The 2021 Sunday Times Rich List will renew debate over how to prevent Britain’s position as one of the most unequal societies in the developed world from getting worse.
Those who argue for a wealth tax would usually face a withering response from the major international bodies that analyse the effects of taxation on economic growth. In previous decades a neoliberal consensus demanded wealth creators be given free rein, while everyone should accept that the extraordinary lifestyles of the super-rich was the price of innovation and decently paid jobs for the rest. In the 1990s the Clinton and Blair administrations felt unable to confront the proselytisers for trickle-down economics.
Times have changed. The Organisation for Economic Co-operation and Development, the Paris-based club of mostly rich nations, was once an honorary member of the neoliberal club alongside the International Monetary Fund.
Since the 2008 financial crash it has argued that wealth taxes need to rise unless governments are prepared to forgo sustainable economic success. It repeated the warning earlier this month, predicting that social unrest would erupt unless the rich were made to pay more.
Last year the IMF dropped its long-held opposition and said wealth taxes need to rise to pay for the costs of fighting the pandemic. And then in March, President Biden said that trickle-down economics didn’t work as he laid out plans for higher income taxes on those earning more than $400,000 (£282,000) and a 43.4% capital gains charge on taxpayers with incomes over $1m.
In the UK, capital gains tax is 20% regardless of the taxpayer’s income, unless they are selling a property other than their own home, in which case it is 28%. Inheritance tax is charged at 40%, but there are large loopholes for those with assets in trusts and £1m of property can be passed on tax free.
No wonder there are demands in the UK for higher wealth taxes. So far the Johnson administration has been deaf to those calls.
