chronically weak local government and from central government that is too powerful. Decisions are made remotely, national policies are imposed although they are inappropriate in most localities and terrible amounts of public money get wasted.

At present local government is little more than an instrument of Whitehall. It is dependent for most of its income on the Treasury which can therefore dictate most of its policies. It simply cannot be otherwise for as long as local authorities are forced to raise their money through a levy that is unrelated to ability to pay.

I think that there is a strong argument that taxes on income (as well as the taxes on Privilege/Property referred to above in my comment) should all be collected locally and then passed upwards, for any regional and national spending deemed necessary.

ie reversing the existing centralised mechanism. My understanding is that income tax is collected in this way in Norway, I'm not sure about elsewhere.


The leading parties are constantly searching for a big idea that could be trans-formational. Salmond has hit upon it, admittedly for opportunistic reasons. Sadly, neither Brown nor Cameron is willing to offend income tax payers or risk competition from more effective city leaders.

I find it difficult to disagree, with a wry comment that most politicians ever have anything other than opportunistic reasons....

Salmond's approach is right in principle, and he cannot lose politically by taking it.

Portillo, who IMHO is both intelligent and a pretty straight guy, demonstrates in his last remark the need for a backbone transplant which could have made him a statesman.

After all, I once proclaimed that the poll tax would be the platform on which the Tories would win the following general election. In my defence, even as I said it I knew it was incredible.

The tragedy is, that he says this in his defence...

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Sep 7th, 2008 at 06:02:43 AM EST
I think everybody knew at the time that Portillo was not inclined to be politically "brave". Always an opportunist, he'd be fourth in line to stab an opponent in the back; wary to let others go first, careful to be seen joining in to claim the credit after. that was why the nation delighted when Twigg beat him in 97, he was a slimy duplicitous bastard and foes on all parts of the spectrum were happy to see him go.

That never stopped him being a reasonable thinker tho, he's been a much better commentator than politician. He and Diane Abbott runs rings round Andrew Neil on the latter's tv prog.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Sun Sep 7th, 2008 at 02:05:43 PM EST
[ Parent ]
Is the opposition to allowing local government to use taxes based on the ability to pay a way of appearing to support devolution while simultaneously undercutting it?  Fortunately, the Federal government does not have the power to do such a thing in the USA.  The states have to do it to themselves, instead.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 7th, 2008 at 09:05:20 PM EST
[ Parent ]
Everyone deserves some unfairness.

I mean, why "fair" payouts to banks and investors should be taken that much overwhelmingly seriously than support to those loosing jobs or suffering hunger?

by das monde on Sun Sep 7th, 2008 at 10:27:00 PM EST
[ Parent ]
Slightly related: to her credit, German chancellor Merkel commented this study:

DoDo:

A study by two economists is causing outrage: they 'calculated' that the low social/long-term unemployment benefits introduced by the infamous Harz-IV reform are too high, as people could live from significantly less, "provided they don't smoke and make calls"...

...in clearly negative terms.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sun Sep 7th, 2008 at 06:07:34 AM EST
An analogy:

The super-rich are the parents in the front of the car, they are drunk as all hell, putting blow up their nose, the car stereo is blaring, and the car keeps going faster and faster.  The rest of society are the kids in the back seat, wide eyed, screaming, terrified, but incapable of doing anything other than screaming "Daddy, slow down!".  How does this scene end?  You  KNOW how it ends!  Once the crash is over, IF any of the kids live, assuming their is any portion of the car still salvageable, some of those kids will get together and MAKE SURE THEIR PARENTS NEVER GET THE CAR KEYS AGAIN, assuming they're still alive and allowed to live.

Read into this as you will.  

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 7th, 2008 at 07:17:58 AM EST
This has always been the goal of what used to be called the bourgeoisie.  Socialism, or populism, or any number of movements under reform banners, developed in opposition to nation-states being run for the interests of the ownership class.  In the 19th century it was observed that the bourgeoisie had little or no interest in the nation as a whole. The bourgeoisie's interest in the state began and ended with property rights and the security necessary to protect property rights.  The state was to have no other function than to protect wealth accumulation.  When social democracy began to threaten the minimal state the bourgeoisie turned to politics and tried to convince the politicians that their narrow class interests were the interests of the whole nation.  The bourgeoisie did embrace the nation when protection of foreign markets and resources became a concern during the age of imperialism (Globalization exists for the same reason imperialism existed. War just became too costly).  But this was only to use the state's monopoly on violence to create investment stability in far off countries.  Beyond military support imperial administrators resented intrusion of home parliaments into colonial affairs.  

The ownership class is in a struggle against claims to rights or justice that would limit wealth accumulation at home and abroad.  In this they are against the conscience of the nation expressed in parliament or by a free press.  The true national model of the bourgeoisie is not a republic or a liberal democracy or a bureaucratic state or even an aristocracy with those troublesome noble obligations-these are all forms of oppression; it is the colonial outpost where society is powerless and administration focused on protection of wealth accumulation wields absolute power.  This relationship has turned from the philosophical arguments of the Manchester Capitalists and early Herbert Spencer into the righteous ideological movement, a kind of inversion of the Revolution of the Proletariat, of neoliberalism.  

by bellumregio on Sun Sep 7th, 2008 at 10:53:06 AM EST
the problem with tax rates is that most of the high earners don't pay PAYE and so the rate becomes irrelevant. It's all the tax avoidance schemes that various rich politicans have loaded the statute books with that are the problem. I'll never forget that Lord Vestey once boasted he only pays £50 tax a year, as a voluntary contribution, stating that once out of PAYE, paying tax was entirely voluntary with a good enough accountant.

Look at the viscount althorp, how come they pay next to no tax, or the Duke of Westminster. At the last election the Daily mirror reckoned that the top 10 earners in Britain avoided over £100 billion in tax. That's the problem, not 40% on £100,000

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Sun Sep 7th, 2008 at 02:10:40 PM EST
Helen:
Look at the viscount althorp, how come they pay next to no tax, or the Duke of Westminster.

That would change a bit with a tax on land rental values though, eh?

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Sep 7th, 2008 at 02:15:51 PM EST
[ Parent ]
No, because these guys have got all the pseudo-excuses to deduct sums from their tax-liable profits from their accountants. they can spread the load overseas, they can split liabilities between different entities.

You have to delete huge numbers of tax emempt or tax-replaceable items such as art on "public" display from the statue books. give them nothing to play with. then you can worry about what you tax. It's them avoiding it that's the problem.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Sun Sep 7th, 2008 at 02:30:47 PM EST
[ Parent ]
Helen:
It's them avoiding it that's the problem.

Not on taxing land rental values it isn't. Ask the Danes.

We are not talking about the buildings on the land - we are talking about the rental value of the location.

Land owners pay - and its immaterial if the owner's a trust in Nauru, or a Lichtenstein Anstalt - or they lose the land.

Bingo.

That's the beauty of it. Everyone pays.

And that's why the House of Lords scuppered Lloyd George in 1912 when the House of Commons voted it through...

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Sep 7th, 2008 at 02:41:13 PM EST
[ Parent ]
Indeed, a marginal tax rate of 100% on taxable income of 0 is 0.

Diversity is the key to economic and political evolution.
by Cat on Sun Sep 7th, 2008 at 07:48:28 PM EST
[ Parent ]
I read this on the front page of the Sport's Section of The Sacramento Bee (CA) newspaper, of all places.  Apparently the San Diego Chargers (US football) haven't sold out their stadium seats, apparently a lot of teams have the same problem, there is therefore a threat to "black-out" the game to the locals (force them to pay to go to the game rather than watch it at home on TV), the article admits that these are tough times financially for your average Joe, and their solution is TO BUILD A NEW STADIUM!!!  

Hey, your house is burning down!

That's OK, let me throw this gasoline on it, it will burn faster, and once it's all ashes, the fire's over.  Don't panic.  It's all under control.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Sep 7th, 2008 at 03:14:18 PM EST
So who dropped the top tax rate to such low levels? As you know, this identical phenomenon in the USA is the direct result of favorable tax rates for the wealthy, but mostly the low dividend/capital gain tax rate of only 15%. We were all led to believe that if you taxed the wealthy at the usual rate, 90%, and not make life easier for them, we would all die in poverty (see Sweden's tax rates for a wake up call).

Well, democracy has a lot of problems but one especially detracts from its benefits: it can be bought and sold. Free speech also permits lies so that you can eventually get poor people to vote for candidates who support the wealthy. One asshole I heard recently actually repeated an old mantras of the wealthy: when has a poor man ever offered you a job? That was at the Republican convention in the US. Reminds one of Dicken's London.

by shergald on Sun Sep 7th, 2008 at 03:25:24 PM EST
Not that it would be easy to do, but it would appear that fundamental reform of election finance, and possibly in GB of candidate selection as well, may be the only real solution to your problems.  My guess is the the closest thing to taxes that the very wealthy in GB pay are the contributions they make to politicians and political parties.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Sep 7th, 2008 at 09:12:42 PM EST


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