The Poorer Rich List

Three weeks ago, the Coronation presented a glorious spectacle of today’s Britain, a multi-ethnic, multi-cultural kingdom united by the ethos of service.

No more coronets, just kind hearts and meritocratic endeavour. Most non-royal dukes NFIed (Not Flipping Invited). Unknown earls – offering yellowing ermine and the whiff of mothballs – making way for the people-pleasing likes of Nick Cave.

The country’s landed aristocracy were banned from the Coronation like a Bourbon king’s discarded mistress from the palace of Versailles. It reflected the astonishing social change the country has undergone since 1953.

If our Head of State hoped his Coronation guest list would reinforce a sense of solidarity among his subjects, this would have been dispelled last weekend with the publication of the latest Sunday Times’ Rich List. Inaugurated in 1989, this annual wealth fest underscores the financial chasm between the 0.001 per cent and the rest of us.

The Rich List is primary source material for academics who want to track social change in the UK since the late Thatcher era. Then dominated by the landed gentry, today most listed are self-made and often from overseas. Now, fortunes are made through online businesses, mobile phone empires and hedge funds. These brave new worlds only began being created in the 1990s.

The Rich List is a political inconvenience for the Prime Minister. He’s in at No.275 – thanks to his wife’s wealth. Few women are listed. Top tip for inclusion: get yourself a Croesus-rich father, husband or ex-husband. Oddly, the Sunday Times seems to have forgotten to mention the partners of Ruth Parasol (No.221), Dame Margaret and Helen Barbour (No.274) and JK Rowling (No.191). Perhaps their dosh is not “shared with him”, as the ST cloyingly put it.

Paradoxically, the Rich List might present more of political problem for the Labour leadership. Slap in the middle of the online piece was a live poll: Should There Be a Wealth Tax?

Of the 21,500 who took part, just over half supported a wealth tax. The spotlight on Britain’s filthy rich must have enraged many readers. It is unsurprising if they wanted millionaires’ pips to start squeaking – and stabbed at the yes button.

The current post-pandemic economic fragility means that the gulf (and Gulfstream) between the Have Yachts and the Have Nots is especially stark.

Since the fall of Northern Rock in 2007 and the ensuing Global Financial Crisis, many household incomes have remained more or less stagnant.

For all the identification of the “squeezed middle” and “just about managing”, in the aftermath of the Crisis, policymakers failed properly to address the resentment among the country’s least well-off about their stalled wages. Pay packets went backwards, while banks were bailed out and bankers were too big to jail.

Now that the era of cheap credit is at an abrupt end and high inflation is upon us, even the Waitrose-shopping classes are feeling the pinch. Bitter about the cost of butter, today the Blue Wall seems as fed up as the Red Wall was back in June 2016 and December 2019.

Britain’s post-Pandemic cost-of-living crisis makes voters far more susceptible to giving the super-rich a real kick in the wallets. A YouGov poll in January found that three-quarters supported a one-off wealth tax of either one per cent on £10million and two percent on £5million. Around half were in favour of increased capital gains tax not only on shares but also on property.

Although not included in Labour or the LibDems 2019 election manifestoes, wealth taxes have crept on to the political radar.

A Wealth Tax for the UK (2020) from the LSE and University of Warwick suggests a one-off levy on all individual wealth above £500,000 (excluding a main house and pension), charged at 1 per cent for five years would raise £260billion. This is the equivalent of 9p rise in income tax.

This week, the International Monetary Fund suggested the reform of UK property taxes. Along with its 0.4 per cent growth prediction, it called for “rebalancing away from transaction taxes”, which in plain English means the abolition of stamp duty. Those who are about to celebrate should note that the IMF’s call for “updating property valuations” echoes a proposal in the Wealth Tax report. Such valuations are needed for either a mansion tax or a wealth tax.

Labour’s obsession with driving Non-Doms out of the UK will mean that the £7.9billion they paid in direct taxes to the UK in 2021 will have to come from other taxpayers. The indirect taxes, for example VAT, staff levies and stamp duty, are incalculable. These funds will be welcomed by Treasuries in Dublin, Lisbon and Athens, all of which have introduced separate tax arrangements for resident foreign nations (i.e. Non-Doms). In 2017, President Macron abolished France’s wealth tax, which he said had made the country “Cuba without the sun”.

Windfall taxes on stellar British energy companies, hitting Non-Doms, reversing reforms to the life-time pension allowance ... The opposition parties love to tax, which puts the deepest blue water between them and the Conservatives.

The Rich List wealth tax poll divided 52:48 in favour, an unhappy omen. The 52 per cent should be asking themselves how long it would be before a red-orange-green coalition came after their assets. After all, the 40 per cent tax rate burden was only supposed to be for, cliché alert, the broadest-shouldered.

In his book Values (2021) former Bank of England Governor Mark Carney reflects on the civic virtue shown during the pandemic. “People have acted out of human compassion not financial optimisation. They prioritised the health of their families, neighbours and those they never met.”

As Dr Carney suggests, the economy was put on life support to save lives. The invoice for two years of lockdown is now in. The road to economic recovery will be a long, hard one. But taxes on the assets of Britain’s wealth creators are not the convenient short cut they appear.

Superficially attractive, but sowing social division, spite and envy, wealth taxes also make for ugly politics.