This week’s issue of The Spectator, out today (and
available for only £1 an issue here), dwells on the new anti-rich mood in Westminster. James will have more on his
cover piece later, but here’s the accompanying article by Dennis Sewell to get the debate flowing:
The Bible tells us that the poor will always be with us, but there is no good reason, and certainly no scriptural authority, to support the widespread belief that the rich will be too.
As capital has become more mobile, slipping across fiscal boundaries at the snap of an enter-key, so too have its owners, who are today only a Gulfstream ride away from somewhere where the climate
is more agreeable, the taxman less importuning and the populace less hostile.
In the past, we have indulged ourselves during downturns in the politics of envy, responded with tax and regulation — then watched as the globalised rich took flight. From bankers to the
Rolling Stones, those who could work anywhere decided not to stay as ministers made their pips squeak.
The terrible truth we need to acknowledge — a truth that has been shielded from us by high deficits — is that most of us, not just benefit claimants, are part of the dependency culture
now. We are staggeringly dependent upon the rich for the maintenance of our expensive public services.
A decent welfare state requires an appropriate balance between carriers and carried. HM Revenue & Customs believes that almost 27 million of our 30 million taxpayers will contribute less than
£6,000 per head in income tax this year. Those who have a child in a state school or who make more than passing use of the NHS are likely to be net takers, rather than contributors.
So who’s doing the carrying? The ‘squeezed middle’, as ever, will do their share. But those whom we call ‘the rich’ — the top 1 per cent of earners — will
contribute an astonishing 28 per cent of total income tax this year.
HMRC also identifies a tiny group of the super-rich, upon whom we have become dangerously reliant. These are 14,000 taxpayers earning on average a little over £2 million each. If just one
thousand of them were to leave the country, the economy would have to generate 300,000 extra new jobs, paying £20,000 per year to make up the resulting shortfall in the tax take. That would
stymie the government’s growth strategy in one rush to the Departures gate.
Those who scoff at the prospect of such an exodus tend to focus on those earning around £150,000 — doctors, lawyers, middle-ranking bankers with deep roots in this country. But look at
the seriously wealthy: 16 out of the top 20 entries on the latest Sunday Times Rich List come from outside the UK.
So do 33 of Britain’s 73 resident billionaires. Many only settled here before 2008 because of what Forbes magazine called our ‘billionaire support ecosystem’ of light-touch
regulation, compliant tax authorities and Cool Britannia mood music, which have now vanished.
Besides, we have recent empirical evidence of the high propensity of the rich to scarper. Some 5,400 non-doms actually paid Labour’s £30,000 levy in its first year of operation, netting
the Treasury £162 million. Alas, the number of non-doms dropped by 16,000 — depriving the Exchequer of an estimated £800 million in taxes. A survey by the investment firm Skandia
reported that more than half of Britain’s millionaires say they might quit the country. OK, they’re just thinking about it. But between the idea and the reality falls the shadow
chancellor. If George Osborne spooks them, aren’t they sure to cut and run at the prospect of Ed Balls? Threatened tax hikes and envious bad-mouthing of high-earners could wreck our recovery.
To insult, regulate and tax them will always be popular — but it is a political luxury, which Britain certainly cannot afford. We need the filthy rich to feel right at home here.
Dennis Sewell is a contributing editor of The Spectator.Tags: Business, Economy, Public finances, Tax, UK politics