One of the measures being urged on the government to solve its ‘fiscal problem’ is ‘tax the rich’ by means of a levy on the personal wealth of some capitalists.
‘Advocates of a UK wealth tax, including Lord Kinnock, have proposed an annual 2% tax on wealth above £10m. Wealth tax campaign group Tax Justice UK has calculated this would affect about 20,000 people — fewer than 0.04% of the population — and raise £24bn a year’ (Sky News).
According to the latest figures (for the period 2020 to 2022) from the Office for National Statistics, ‘The wealthiest 1% of households had wealth of at least £3,121,500’.
So, the proposal would only affect some of the super-rich, not even all of the ‘top 1 percent’, let alone the whole of the capitalist class.
The ‘fiscal problem’ facing the British capitalist state, which Labour currently has responsibility for running, is how to pay for its essential spending on such things as the military, education and health for the working class, ‘benefits’ for those not in work, as well as its own administration. This can only be covered by money raised from taxes or through borrowing. The government doesn’t want to borrow more since this risks raising the rate of interest it has to pay lenders; which in turn increases the amount of tax it would need to raise, since taxation is the only source it has of money to pay the interest on its debts (the so-called ‘National Debt’).
The irony is that all taxes already fall in the end on property and property income, irrespective of who pays them in the first instance. Obviously corporation tax, income tax on dividends, capital gains tax, inheritance tax, and employers’ national insurance do so directly. But other taxes do so indirectly.
To be able to work efficiently workers require a given standard of living and an adequate money income to pay for this. By and large, though not automatically, what workers are paid goes up in line with the cost of living. If this rises, so sooner or later will wages. Taxes such as VAT on what workers need to buy to maintain their working skills are in effect passed on to employers. Similarly with a direct tax on wages; this too gets passed on. In fact, with PAYE, workers never even see the tax part of their nominal wages; what counts in terms of maintaining a standard of living appropriate to their working skills is their take-home pay and what it will buy.
Arguments about taxation are essentially arguments about how much in taxes particular sections of the property-owning class should pay. Taxes on wages and on what workers consume fall on employers. A wealth tax would be a tax on what capitalists consume in extravagant living and would enable part of the burden of taxation to be shifted from employers on to the super-rich. It wouldn’t make any difference to workers.
A wealth tax also implies the continued existence of the super-rich. One of their arguments against it is precisely that one effect of such a tax would be to drive some of them out of the jurisdiction of the British capitalist state.
Socialists don’t want to maintain the rich so that the state can milk them. Nor do we want to redistribute their wealth amongst the rest of the population so as to try to achieve a more equal society contrary to capitalism’s nature. We want the means for producing wealth to be commonly owned by society as a whole so that they can be used, under democratic control, to directly provide what people need. We don’t want to tax the rich. We want to abolish the division of society into the rich and the rest.
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