1. Government to control inequality to agreed limits:
- Agree limits on the maximum share of national wealth and income we should allow the top 1% and 10% to take. Guess how national wealth is distributed using our interactive inequality chart, and then we’ll show you the real picture.
- Re-balance wealth and income towards the new targets by increasing tax on the very wealthiest – proposed tax changes in boxes below.
2. Measures to keep the government honest:
- OBR to assess budgets for impact on inequality – The Office of Budget Responsibility to evaluate the impact of each annual budget on inequality before being presented in the Commons – with particular emphasis on the top 1% and top 10%. This assessment, should be published alongside the budget, and in the event that the government’s proposed measures are considered by the OBR to be likely to increase the share of income and/or wealth of the richest, then the Chancellor should be compelled to state this in his or her budget speech.
- Limit contributions to political parties – The current approach of hoping that undue influence will be curbed by requiring donations to be declared is not good enough. Contributions to political parties must be limited to a level at which we can be confident there will be no temptation to sway decision making – e.g. £5,000 per individual or company.
- Re-write the tax code – At 17,000 pages, our tax system is hugely complex, the product of incremental change. It is too easy for those with influence to push through complicated changes that quietly leave the wealthy better off without attracting too much attention. Compare the UK to other countries.
Six tax changes to tackle inequality
Introduction of a wealth tax based on all your assets. The proposed mansion tax on property is a misguided attempt at this. It omits financial assets, shares etc, and so would barely impact the richest in society, and would unfairly impact pensioners with higher value houses but little financial wealth.
Look here at how much could be raised by a wealth tax.
Higher Income & Inheritance Tax
Top tax rates must be lifted substantially on very large incomes and estates. The highest rates have fallen dramatically since the 1970’s and even the 1980’s (have a look at Thomas Piketty’s historic rates chart). Even left wing politicians won’t tackle this problem – because of the power of the wealthy elite, including the newspaper proprietors who will lose out.
Higher Capital Gains Tax
Capital gains tax (CGT) – top rates should be increased. The highest rate is currently only 28%, a huge advantage to wealthy people living off inherited investments. Why do we accept that very wealthy people who don’t work should pay a lower top rate than working people?
Nat Insurance on ALL income
National insurance is paid by people who work – but not by those who don’t work and live off their investments. How on earth did we allow this situation to arise? NI is just income tax. Our premiums aren’t saved for our retirement – they just form part of government’s tax receipts and are paid right back out again. National insurance should be charged on all income.
Reduce VAT to 15%
VAT hits the poorest hardest because they generally spend everything they earn, whereas very wealthy don’t. VAT should be reduced to no more than 15%, funded from tax increases for the wealthiest.
Financial Transaction Tax
Also known as the Robin Hood tax, this proposed 0.05% tax on transaction of stocks, bonds, foreign currency and derivatives could raise up to £20 billion annually in the UK.
Read about it here.
“Small change for the banks – big change for those hit hardest by the financial crisis.”
One of the purposes of our progressive tax system, where those with more money pay more, is to prevent the gap between rich and poor growing too wide. Tax rates on the wealthy are now so low that our system is dangerously out of balance.
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