The super-rich may not be much good at running the country, having engineered the worst financial crash for nearly a century, but they are certainly assiduous at justifying their own greed. Yesterday the Vickers Commission on Banking proposed a firewall between retail and casino investment banking designed to check profiteering from reckless speculation which is then bailed out by taxpayers if it goes disastrously wrong. The main complaint was that it would reduce their lending to homeowners and business – as though they haven’t already massively reduced such lending to bolster their own profits.
Then they say it will reduce their tax payments to the Treasury which reached £25bn in 2006 – as though the present banking system which so profits them hasn’t cost taxpayers the gargantuan penalty of £850bn in keeping the banks afloat. Then they say if they can’t get their way, particularly Barclays and RBS, they’ll up-sticks and go abroad – a blackmail where we should perhaps call their bluff if we want to avoid saddling the country with crippling costs again. What they don’t say is that all these claims about loss to the public interest are really about preserving their colossally lucrative and privileged position at the expense of the country as a whole.
Then there’s all this specious pleading about the 50p tax rate on the super-rich (about 300,000 persons, the 1% highest earners) that it won’t even raise extra money because of widespread tax avoidance/evasion and will (once again) risk losing wealth-creating entrepreneurs and fooloose talent. This is really the most threadbare rationalisation to cover their greed. The use of tax avoidance and evasion is not a reason to stop a fair tax being imposed, it’s a reason for putting into legislation a generalised anti-tax avoidance principle (GANTIP). A 50% tax rate (modest by both US as well as UK standards over the last 60 years) might actually make the rich work a bit harder, which everybody else is being expected to do to maintain their standard of living.
Their job-creating capacity is greatly exaggerated – over the last 30 years many of them have been paid exorbitant salaries precisely for organising large-scale redundancies. And if flee abroad (which is highly unlikely apart from oddballs like Tracey Emin), would anyone notice? The culture they represent of bling and ostentatiously extravagant consumerism is one we could all do without.
These lazy slogans and sloppy arguments should be seen for what they are – special pleading to keep wealth as unevenly and unfairly distributed as it is. Rather, if if the IFS is right today to forecast that living standards will fall by a drastic 10% over the next 3 years, there is a very strong case for raising the top rate on the richest for those 3 years to 60%.
