The richest 1,000 people in the UK have more wealth than the poorest 40% of UK households. The 1,000 richest saw their wealth increase by a staggering £82.5 billion last year, the equivalent of £226 million a day, or £2,615 a second.
The Equality Trust has found that this increase in wealth of £82.5 billion could:
Pay the energy bills of all 25.6 million UK households for two and a half years. Cost = £79.15 billion OR
Provide 5,143,819 million Living Wage jobs , or 2,923,333 million jobs paid at an average salary for a year. Cost = £82.476 billion OR
Pay the grocery bill for all of the UK’s users of food banks for 56 years . Cost = £81.5 billion OR
Pay two years’ rent for 4.5 million households (4,528,000 households) . Cost = £72.1 billion OR
Pay for 68% of the budget for the NHS in England Cost = £81.6 billion
Pay for 4 years of adult social care in England . Cost = £78.8 billion.
This totally unearned bonanza needs justifying somehow. It arises merely from the structure of wealth ownership, tax laws, and property holdings. The beneficiaries had to do little beyond what they currently own or do to enjoy this largesse.
One justification for the support of the current social structure of wealth ownership and control is that these people pay in absolute terms a good deal of tax. If you are destitute at least you don’t pay tax. Consider however that if one paid tax on income on say, £1,000,000, under current tax rates you would still get £540,676 per year. You pay nearly 44% of your income.
The median in the U.K. in 2017 is £27,000. Thus you take home £21, 641. You pay 20% of your income. You take home 4% of what the high earner does.
The millionaire pays as much tax in one year (£458,000) as a the median earner would (£5,200 pa) in 88 years. This is of course ‘inequality’.
So for every 1 person receiving £1,000,000, you’d need 88 on the median. Impossible of course due to what median means. The top 1000 get, receive, not ‘earn’, considerably more than what to them what would be a miserable £1,000,000 pa.
Those who earn up to the £150,000 threshold of 40% take home £90,176. Each extra pound they then get is taxed at 45%. What if that tax rate was 90%? This would mean someone getting £200,000 would receive £90,176 up to the £150,000 threshold and then another £5,000 taking it to £95,176. Someone getting £1,000,000 would after tax get £90,176 + £98,500 = £188,676.
The price of a loaf of bread would be the same.
So even at 90% marginal tax rates over the threshold, a millionaire would not have to worry about paying utility bills. Yes they pay more tax, but what’s left for them is hardly destitution. I digress. Millionaires to the 0.01% are paupers. Billionaires can avoid paying any taxes at all.
A second justification is that they are the ‘wealth creators’ and so deserve it all. I will not unpick this here because the rebuff is as obvious as the claim is spurious.
A third justification is that changing this structure would lead to economic chaos and left wing totalitarianism. This sets up a false dichotomy of either keeping hold of wealth or descent into tyranny.
A fourth justification is that the wealthy need to get ‘rewarded’ as they operate in a competing market, and that pay rates merely reflects market forces at work? Well, indeed but should that really be a plea to hold on to vast amounts of wealth? Are you really saying that you are miffed because someone else gets £5,000,000 pa while you get a ‘paltry’ £2,000,000 ?
There is a fifth technical justification – the Laffer Curve:
“In economics, the Laffer curve is a representation of the relationship between rates of taxation and the resulting levels of government revenue. Proponents of the Laffer curve claim that it illustrates the concept of taxable income elasticity—i.e., taxable income will change in response to changes in the rate of taxation.
The Laffer curve postulates that no tax revenue will be raised at the extreme tax rates of 0% and 100% and that there must be at least one rate which maximizes government taxation revenue. The Laffer curve is typically represented as a graph which starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate. The shape of the curve is uncertain and disputed.
One implication of the Laffer curve is that increasing tax rates beyond a certain point will be counter-productive for raising further tax revenue. A hypothetical Laffer curve for any given economy can only be estimated and such estimates are controversial. The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%. Generally, economists have found little support for the claim that tax cuts from current rates increase tax revenues or that most taxes are on the side of the Laffer curve where additional cuts could increase government revenue.
Although economist Arthur Laffer does not claim to have invented the Laffer curve concept, it was popularized in the United States with policymakers following an afternoon meeting with Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974 in which he reportedly sketched the curve on a napkin to illustrate his argument.”
See: Laffer Curve
If all else fails, fall back on classic economic models which are of course nothing more than mathematical representations of actual human behaviour in particular social and political contexts. They do not operate like the laws of physics. Hence they can easily change given different contexts.
With these vacuous and self serving justifications, the 1% keep the status quo going. Every society needs a unifying myth, and the powerful 1% need one even more so. Monarchy, Nation State, and ‘Free Market’ Capitalism (note: not financial/rentier/crony capitalism) are used as unifying myths to merely cover wealth and privilege. It is why right wing politics intuitively support monarchy, church and the flag because if those are dismissed by critics then that only leaves the theory of free market neoliberal capitalism as a defence against ‘the underclass’.
You decide if this level of wealth appropriation is good for social cohesion and health inequalities.