This month at Davos, a group of billionaires and millionaires who are ‘proud to pay more’ in wealth taxes gathered in Switzerland at the World Economic Forum to demand the elite introduce wealth taxes to ‘help pay for better public services’ and to ‘turn extreme and unproductive private wealth into an investment for our common democratic future’.
This is in response to the relentless concentration of global and monopoly corporate power fuelling inequality by rewarding the wealthy, not workers; dodging taxes; privatising public services; and driving climate breakdown.
A Patriotic Millionaires-commissioned Survation poll of more than 2,300 respondents who hold more than $1m in assets (excluding their homes) reveals that 58 per cent support the introduction of a 2 per cent wealth tax on people with more than $10 million, and that 54 per cent think that extreme wealth is a threat to democracy. This desire for greater taxes on the wealthy is broadly supported by the UK public too and has been for some time, as the Proud to Pay More report documents. Public attitude surveys carried out as part of the Wealth Tax Commission showed a clear preference for a wealth tax over other types of taxation. In March 2020, Tax Justice UK in partnership with Survation found that 74 per cent of the public wanted to see the wealthy paying more tax, including 64 per cent of Conservative voters. Public Social Attitudes Survey data from 2021 shows that more than half of British people think the government should raise taxes. In May 2023, the Fairness Foundation found that 68 per cent of voters think the government should be doing more to tax people with wealth over £10 million. This is not surprising, considering that the UK’s absolute wealth gap is the second widest in the OECD, behind only the USA.
The public’s concerns about wealth inequality include that it’s fundamentally unfair, gives the wealthiest too much political power, and makes us a more divided society. That sense of economic unfairness is felt across party lines, and is especially strong when coupled with perceptions about the need to support investment in public health as argued by Paul Summerville and Eric Protzer in Reclaiming Populism: How Economic Fairness Can Win Back Disenchanted Voters.
You don’t have to look too far, however, to understand why this concern over wealth inequality and support for wealth taxes does not translate into policy change. In Europe and in the UK, corporations and their wealthy owners have eroded taxation over the last 30 years to such an extent that the average corporate tax rate in the EU has fallen by ten percentage points (32 to 22 per cent) and why in the last 30 years, seven out of eight EU countries got rid of wealth taxes. In the UK, most votes went to parties to the left of the Conservatives in 18 of the 19 general elections since 1950. Higher levels of income inequality, less influential trade unions, smaller shares of workers in unions and weaker collective bargaining are all associated with our first-past-the-post majoritarian democratic system and have contributed to long-term underinvestment in public goods and services. The inverted pyramid of power that we have in Britain means that on average, 38,264 votes are needed to elect one Conservative MP while 865,000 are needed to elect Caroline Lucas, Britain’s only Green MP. Labour’s decision to court wealthy business interests by abandoning its commitment to a wealth tax is best understood, if not condoned, within this context.
As Owen Jones wrote earlier this year of Rachel Reeve’s comments on her spending plans:
“Any politician who claims to be able to fix a country facing multiple overlapping crises without spending a lot of money is simply not being straight with the public. From record NHS waiting lists and an unprecedented squeeze in living standards to crumbling infrastructure and an ever-escalating housing crisis, Britain will not escape its current mire without colossal levels of investment.”
Nurses, doctors, teachers, emergency services, train drivers, barristers, academics, civil servants, with the help of unions, have been starting to raise awareness of the need for this investment and of how unequally structured – how unfair – our economy is. With growth likely to remain weak and inequitably distributed in the UK, and demographic pressures, high inflation, rising debt costs and weakened public services, governments will have to do more than raise income taxes by stealth as they have done in recent years. This will entail having to increase taxes in a more visible way – including through a one-off wealth tax. Karen Rowlingson and colleagues note in their work on public attitudes to a wealth tax that governments may lead, follow and even shape broader policy debate with the use of particular language and discourse but they may ignore public opinion at their peril – as the 1990 ‘poll tax’ illustrated. And as Gus O’Donnell said in the foreword to the final report of the Wealth Tax Commission, ‘governments have made radical changes to taxes when there has been public understanding that change is needed’.
In Uncomfortably Off: Why the Top 10% of Earners Should Care about Inequality, we argue that this shift in public understanding needs to come from those in society who may not have yachts or direct access to senior politicians, but who do service and legitimise the needs of those at Davos and who are themselves affluent but not excessively. They include all British MPs and most of the top echelons of government as well as a sizeable proportion of decision makers in the media, the third sector, political parties, business and academia, not to mention senior doctors, lawyers, most judges, consultants and the like.
It is this top 10 per cent who, despite their relative privilege, are worried about their income, and anxious about the future, particularly their children’s. They struggle to maintain their lifestyles and see the gap between themselves and the wealthiest 1 per cent growing quickly. Aligning their values with those above them on the income distribution isn’t working for them anymore. In the book, we argue that while the top 1 per cent may not have a need for public services and infrastructure, the top 10 per cent certainly do, both directly and indirectly. It is therefore now in their interests to reconfigure their sense of what is reasonable for governments to do for their citizens and then start a shift in the public conversations that they dominate, whether in the world of politics, economics or government. This includes, as the Proud to Pay More campaigners have done, thinking of tax in a different way. First, with awareness that we live in a country with a highly inequitable tax system in need of complete reform; second that once reformed, the tax system is a force for good not a burden, and the only means of addressing the biggest collective problems that can’t be solved individually. It may only be the downward mobility of their children that finally pushes them into action.
Gerry Mitchell is a freelance policy researcher, working most recently for the Think-tank for Action on Social Change (Dublin), Friedrich-Ebert-Stiftung (Stockholm and London) and the Foundation for European Progressive Studies (Brussels).
Uncomfortably Off by Marcos González Hernando and Gerry Mitchell is available here for £12.99 on the Bristol University Press website.
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