13 Nov 2004

Super Tax for Super Rich?

Those of you who dis-like criticism without a solution can now argue against the following possible solution.

Before you read I have decided to prempt a few possible counter arguments.

Calling for a demand to super tax the super rich, 'Envy', seems to be built on a very individualistic, rational choice argument. That human beings are only motivated by instrumental rationality, or greed and self-promotion. A society that refuses to acknowledge action based on 'social' values seems to encourage the interpretation of human action by rational choice motivation. Claiming that we are all motivated by 'greed' seems to de-humanise, or remove our other emotional motivations and render them ineffectual.

The other counter argument is that the wealth will trickle down from the top. An arguement that Margaret Thatcher used in the 1980's. The 1980's, a decade of giving, loving and caring for our fellow human beings.

The bigger issue is how do you get those with the super wealth to agree to a super tax? After all they have a very strong influence on the political situation and in Singapore's case, the politicians are the super rich. [Oops!]

Story from BBC NEWS:

Call for tax on the super rich

The government should consider raising the top rate of income tax to 50 per cent, the former head of policy at the [British] Prime Minister's Office has said.

Geoff Mulgan, who was in charge of the policy directorate at Number 10 until earlier this year, told the BBC's Panorama programme that the top earners in the country seem to be getting more influential.

He said the government should be worried about this rise of a super-rich, elite class in Britain - and suggested that a 50 per cent top income tax rate might help combat the problem.

Mr Mulgan's comments came in a Panorama documentary - "Winner Take All Britain" - which will explore the rise of a high earning elite in Britain. The programme is due to be broadcast this Sunday at 10:15pm.

The top one per cent of earners in the UK currently account for 13 per cent of earnings, more than double the figure when Mrs Thatcher came to power.

There are now more than 475,000 people in Britain who earn more than £200,000 a year.


"It's a very short-sighted approach to tax people with money"
DeAnne Julius, economist

It is figures like these, and the influence that the high earners may have on both politics and the spending habits of the public, that worries Mr Mulgan,

He said: "The top one per cent of the population seem to be getting richer and richer."

"They also seem to be becoming more and more powerful in politics and probably also more influential in our culture."

"We're also seeing people lower down the scale trying to keep up with the spending and lifestyle patterns of the very rich and finding they can't do that and therefore getting deeper and deeper into debt."

Mr Mulgan, now Director of the Institute of Community Studies, believes that the rise of the cult of celebrity has protected the super rich from a backlash over their wealth.

He said: "In the past where there's been a big surge in the power and wealth of the very rich, people have become envious, they've turned to politics or often sometimes it's turned to rioting."

"What's surprising about the last 10 or 20 years is that hasn't really happened and I think part of the reason maybe the rise of a celebrity culture."

Short sighted

Mr Mulgan said that action may have to be taken to curb the growing gap between the super rich and everybody else.

He said: "It's actually proved easier to improve the lot of the relatively poor groups in societies than it has been to reign in the runaway super elites.

"There are things which can be done, whether a 50 per cent rate or a 60 per cent is the key I think is a matter for debate."

But DeAnne Julius, who used to sit on the Bank of England's interest rate setting Monetary Policy Committee, told the Panorama team that raising taxes would be a bad idea.

She said: "The particular success of the high-earning one per cent is something that in many cases we should be pleased about."

"It's a very short-sighted approach to tax people with money, to tax them heavily because these are also usually the most mobile people.

"The question really then is does the winner take too much, and I think that's really a question of envy. Envy is a very destructive emotion. Individually, personally, but also for a society."

Panorama: Winner takes all Britain will be broadcast on Sunday, November 7, on BBC One at 22:15 GMT.

Story from BBC NEWS:

Published: 2004/11/07 04:14:12 GMT


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