These are indeed interesting times to be a billionaire… I imagine. Even being able to class oneself as genuinely super-rich isn’t enough to insulate them from a bilateral bashing.
According to Forbes magazine, for instance, we have just seen the largest year-on-year drop in the number of billionaires since the last global recession.
As of March this year, it has suggested, there were 2,153 billionaires. They included 54 UK-based individuals who were worth a combined £182 billion.
If that economic buffeting wasn’t enough, the rich are now having to contend with renewed efforts to prevent them becoming any richer.
Wealth tax: Are billionaires about to become an endangered species?
Some would have been unnerved at the start of last week to hear Labour’s Shadow Chancellor John McDonnell outline plans to do away with non-dom status – something which, as I outlined elsewhere on this ‘blog, he dismissed as a “spurious scam”.
Calls to use tax as an international weapon to check the wealthy were amplified only days later when Bernie Sanders, one of the individuals hoping to be the Democratic candidate in the next presidential election, announced an even more aggressive strategy.
An Outrageous Level of Inequality…
In an attempt to confront what he described as an “outrageous level of inequality” in the US, he set out plans for a wealth tax which he calculated would raise as much as £3.5 trillion over the next decade.
Not exactly loose change!
Just in case there was any doubt about his objective, he told the New York Times:
“I don’t think that billionaires should exist”.
Only recently, such views would have been considered the sole preserve of left-wing radicals not mainstream politicians.
As evidence of such a shift, take the comments of former Prime Minister Tony Blair, who declared in 2005 that Labour was the “party of modern wealth creation”. Once upon a time, Lord Mandelson was “intensely relaxed about people getting filthy rich as long as they pay their taxes”
However, it also seems that the old ‘New Labour’ position, in which ministers are eager to seen as a friend of business, have also been adopted by others in Westminster.
In August, Boris Johnson, you may recall, unveiled two tax proposals of his own which would increase the higher rate of Income Tax from £50,000 to £80,000 and raising the point at which people start paying National Insurance contributions (NICs).
His suggestions were almost immediately shredded by the Institute for Fiscal Studies, which reckoned that they would only really benefit individuals with the highest incomes.
It’s not only economists who are dubious of Mr Johnson’s attempts to defend the interests of the well-off. A new survey has discovered that many of those who Johnson wants to buy into his plans are, instead, coming ’round to the idea of a wealth tax.
The study concluded that more than two-thirds of people questioned reckoned that earnings from wealth should be taxed either at the same level or more heavily than earnings from income.
What’s apparent is that we’re in an age of populism. Bold notions which appeal to any particular constituency will find favour.
Some may have merits but others are not necessarily sensible.
The need for balance
I’m not advocating any political position but trying to point out the need for balance.
The issue of redistributing wealth – something which Labour has mooted in its proposals to “integrate” independent schools – is incredibly emotive and would be very difficult to achieve.
Bear in mind, for instance, that some of those wealthy men and women in the crosshairs of Mr McDonnell and Mr Sanders already make sizeable contributions to charity.
Furthermore, not all have inherited wealth. A good number are entrepreneurs who have established and developed businesses which, yes, generate profits but are also employers which benefit the local and national economy.
The picture is clouded even more by the fact that falling into the bracket of what many would class as wealthy can be down to something as simple as geography, given the impact of property prices in different parts of the country on steadily rising Inheritance Tax receipts over recent years.
I would like to think that most readers of this ‘blog would, like myself, be in support of progressive and socially inclusive strategies which benefit society.
Many politicians, however, have discovered that it’s incredibly difficult to translate ideas which prompt positive headlines and enthusiastic hustings into policies that actually do work.
If you have any queries about this article, or a wealth tax in general, then please do get in touch.
Read more about HMRC below…