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Growth dividend plus ultra-rich 2011 gains could pay off entire deficit

The obvious question raised by the Sunday Times Rich List, published yesterday, is why the 1,000 richest persons in this country are not making any contribution to paying off Britain’s public deficit. These 1,000, just 0.002% 0f the population, all have wealth in excess of £70m, some 100 times as much – there are 73 billionaires in the list. Over the last 13 years their collective wealth has ballooned 4-fold from £99bn in 1997 to £396bn now. The increase in their wealth therefore over this period is just under £300bn, that is a massive explosion of wealth for each one of them on average of £300m. And what happened to them after the crash in 2008-9 when for 95% or more of the population a hard dose of austerity kicked in? In 2009-10 the wealth of the ultra-rich soared by £77bn and in 2010-11 it continued to soar by a further £60bn. So are we all in it together? Like heck, the rich privatise the gains and socialise the losses. So what should be done about it?

The response of the super-rich of course is not to offer a fair contribution to getting Britain out of the financial crash for which actually many of them were responsible – the bankers, hedge fund managers, commodity traders and the like who make up 6% of the total Rich List. Their reaction, like the big banks, is rather to threaten to leave the country. The impression they like to give is that the economic future of Britain depends on them. But there’s no truth in that whatever. What they splash their money on is hugely expensive real estate, buying up the top football clubs, taking over bling boutiques in upmarket stores and solons, and pouring vast sums into the playthings of London’s luxury exotica. For most of the very richest, rather little goes into solid investment in Britain’s industry and services, the lifeline of our economy and future livelihood.

So if they were required to pay their way in writing off the country’s deficit, would they leave, and if they did, would it matter? Almost certainly no more than a trickle would leave; it’s a bluff which should be called. One should never pay up to blackmailers. But the real point is if they left en masse, the country would hardly notice – the impact on the economy would be trivial, and the social effect would actually be beneficial by reducing the groresque inequality which lies at the root of so much of Britain’s scial pathology.

So what should be done? Clearly the most urgent requirement is for a wealth tax, starting at perhaps 1% of total assessed UK-sourced wealth. Second, there should be a crackdown on offshoring to escape tax: wealth created in Britain should be taxed whether or not the company is registered offshore, and tax havens should be closed down (half of them are UK dependent Territories). Third, a Financial Activities Tax should be introduced, and the non-dom loophole closed. Fourth, capital gains tax should be doubled above a high threshold from 28% to 50%, and a Land Value Tax introduced at progressive rates on the larges and most expensive holdings.

Will a Tory government do this? Never. But this is what Labour should now be campaigning on.

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