Clegg’s wealth tax and gesture politics

It must be party conference season.  Nick Clegg making statements about an emergency wealth tax, a rather desperate attempt to give the annual festival of Stockholm Syndrome that calls itself the Liberal Democrat Party Conference something to differentiate themselves from the Tory party their Parliamentarians have happily maintained in office.

A wealth tax sounds superficially like the sort of thing that’s designed to get right up the noses of the Tories and to give the Liberal Democrats some sort of radical credibility at a time when Britain’s manifest inequalities – and the ease with which the wealthy avoid their responsibilities – are at the forefront of political debate.

But actually it’s a far less radical policy than it sounds, and one that plays into the hands of the Right.  The answer lies in the fact that wealth is hard to calculate – especially in an age of offshoring and when accountants are adept at spiriting away real wealth.  A one-off tax could bring in some revenue, but Clegg – light on detail as ever – would need to show how it would be calculated and how it would get past the attempts of the wealthy to reduce their liability.  After all, that’s what wealthy people do.

Progressive taxes on income have the benefit of being fair, and relatively easy to administer.  For the vast majority of those in employment, of course, they’re deducted by PAYE.

Tax evasion by the rich remains one of the salient political issues of the day – we have UK Uncut largely to thank for that, but also the extreme clumsiness with which HMRC and George Osborne have written off corporate taxation.  In all of this, Clegg’s proposal – to the extent that it has been thought through at all – looks like a piece of political tokenism.  Obvioiusly a one-off tax does nothing to address the urgent task of stabilising the UK’s denuded tax base; it also helps to let the wealthy off the hook, since it allows Government to claim that they have done their bit, showing that we’re all in this together, before going back to business as usual. It does nothing to address the tax gap, or to ensure that the wealthy meet their responsibilities in the long term.

It fits in particularly well with the view from the Right that taxes should not be progressive, and should not be levied of income; it smells as if it comes from the same stable as the flat tax movement, which is really a way of reducing the burden of tax on the wealthy and divesting the state of responsibility for welfare.  Clegg’s gimmick does nothing to address fundamental questions about the sustainability of the UK’s tax base and where the burden falls.  It’s gesture politics pure and simple, coming from a party leader who is wholly compromised in his alliance with the Tories.

Attlee wrote that a decent society was one in which the better-off paid their taxes gladly.  Clegg’s big idea shows that we are as far away from that ideal as we have ever been.

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