Aditya Chakrabortty claims that wealth tax proposals are a “pantomime of pseudo-radicalism” (What does the left want? A wealth tax. What will that accomplish? Very little, 20 November). He notes that the Wealth Tax Commission in 2020 estimated that an annual wealth tax of 1.12% on assets over £10m could bring in £10bn a year, describing it as “handy, but in Whitehall terms hardly life-changing”. This amount is far from trivial. Earlier this year, our government was trying to push through cuts to disability benefits that would have plunged hundreds of thousands into poverty to save half that. Although a backlash stopped them, Rachel Reeves has said that she can’t “leave welfare untouched” and is still considering how to claw billions from the most vulnerable. These amounts are completely life-changing to the people at the sharp end.
Although the annual wealth tax is leading the headlines, it’s not proposed in isolation. Groups like Tax Justice UK estimate that new taxes on wealth and pollution could raise up to £60bn a year. These funds should be used to redistribute wealth from the richest to the rest of us: investing in co-ops, taking assets back into public ownership and building council homes.
But annual wealth taxes would also be a step towards curbing the billionaire class. The wealth of British billionaires alone has grown by more than 1,000% since 1990, and we can all see the way that inequality of wealth has rapidly become inequality of power. It’s corrosive to our society. Billionaires should not exist – that should be a policy goal.
The American labour economics professor Marshall Steinbaum has estimated that a 2% wealth tax and inheritance taxes could undo this in 20-30 years in the US, and we need to be aiming for the same here. Annual wealth taxes alone may not fix everything immediately, but they’re a start to the deep structural change that our society needs.
Priya Sahni-Nicholas
Co-director, Equality Trust
• Aditya Chakrabortty is missing the point. A wealth tax is a political statement, not an economic policy, and it’s necessary. People’s lives are getting worse. Both established political parties have failed to improve things, so people are looking for an alternative. We are in a dangerous place with Reform UK edging its way towards Westminster.
Reform UK offers simple solutions. It says our problems are caused by immigration. “Stop the boats! Deport the foreigners – they’re taking your homes, jobs and GP appointments.” This is simplistic nonsense but it works because it’s simple. It fits in a tweet. The left needs an alternative and though its answer lies in long complex arguments about fiscal and macroeconomic policies, few people understand these. You can’t win an argument with someone who thinks “stop the boats” will fix their life by talking about marginal propensity to consume, asset-price inflation or capital controls.
So we need simple formulas that indicate change. One of these is the call for a wealth tax. It’s less an economic policy than it is a political truth that money flows to the rich in our economic system. It states the left’s intent to reverse this, that we need to distribute money downwards to give people better lives. Until someone comes up with something better, I’m going to keep arguing for a wealth tax.
Clare Burton
Shipley, West Yorkshire
• Aditya Chakrabortty writes that a 1% tax on the super rich would be insufficient for tackling wealth inequality. He’s right, of course, but the alternative solution he proposes – conducting something like a “giant raid” on “well-to-do families” with assets over £1m – is bizarre.
There are 150-odd billionaires living in the UK, and thousands with more than £100m. Why tax those with less wealth when we can tax these few individuals with truly extraordinary wealth at 10% or more? They won’t miss it and we’ll raise much more. Plus, threatening the much more numerous group with a “raid” seems to me like a great way to lose political support.
I am not a homeowner and indeed have no assets other than a pre-owned 2016 Vauxhall Corsa that would probably fetch me about £5,000, so I write this not out of fear but out of confusion.
Shannon Ray
Totnes, Devon
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