UK
Tax the rich: five measures that would raise billions for public services
Rachel Reeves wants £40 billion in cuts and tax rises—it's a political choice to make working class people pay
Chancellor Rachel Reeves claims there is a £40 billion “black hole” in the economy (Pic: Kirsty O’Connor on Flickr).
By Tomáš Tengely-Evans
Wednesday 16 October 2024
Don’t believe chancellor Rachel Reeves’ lie that she has to slash tens of billions of pounds from public spending.
Reeves is preparing to make £40 billion worth of cuts and tax rises in the budget on 30 October. She told a cabinet meeting this week that plans to fill a “£22 billion black hole” will only be enough to “keep public services standing still”.
Reeves has already snatched winter fuel payments from ten million pensioners under the guise of “filling the black hole”—and now she’s coming for more.
Bosses are demanding that Labour doesn’t increase taxes—even by the smallest amount—on the big business and the rich. And Starmer’s Labour, desperate to suck up to the bosses, will oblige unless there’s a fight.
The money is there to deliver the billions of pounds worth of investment that working class people need in schools, hospitals, housing, wages and much more. But it’s in the wrong hands—the hands of the rich and corporations.
The Tax Justice group has highlighted a series of measures that could raise billions of pounds:
1) A wealth tax of just 2 percent would raise £24 billion a year
Tax Justice says that levying a tax on assets worth over £10 million would hit 20,000 of the richest people in Britain.
2) Equalising “capital gains tax” with income tax would raise £16.7 billion a year
This would hit the super-rich who profit from selling shares and property—gains from owning capital.
Earned income, such as working class people’s wages, is taxed at rates of 20 to 45 percent. But unearned income in the form of capital gains is taxed at rates in the range of 10 percent to 28 percent.
3) Applying National Insurance Contributions to unearned income would raise £10.2 billion a year
Currently, National Insurance Contributions are only levied on earned income.
But why shouldn’t rich people pay it on income from dividends from shares, rent from property and interest on savings?
4) Closing loopholes in inheritance tax could raise £1.4 billion a year
Inheritance tax rules allow the rich to pay as little tax as possible.
For example, an estate worth over £10 million should pay 40 percent—but on average pays a rate of just 17 percent.
5) A tax on share buybacks could raise approximately £2 billion a year
Some of Britain’s biggest corporations use a method known as “share buyback” to boost profits. This sees companies buy their own shares, which reduces the total number of shares on the market and inflates the value of shareholders’ assets.
It enriches shareholders, board members and top executives. A tax of just 4 percent—a very limited measure—could raise £2 billion.
Decades of neoliberalism have seen both the Tories and Labour push free market policies that concentrated wealth in the hands of a tiny minority. Tax increases on the rich should only be the start of breaking with neoliberalism.
Apologists for the bosses’ system claim that all wealth is a reward for capitalists’ “hard work” and “business acumen”.
In reality, working class people make the profits—whether it’s in retail, transport, manufacturing or public services—and keep the wheels of the economy turning. If they stopped work, the bosses would soon be out of pocket and services wouldn’t run.
So why should this wealth be in the hands of corporations and the rich? It should go to meeting social needs.
But it will take a much bigger fightback on the picket lines and streets to beat Labour’s austerity mark 2—and win a system that puts people before profit.
Wednesday 16 October 2024
SOCIALIST WORKER Issue
Don’t believe chancellor Rachel Reeves’ lie that she has to slash tens of billions of pounds from public spending.
Reeves is preparing to make £40 billion worth of cuts and tax rises in the budget on 30 October. She told a cabinet meeting this week that plans to fill a “£22 billion black hole” will only be enough to “keep public services standing still”.
Reeves has already snatched winter fuel payments from ten million pensioners under the guise of “filling the black hole”—and now she’s coming for more.
Bosses are demanding that Labour doesn’t increase taxes—even by the smallest amount—on the big business and the rich. And Starmer’s Labour, desperate to suck up to the bosses, will oblige unless there’s a fight.
The money is there to deliver the billions of pounds worth of investment that working class people need in schools, hospitals, housing, wages and much more. But it’s in the wrong hands—the hands of the rich and corporations.
The Tax Justice group has highlighted a series of measures that could raise billions of pounds:
1) A wealth tax of just 2 percent would raise £24 billion a year
Tax Justice says that levying a tax on assets worth over £10 million would hit 20,000 of the richest people in Britain.
2) Equalising “capital gains tax” with income tax would raise £16.7 billion a year
This would hit the super-rich who profit from selling shares and property—gains from owning capital.
Earned income, such as working class people’s wages, is taxed at rates of 20 to 45 percent. But unearned income in the form of capital gains is taxed at rates in the range of 10 percent to 28 percent.
3) Applying National Insurance Contributions to unearned income would raise £10.2 billion a year
Currently, National Insurance Contributions are only levied on earned income.
But why shouldn’t rich people pay it on income from dividends from shares, rent from property and interest on savings?
4) Closing loopholes in inheritance tax could raise £1.4 billion a year
Inheritance tax rules allow the rich to pay as little tax as possible.
For example, an estate worth over £10 million should pay 40 percent—but on average pays a rate of just 17 percent.
5) A tax on share buybacks could raise approximately £2 billion a year
Some of Britain’s biggest corporations use a method known as “share buyback” to boost profits. This sees companies buy their own shares, which reduces the total number of shares on the market and inflates the value of shareholders’ assets.
It enriches shareholders, board members and top executives. A tax of just 4 percent—a very limited measure—could raise £2 billion.
Decades of neoliberalism have seen both the Tories and Labour push free market policies that concentrated wealth in the hands of a tiny minority. Tax increases on the rich should only be the start of breaking with neoliberalism.
Apologists for the bosses’ system claim that all wealth is a reward for capitalists’ “hard work” and “business acumen”.
In reality, working class people make the profits—whether it’s in retail, transport, manufacturing or public services—and keep the wheels of the economy turning. If they stopped work, the bosses would soon be out of pocket and services wouldn’t run.
So why should this wealth be in the hands of corporations and the rich? It should go to meeting social needs.
But it will take a much bigger fightback on the picket lines and streets to beat Labour’s austerity mark 2—and win a system that puts people before profit.
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