Since the war ended the myth has arisen, carefully fostered and well-nourished by every hack of Fleet Street and apologist of capitalism, that the rich are no longer as rich as they once were, that heavy taxes are mulcting the poor blighters white and that there is in fact taking place a general redistribution of wealth resulting in greater economic equality. Never an opportunity has been lost to bring to our notice that this film star or that author or the other well-to-do man were being bled to death by taxes and what was left would in any case be drained away by death duties.
So persistently have these notions been nurtured that many workers have actually come to believe them, presumably on the Mein Kampf principle that if you tell a lie often enough it will eventually be accepted as the truth. To those who do so, and still more to those who believe vaguely that some sort of more equitable distribution of wealth is taking place, we draw attention to some remarks and observations recently made in a British Association lecture by J. R. S. Revell, Dept of Applied Economics, Cambridge University. Dealing with the extent to which wealth had become more equally distributed during the first 50 years, he said:
. . . that the figures conventionally quoted greatly overestimated the extent of the redistribution.Those figures showed that the wealthiest 1 per cent. of the adult population of England and Wales owned nearly 70 per cent. of the total personal wealth in 1911, and that by 1954 the wealthiest 1 per cent. owned around 43 per cent. The figures were based on estimates of personal capital, which used statistics of estates paying death duties as a random sample of the wealth of the living population. They were deficient in several respects and the deficiencies had tended to increase in recent years. That meant that their use would overstate the redistribution of wealth.
Apparently one of the important of these statistical deficiencies, of ”growing importance," as Mr. Revell tells us:
. . . consisted of creating settled property in a particular form known as a discretionary trust. Under that form of properly the trustees had the discretion to pay income to any of a specified class of persons and to distribute the capital when they thought fit. When the person who had been receiving the income died, the trustees merely nominated another person from the specified class, and there was no passing of capital which could attract death duties.
Certainly these capitalists are not going to allow themselves to be impoverished without a fight!
The effect of this and other tax-evading subterfuges is:
. . . that a large slice of the capital from which individual persons—particularly wealthy persons—drew income did not figure at all in an estimate of personal capital derived from death duty figures. It was almost impossible to obtain any statistical evidence on the amount of property which thus avoided death duties. “but it is likely to be large enough to upset any estimates of personal capital."
Earlier in his lecture Mr. Rcvcll pointed out that, conversely, small incomes were grossly overvalued:
. . . because insurance policies represented such a large proportion of the value of small estates; they were valued for death duty purposes at the sum paid out on death, whereas the greatest value which could be put on them in the hands of a live person would be the surrender value. Thus poorer persons, in short, are worth more dead than alive.
Mr. Revell concludes:
Small estates were thus overvalued and large estates were undervalued in the death duty statistics. Since life assurance and tax avoidance had both grown greatly in recent years, the conventional figures for the distribution of personal capital gave an impression that the redistribution of wealth had gone much farther than it really had. There was no means with present statistical knowledge of estimating what the correct figures should be.
Whatever the truth of Mr. Revell’s last remark, there is one incontrovertible fact arising from all this. It is that in 1954 1 per cent. only of the population owned more, probably much more, than 43 per cent. of the total personal wealth in England and Wales.
Ponder a while on this simple fact and it will give quite a close idea of the nature of wealth distribution in our present-day capitalist society.
Max Judd
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