False Economies: Time To Cap The Fat Cats And Make Britain’s Economy One Which Works For The People
One basic myth revolving around economies and taxation is that the wealthiest in society pay the most taxes. What we are told something like the top 1% of wealthiest people are burdened with paying 27.5% of income tax but such announcements represent exactly what I find infuriating about the spewing of disjointed statistics.
Firstly, let’s deal with the simple fact that ‘income tax’ represents only one part of taxation and that the top 1% pay very little in the way of taxes such as V.A.T. and Excise Duty; they also pay little in the way of local Council Tax.
In 2015, the top 10% in Britain were reported to own close to half of Britain’s private wealth, at 45%. The ‘top’ 1000 families in Britain have more than doubled their wealth since 2009, up 112% to £547 billion.
Little of that wealth accumulation will be classified as ‘earnings’ because it will be covered by taxes like Capital Gains. So, are the wealthiest paying income tax on all the wealth they accrue? No.
So, the headline figure tells us very little about how much the wealthiest 1% are contributing towards society. But let’s put that issue aside; let’s look at the 27.5% of income tax that the 1% are reported to pay. We are meant to be impressed by the notion that 1% are paying 27.5% of taxes because that means they’re paying 26.5 times more than their fair share … right?
Well, no, of course not. The percentage you pay is linked to the percentage you earn and if you earn 27.7% of all income then it should be expected that you’d pay 27.5% of income tax.
Let’s fix that thought in our minds: the percentage of tax you pay should be linked to the percentage of total income you have.
A simple bit of mental arithmetic … ask yourself if your household has doubled its wealth since 2009. Do you own property of twice the value, do you drive a car that costs twice as much (all adjusted for inflation)? Do you have assets of twice the value than you did in 2009?
I suspect that few reading this would answer in the affirmative. If the 1% are paying an equal percentage of income tax to their percentage of total income then how have they managed to more than double their wealth since 2009 and the rest of us haven’t?
Britain’s annual growth in GDP is around 2%, does 15% sound more likely your household’s growth since 2009, rather than 112%? Lower?
The wealthiest 10% control 45% of all private wealth and probably ‘earn’ closer to that percentage of total income than 27.5%. Imagine how much more you could increase your own personal wealth if you were paying approaching half of the tax you aught to.
It is no wonder they have more than doubled theirs but we are intended to be taken in by the headline figures and impressed by how generous the wealthiest in our society are. We are told that we should be ‘proud of wealth creators’ but the wealth creators are us, not the 1%, the 1% are simply accumulators who devalue society.
It is no coincidence that national debt has soared under the Tories since 2010 and public services like the NHS and Education in Britain have seen grotesque under investment in service provision, whilst spending has been focused on satisfying privateer contractors, and our 1% have doubled their personal wealth.