Tax the Elite!

Sitting in a hospital bed in the University College London waiting for my turn in the theatre to repair a dislocated metatarsal, I was able to catch up on some reading – (I had nine hours). The article written by Helen Lewis, deputy editor of the New Statesman attracted my attention ‘Who are the elite?’. In short any group of people which can be pointed to as having greater benefits than others unite supporters through envy; they may have more money, more power or better access to the leavers of control.

She made the point that the ‘elite’ are more often the anti-elite cheerleaders – on the right is Boris Johnson (Eton, Oxford, London Mayor, MP), who rages against the ‘unelected elite in Brussels’, and on the left we see Diane Abbott (MP since 1987) who rails against the ‘Westminster elite’. Then there are the supporters of Donald Trump, who are said to be rebelling against ‘the elites’, yet in many states, they’re the voters on above average incomes.

It is a human trait to unite against a common enemy. It is often said that during war, people are united in a way that they are not in times of peace they come together against a common enemy.

I live in a block of apartments, which was owned by a landlord, which without consulting the tenants, made our long serving resident caretaker, redundant, and installed a house manager. The tenants were so cross, they united against our landlord – to enfranchise the block and buy the freehold to get rid of it.

Politicians are well versed with the desire of humans to unite against a common enemy and if there is no obvious enemy, envy is a good substitute; find an ‘elite’; a group of people who in some way have more privileges than others and vilify them as having above average income, access to power or control.

This week we saw Nick Clegg going for the envy jugular once again with his suggestion that a wealth tax should be introduced. This is not a sensible political suggestion, we only have to look at the damage to the French economy under extreme socialist politics, or the stagnation to our property market at the upper end with eye popping ATED, CGT related ATED and IHT at 40% on all UK residential properties regardless of how they are owned to see how a suggestion like this is more to do with politics of envy than raising revenue.

‘If we want to remain cohesive and prosperous as a society, people of very considerable personal wealth have got to make a bit of an extra contribution,’ Nick Clegg declared. I agree, but a wealth tax is not how to go about it. What is needed is to understand what the rich want and are prepared to pay and make changes that will produce more revenue; not less.

Lady T proved, if tax rates get too high people find ways not to pay it. If income tax gets too high people pay themselves in other ways; capital gains or deferred income. Inheritance tax at a rate of 40% on an estate at death is unacceptably too high. Why do I say this, because most people want to find ways to avoid using the reliefs available; business property relief, spouse relief and gifts survived by seven years. If it were say 20%, much more tax would be raised, because they would not have the incentive to avoid it.

What is needed is a proper understanding of how the rich behave and think, and with this knowledge to be creative. The non doms should be encouraged to bring their wealth into the UK through new investment reliefs; rather than to leave it offshore where it is managed and controlled by the Swiss, the Channel Islands or in Liechtenstein to the benefit of their economy not ours.

The UK has an opportunity now that it has voted to leave the EU to be the most successful financial centre in the world. It should welcome the wealthy to our shores and encourage them to bring their money with them. As mild mannered Bernard Jenkin MP said on radio 4 Breakfast Program, we must not ‘kill the goose that lays the golden eggs’. It may be a hackneyed expression, but he is right. Politicians need to dump the temptation to unite the voters through envy and look to new ways to raise revenue which is not through higher rates. If we were a little more understanding, determined and creative I believe it would not be difficult to make Britain ‘Great’ once again.

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