A 20% wealth tax on the mega rich would raise up to £800bn

If Nick Clegg is serious about introducing a wealth tax, here's how it could work.

The government's solution to the economic crisis is swingeing cuts in public services. David Cameron claims, Thatcher-style, that cuts are the only option. Not true. There are serious alternatives.

Even Nick Clegg seems to now realise this, with his recent proposal for a wealth tax. The only problem is that he hasn't spelt out the details. There are no specifics.

So let me help out the Lib Dem leader with an idea of how it could work. A one-off graduated 20 per cent wealth tax on the richest 10 per cent of the population would raise £800bn – more than enough to create the jobs needed to revive the economy and a concrete way to avoid harmful cuts in public services.

The wealthiest 10 per cent of the population have combined personal assets totalling four million, million pounds. This is a million pounds multiplied four million times. Many of these people have multi-million pound homes (often several of them), plus private yachts and jets and vast art collections. They can easily afford a once-only 20 per cent tax on their immense wealth. Selling off one of their six houses, a Lamborghini car or a Jackson Pollack painting won’t cause them to suffer. Indeed, it is in their self-interest to pay this tax because if we slip into a new depression they will lose much more than 20 per cent of their wealth.

The 20 per cent tax rate would be the average. People at the less rich end of the richest 10 per cent would probably pay a wealth tax of only one per cent, while those at the very richest end might pay 30 per cent. Everyone would be assessed individually. No one would be made to pay in ways that caused them hardship. The tax would be assessed and collected in the same way as other taxes, such as income tax and capital gains tax. People could be given the option to defer payment until after they die, so it would become a tax on their estate.

By raising a massive £800bn, this tax would be enough to pay off the entire government deficit more than four times over - or it could be used to clear most of the national debt. A reduction in the national debt would dramatically cut the government’s huge debt interest payments, which amount to nearly £50bn a year. This vast sum of money would be better spent on schools, hospitals, pensions and job creation.

Alternatively, and even more useful in terms of reviving the economy, the £800bn (or part of it) could be used to fund the proposed Green New Deal. Modelled on Roosevelt’s 1930s New Deal, which got America back to work and helped end the Great Depression, the Green New Deal would create hundreds of thousands of green jobs in energy conservation, renewable energy, public transport and affordable homes; simultaneously helping remedy climate destruction and kick-starting economic recovery.

It could ensure that Britain leads the world in sustainable economics and green technologies, opening up new export markets and boosting our economic revival for many decades to come.

According to a YouGov poll in June 2010, 74 per cent of the public favour a one-off tax on the richest people in Britain. Only 10 per cent oppose it.

With great wealth comes great responsibility. The mega rich have the capacity and responsibility to help the country out of the mess we are in. They benefited disproportionately from the boom times. Now that times are tough they should contribute disproportionately to get the British economy back in shape.

Put bluntly: The super rich have a patriotic duty to help save the economy by paying more tax. If they love Britain, they will be willing to do this, in order to help us win through the current economic crisis.

Contributing more tax is in the interest of those with huge wealth. If the economy fails, their losses will be even more than the increased tax they are being asked to pay. By giving more to the exchequer they would be doing the morally right thing for the country and its citizens. Moreover, by helping save the economy they would also save most of their own riches. It’s enlightened self-interest. Over to you, Nick Clegg.

Danny Alexander and Nick Clegg. Photograph: Getty Images

Peter Tatchell is Director of the Peter Tatchell Foundation, which campaigns for human rights the UK and worldwide: www.PeterTatchellFoundation.org His personal biography can be viewed here: www.petertatchell.net/biography.htm

Photo: Getty
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Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.