The two of us are from very different worlds. One of us is a millionaire investor, the other a care worker and trade union member. We have totally different experiences of the British economy, but we share a fundamental belief that it is broken — and the government in its autumn statement did nothing to fix it.
The cost of living crisis affects all of us, but it does not affect us equally. One of us struggles to afford the spiraling price of the weekly shop, while the other can shop as before, unaffected by rising food prices. One of us fears turning on the heating to keep her house warm, while the other can heat her home and travel for some winter sun without a second thought.
This is not how an economy succeeds. The argument of former British prime minister Liz Truss — that the only route to economic success is to allow inequality in our country to grow even greater — is simply wrong. Wealth does not come from the top and trickle down, it comes from all of us. There is no route to prosperity through increasing inequality.
Illustration: Yusha
The new finance minister, British Chancellor of the Exchequer Jeremy Hunt, might have accepted this argument in theory, saying in his autumn statement that he is “asking more from those who have more,” but this is not the reality. A slight lowering of the threshold for the top rate of tax and some tweaks to the thresholds for dividend and capital gains taxes would, as one of us can testify, hardly be noticed by those with real wealth.
In comparison, a squeeze on income tax rates for low and middle earners raises far more revenue and would cause far more economic pain.
EASY REVENUE
Instead of squeezing low earners, Hunt should have matched his actions to his rhetoric and taxed wealth at the top. If Truss’ attempt to give huge tax cuts to rich people is part of what crashed the economy, then the opposite seems like a good place to start in fixing it — as even those of us on the highest incomes should recognize.
Let us start with taxing the seriously wealthy — people with wealth of more than ￡10 million (US$12.26 million). A wealth tax of just 1 or 2 percent on stocks of more than ￡10 million would give our country the investment it desperately needs to see out the hard winter to come. A 1.1 percent tax on wealth above ￡10 million would raise ￡10 billion from the wealthiest 0.04 percent of the population, according to Arun Advani, assistant professor of economics at the University of Warwick’s CAGE research center.
We also need to make sure that people’s incomes are taxed at the same rate, no matter how they are earned. The reality of our current tax system is that money made from work, such as caring for vulnerable people, is taxed at a higher rate than money made from investments or the rising value of assets. The unfairness is maddening, and it is also holding our economy back.
This matters because of the other big part of Hunt’s plan — the squeeze on public services. The bitter experience of the past few years shows us that when public services such as social care are cut, it piles pressure on other areas and we all suffer. We need to invest in our public services and those who work in them, rather than inflict further cuts that continue a journey of decline.
This is not unaffordable. The wealth exists in this country, but the government’s unwillingness to tax it properly is what is starving our services of the funding we need. One of us is seeing the result of this underfunding every day, as staff in the care sector work longer and longer hours for less and less pay, and feel more overwhelmed than ever before. The staff simply cannot be asked to continue to give everything to keep the social care sector afloat, when what is desperately needed is the extra resource that only government can provide.
TAKING ACTION
A collection of groups have come together to form the Stop the Squeeze campaign, to call for this vital change of direction. It is a rejection of the failed inequality economics that has held us back, and an endorsement of the simple idea that, as the saying goes, we are all better off when we are all better off.
This agenda is backed by economists, charities and trade unions, but more importantly it is supported by the public, with large majorities across the political spectrum in favor of higher taxes on wealth. The two of us have never met, but we both felt the inequality in this country could not continue, so we got involved with Stop the Squeeze (one through a union, the other as part of the anti-inequality Patriotic Millionaires group), and decided to write this piece together.
The media also have a role to play here. The narrative about the overall “tax burden” is spin designed to deflect from the real questions that need to be asked about exactly who is being asked to pay, and whether it makes sense.
The focus on tax cuts during the summer Conservative Party leadership race, which even included the BBC framing questions to the candidates in terms of when, not if, taxes should be cut, is a good example of this lack of nuance in the public debate around tax.
We can all see where that kind of groupthink led us. If anything should have impressed upon people the need to question propaganda about low taxes on the rich being good for everyone, then surely the past few months should have been the wake-up call we needed.
We might not have been able to vote for the new British prime minister, Rishi Sunak, but that does not mean he need not listen to us. An economy that works for one of us, but not the other, is an economy that is never going to succeed.
A country where people who do essential work in our communities must struggle to put food on the table is not a country that is working.
Winsome Hill is a care worker and member of the Community trade union. Julia Davies is an investor, lawyer and member of Patriotic Millionaires.
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