Clegg's wealth tax deserves a fair hearing

A wealth tax would be progressive and economically beneficial.

In his relaunch interview in today's Guardian, Nick Clegg calls for a new wealth tax, declaring that "if we want to remain cohesive and prosperous as a society" those of "very considerable" wealth should make an "extra contribution". To which Labour has replied: why did you vote to abolish the 50p tax rate, then? It's a reasonable debating point (the decision to scrap the 50p rate was both politically and fiscally foolish) but it's also rather disingenuous. As anyone who has read any of Clegg or Vince Cable's speeches will know, the Lib Dems have long argued that the burden of taxation should be shifted from income towards wealth (as, indeed, has the New Statesman). There is nothing inconsistent in Clegg calling for a wealth tax while also supporting the reduction in the 50p rate to 45p. You could argue that new taxes on wealth should complement, rather than replace, those on high incomes (and you'd be right), but this shouldn't blind the left to the merits of Clegg's intervention.

In Britain, wealth is concentrated in even fewer hands than income and represents a huge untapped source of government revenue. If taxes on income are to be reduced, as they must be (if one includes National Insurance, the effective starting rate is 32%), either through a significantly higher personal allowance or through a reduction in the basic rate, then taxes on wealth should be increased. As Clegg states:

In addition to our standing policy on things like the mansion tax, is there a time-limited contribution you can ask in some way or another from people of considerable wealth so they feel they are making a contribution to the national effort? What we are embarked on is in some senses a longer economic war rather than a short economic battle.

Taking their cue from John Stuart Mill, the Lib Dems rightly argue that the tax system should do more to reward merit, enterprise and innovation. As Cable put it in his essay for the New Statesman on reclaiming Keynes, taxation should be diverted away from "profitable, productive investment" and towards "unproductive asset accumulation". Wealth taxes are harder to avoid than those on income and, as a recent OECD report noted, they benefit the economy by shifting investment away from housing and into wealth-creating industries.

For now, Clegg's proposal raises more questions than it answers. Most obviously, at what rate and threshold would a wealth tax be set? But the details, we are promised, will be filled in by the time of the Lib Dem conference next month. What one can say with certainty is that, as Jonathan Portes puts it, it is both "good economics and fiscally progressive" to sharply increases taxes on the wealthy. By all means assail Clegg for his support for the government's disastrous economic strategy and its punitive welfare cuts, but don't ignore the fact that the most creative thinking on taxation is taking place in his party.

Deputy Prime Minister Nick Clegg said that those of "very considerable" wealth should make an "extra contribution". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Labour to strip "abusive" registered supporters of their vote in the leadership contest

The party is asking members to report intimidating behaviour - but is vague about what this entails. 

Labour already considered blocking social media users who describe others as "scab" and "scum" from applying to vote. Now it is asking members to report abuse directly - and the punishment is equally harsh. 

Registered and affiliated supporters will lose their vote if found to be engaging in abusive behaviour, while full members could be suspended. 

Labour general secretary Iain McNicol said: “The Labour Party should be the home of lively debate, of new ideas and of campaigns to change society.

“However, for a fair debate to take place, people must be able to air their views in an atmosphere of respect. They shouldn’t be shouted down, they shouldn’t be intimidated and they shouldn’t be abused, either in meetings or online.

“Put plainly, there is simply too much of it taking place and it needs to stop."

Anyone who comes across abusive behaviour is being encouraged to email validation@labour.org.uk.

Since the bulk of Labour MPs decided to oppose Labour leader Jeremy Corbyn, supporters of both camps have traded insults on social media and at constituency Labour party gatherings, leading the party to suspend most meetings until after the election. 

In a more ominous sign of intimidation, a brick was thrown through the window of Corbyn challenger Angela Eagle's constituency office. 

McNicol said condemning such "appalling" behaviour was meaningless unless backed up by action: “I want to be clear, if you are a member and you engage in abusive behaviour towards other members it will be investigated and you could be suspended while that investigation is carried out. 

“If you are a registered supporter or affiliated supporter and you engage in abusive behaviour you will not get a vote in this leadership election."

What does abusive behaviour actually mean?

The question many irate social media users will be asking is, what do you mean by abusive? 

A leaked report from Labour's National Executive Committee condemned the word "traitor" as well as "scum" and "scab". A Labour spokeswoman directed The Staggers to the Labour website's leadership election page, but this merely stated that "any racist, abusive or foul language or behaviour at meetings, on social media or in any other context" will be dealt with. 

But with emotions running high, and trust already so low between rival supporters, such vague language is going to provide little confidence in the election process.