Image by: Chris Devers
A poll last year found that people are delaying having families, because the future looks insecure.
Recently the Financial Times asked young people about their hopes for the future. It’s not only “just about managing” families facing an uphill struggle. According to the FT, it’s also company directors, city traders and computer programmers too.
The thing that unites these people is that they are young and have almost no chance of earning their way to wealth.
Having a good job is no longer a guarantee of a comfortable and secure lifestyle. As the Institute for Fiscal Studies pointed out this week, inheritance is set to be a key factor driving inequalities in future years. Whether you can afford to buy a place to live is increasingly determined by whether your parents own property.
This is made worse by the tax system. At Tax Justice UK, we’ve pointed out that wealth is taxed at a lower rate than income from work. This is just one way that the truly wealthy have access to unfair tax advantages.
It’s hard to see how governments can ignore this problem forever. And as the Financial Times' economics editor has said: "the left is winning the economic battle of ideas".
All parents and grandparents want the best future for their children. Everyone deserves a fair shot at building a secure life for themselves and their kids.
As we build back from Covid we will campaign to have a tax system that works for all of us. We will make sure this is an issue that stays at the top of the list for politicians.
For a longer read on how access to wealth is key to understanding class in modern Britain take a look at this excellent essay from Christine Berry for the think tank Autonomy.
Image by Álvaro Millán
The Manchester United player Marcus Rashford is a footballing genius. He is also a formidable anti-poverty campaigner.
In many ways Rashford represents all that is glorious about the beautiful game. A local boy made good and he’s deeply committed to tackling injustice when he sees it.
He’s an example to all.
However, we learned this week that at the same time that Rashford was campaigning for free school meals, some of football's billionaire owners were plotting to create a breakaway football league. The proposed European Super League would have been a closed competition for making these billionaires even richer.
It’s yet another example of a small group of very powerful, and very wealthy, people profiting at the expense of everyone else.
Fans, politicians, and even Prince William were outraged. The new league looks unlikely to happen after the six English clubs backed away from the idea.
It probably isn't the last time we hear of plans for a super league in football. But for now at least we can take a message of hope that it is possible for popular outrage to make usually unaccountable billionaires back down.
Football has a long history of inequality and murkiness. The Tax Justice Network have investigated the offshore structures used to run the game. They found that owners can become entirely unaccountable. Questionable financial decisions have condemned century-old institutions like Rangers FC to liquidation.
The Super League was yet another example of the dangers of unequal wealth. Concentration of economic power is a bad idea. The Balanced Economy Project has been established to look into precisely this issue. As they say: "dominant firms are using raw economic and political muscle to squeeze the life out of our economies".
We need to stand up to this and demand a different way of running the economy for the benefit of all of us.
New analysis suggests that the UK would raise an extra £13.5 billion a year from a global minimum corporate tax rate set at 20%. This would rise to over £22 billion a year if the rate was set at 25%. Companies like Amazon, Apple, Facebook and Google could face significantly higher tax bills.
President Joe Biden has proposed a sweeping overhaul of how big international companies are taxed. This includes a new minimum tax rate which would help crack down on corporate tax avoidance.
The public is fed up with major companies getting away with paying ultra low rates of tax. A new minimum corporate tax rate would bring in billions of pounds to support public services and would deal a blow to tax dodging. As we build back from covid we should ask big business to contribute more given the support they’ve had during the pandemic.
The Biden administration has suggested a global minimum corporate tax rate of 21%. The Independent Commission for the Reform of International Corporate Taxation has proposed a minimum rate of 25%. Rishi Sunak has pledged to increase the UK’s corporate tax rate to 25% in 2023.
So far the UK government has been silent on whether it backs the US corporate tax reform plan.
The government should stand up and support these proposals. The UK and its tax haven network have long promoted a global race to the bottom on corporate taxes - this needs to end.
A new minimum corporate tax rate would have a big impact on places like Ireland, the Netherlands and the Cayman Islands which have ultra-low corporate tax rates. The plan comes as international negotiations on global tax reform at the OECD club of rich nations gather momentum.
The analysis is contained in a soon to be published paper by international tax experts on how to implement a global minimum effective tax rate (METR) for multinational companies. The paper breaks down the expected revenue for a number of countries for different minimum tax rates based on a methodology from the OECD club of rich nations.
The METR proposal is authored by Sol Picciotto, Jeffery M. Kadet, Alex Cobham, Tommaso Faccio, Javier Garcia-Bernardo, and Petr Janský. In advance of the forthcoming study, details of the proposal are available here.
The UK’s 54 billionaires saw their wealth increase by £40 billion during the pandemic, an increase of 36%.
At the same time, the number of people who needed some form of social security jumped 98% to six million people.
Barely a day passes without fresh evidence of how this pandemic has been soft on the super-rich and hard on those on lower incomes. This is making the inequality crisis in our country even worse.
However, there are dissenting voices among the wealthy who want to see this change. Last weekend the Guardian magazine told the story of a global group of millionaires who are campaigning for higher taxes on the rich. They include Abigail Disney, granddaughter of one of the founders of the Walt Disney Company and the UK’s Gemma McGough.
She told the paper: “The economy is so damaged from Covid, I am happy to pay my share. If you’re making more than £150,000 or £200,000 a year, you should be paying more. If you’re earning £200,000, paying a higher rate of tax on earnings above that is not going to make you poor, is it?”
Wealth in the UK is woefully undertaxed compared to income and Covid has made inequality worse.
As we build back better, it’s clear that profitable companies and those with substantial wealth need to pay their fair share.
Tax Justice UK is working with Gemma and others, to make sure this happens.
We're looking across the pond for inspiration. President Biden has just announced plans for $2 trillion of investment in America’s crumbling infrastructure.
Biden wants to upgrade roads, railways and bridges. The plan includes money to green the economy, as well as investment in looking after vulnerable Americans. This is transformative amounts of money.
The infrastructure plan would be paid for by increasing taxes on companies. The President wants to reverse some of Donald Trump’s tax cuts. Biden is going after multinational companies that pay too little tax.
Biden has also said that it’s time for countries to end the “race-to-the-bottom” on how companies are taxed.
This is music to our ears.
It fits with a growing pattern of politicians making the case for higher taxes on companies. In the UK, the Chancellor, Rishi Sunak, has said that the corporate tax rate will go up to 25% from the current 19%.
At the moment we have promises. And we all know that politicians are often bad at turning their rhetoric into reality.
But it gives us hope to see President Biden setting out a vision for high quality public services backed by a more progressive tax system.
At Tax Justice UK we will work to make sure that our political leaders take notice.
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