An overwhelming majority of Brits believe those rich enough to live off their wealth should pay at least the same level of tax as others who go out to work for a living.
A YouGov poll commissioned by Tax Justice UK and Oxfam found that 69% of people felt people living off income from things like stocks and shares should pay the same level of tax as those who work for a living. A majority (52%) also agreed that the wealthy (net wealth over about £750,000) should be subject to a net wealth tax.
The survey demonstrates that far from being a revolutionary idea, the notion of wealth being taxed the same as income has substantial support across the political spectrum from Tories and Brexiteers to Labour and Liberal Democrat voters.
At the height of Margaret Thatcher’s reign in 1988 the same basic unfairness was ended when her Chancellor, Nigel Lawson, brought the taxation of capital gains into line with that of income from work.
A recent report by the Institute for Public Policy Research found that £90 billion could be raised over five years for public services by bringing capital gains and income tax into alignment.
This isn’t a policy that would hurt asset rich, but income poor, grannies. The IPPR found that 90% of capital gains currently taxable are received by people earning £100,000 a year. Getting rid of the low tax lifestyle enjoyed by these already wealthy people is doable without affecting pensioners.
This is now a no-brainer for any Government. Failing to back this policy wouldn't just be bad economics, it would go against the grain of public opinion too.
We need to put an end to wealthy hedge fund managers who pay a lower tax rate than their cleaners.
More details and a detailed breakdown of the poll findings are here.
All the figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,642 adults. Fieldwork was undertaken between 22nd - 23rd September 2019. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). The full results are available here.
For too long our politics and media has been dominated by a race-to-the-bottom ideology with tax depicted as “theft”.
Tax Justice UK exists to overturn this story.
The facts are simple: we are not raising enough money to pay for the teachers, nurses and public services voters want, whilst the tax that is raised is falling disproportionately on the poorest.
Tax Justice UK was born out of the wider international tax justice movement and we want to see everyone in the UK benefit from a fairer and more effective tax system.
The UK has high levels of poverty and inequality, and a majority of people feeling that the economy doesn’t work for them. Government spending is a key way of tackling these challenges. However, there are signs of strain including people sleeping rough a dysfunctional benefit system with many families reliant on foodbanks and a social care system that is failing the elderly and disabled.
A well functioning tax system should be a basic building block of our communities. But the current approach isn’t raising enough tax to fund vital services. We see no solution to the problems the UK faces that does not involve progressive tax reform. This means raising more tax in the first place and shifting the focus of tax from the poorest onto those better able to pay.
Today we’re publishing our three year strategy setting out how we plan to build public and political support for change. There is lots of policy analysis on what reform should look like by a range of academics, think tanks. What is sometimes missing is the political will and confidence to be bold about the need for change. The value we add is to take the ideas that are already out there and help build a movement to push for change.
Tax Justice UK will do three things:
During the period of this strategy we will focus on campaigning for greater taxes on wealth. Ideally the wealthy should be paying a higher share of their income in tax than the poor, but according to the Resolution Foundation this isn’t the case. There is a growing chorus of people on the left and right arguing that we need to tax wealth and capital better. Our report, The World we Want, set out how to do this.
This is an ambitious agenda. Despite the fact that UK politics is in turmoil, discussions about government spending and tax will still be central to public debate. Tax Justice UK will consistently demand that we have a tax system that works for everyone. If you’re interested in working with us, please get in touch - mail [at] taxjustice.uk.
Read our full strategy here.
Why should someone who goes out to work for a living pay a higher rate of tax than someone living off their wealth?
It’s a question that will puzzle many people in the wake of the Institute for Public Policy Research’s finding that a staggering £90 billion could be raised for public services if capital gains were taxed the same as income. This was a key recommendation from our The World we Want report. Capital gains are the profits from selling something, such as a business, property or a piece of art.
Wealthy people are more likely to get income from wealth and can end up paying less tax than they would if their income was from work. The easiest way is to be paid in company stock, rather than cash, cutting the tax rate for higher earners from 45% to 20%. This is how a hedge fund manager can pay a lower tax rate than their cleaner.
Even Thatcher thought income and capital should be taxed equally
At the height of Margaret Thatcher’s reign the same basic unfairness was ended.
In 1988, using words remarkably similar to the IPPR’s, the Chancellor of Exchequer, Nigel Lawson said: “There is little difference between income and capital gains and many people effectively have the option of choosing which to receive… it is by no means clear why one should be taxed more heavily than the other.”
To say we’ve come full circle since 1988 is something of an understatement. Wealthy people living a low tax lifestyle today benefit from even lower capital gains rates than they would have 30 years ago.
Clearly something has gone wrong, but it’s equally clear how politicians of all persuasions can put it right. We need to ensure that those who live off their wealth pay at least the same level of tax as those who live off their own work.
Tax Justice UK and Oxfam supported the IPPR on the report Just Tax: Reforming the taxation of wealth and work by Henry Parkes and Shreya Nanda which is available to download here
Read our short explainer on taxing income and wealth the same.
The salvo of cash promised in today’s spending review shows anti austerity arguments have won out. But these promises needed to be backed up by a fairer tax system.
Tax Justice UK’s Executive Director, Robert Palmer, said: “It’s clear the anti-austerity movement has won the debate that we need more public spending. However, we must go further to undo the cuts that have caused real hardship for millions.
“Nine years of cuts have helped entrench inequality in the UK. Until politicians address the low tax lifestyles open to the wealthy and commit to a fair tax system that invests in decent public services, “ending austerity” will be a meaningless headline for hungry Chancellors.”
With no Office for Budget Responsibility report to provide economic and fiscal context to today’s statement, it seems there is no-one around to check the Chancellor’s sums.