The 1% should recognise a big fortune is usually built on good fortune

Stop weeping about the £600,000 you take home every year shrinking by a few thousand. It is offensive to the people who survive on a hundredth of that, says Alex Andreou.

“The rich already pay their fair share,” said millionaire David Cameron in response to millionaire Andrew Marr.

This is a sentiment echoed by a number of Conservatives in the last few days. In support, they present figures which show that the top 1 per cent contributes a higher percentage to the total tax take than others. But what struck me was how all commentators persisted in only using percentages.

What about actual figures? Let’s talk numbers.

I will be extremely generous. I will make the assumption that we live in a world where a talented, expensive accountant cannot create a dozen shell companies in exotic places to hide income. I will make the assumption that this top 1 per cent declares every penny it makes and pays full tax on it.

I will accept every assumption made by John Redwood MP – the self-appointed chartered accountant of this Borg collective. I will use 2009-2010 confirmed HMRC figures to avoid charges of manipulation or error.

The total number of taxpayers in the UK is just shy of 30 million. The top 1 per cent is, therefore, 300,000 people. Total income declared across the UK was £870bn. Of that, £121bn was made by the top 1 per cent. The total income tax received was £145bn, of which £40.5bn was contributed by this top-earning 300,000 people. This yields an effective average personal tax rate of 33.5 per cent.

This leaves the top 1 per cent with an average annual personal income, after tax, of £268,000. Over a quarter of a million, on average, each year. It might be “chicken feed” to Boris Johnson, but it is a lot of money to most of us.

Let’s look at a smaller slice, still – the six thousand people in the UK who have a personal income of a million or more. After all personal tax deductions, they are left with over £600,000 a year. It would take a UK person on the median income over 30 years to make what the lowliest of these six thousand people make in a year. A whole working life. 

The additional insidious suggestion by David Cameron, the cause of much mirth at Tory Conference, was that by choosing to tax this top slice less he was not gifting them a tax-break, because “when people earn money, it’s their money”.

The implication being that this money was not made using the work of low-paid people forced to claim benefits to supplement their income; not made using the roads, airports and ports we all pay for; not made by all of us buying their goods and service; not made under the protection of the same police, fire and health services we all paid for.

No. This money magically came into existence out of the very same anatomical orifice of these “doers” and “risk-takers” out of which the sun, evidently, shines. A result of their entrepreneurship and get-up-and-go; nothing else.

Theo Paphitis is an interesting case study – held up perpetually as an example of that archetype. A few months ago, he was asked on Question Time what motivates him. He said it was the will to create things, to grow his companies, to employ people, to make his mark. Ten minutes later the panel was discussing the top rate of tax. He said that if personal tax was increased on those making more than a million, he would up and leave the UK.

So, which is it? Pick one, Theo. You cannot claim the mantle of wealth-trickling sainthood, while clinging on to every obscene penny with bony, Scrooge-like fingers, under threat of imminent departure for Barbados. You cannot claim that your wealth is the result of your hard work alone, while consistently calling it “my kids’ inheritance” on Dragon’s Den. What will they have done to deserve their share of your £170m estimated worth, when you’re no longer around?

None of us, including Cameron or Paphitis, would look at a couple in which one partner said “you’re at home raising the kids – no more hand-outs, you leech” with anything other than disgust. None of us would look at a wealthy family which refused to pay for its kids’ education or kicked out granddad when he became ill and think “bravo – tough love”. All of us admired how a community came together, took time off work, with no thought for their own self-interest, to look for a missing six-year-old.

At what point, precisely, do these qualities of selflessness, compassion and solidarity cease to be attractive? At what point do the rules change and we go from individual, couple, family or community to UK plc? Tax is simply the state’s expression of these qualities. A recognition that a big fortune is built, at least in part on good fortune, be it of birth, education, health or position.

The idea that everyone’s tax pays for a tiny percentage of benefit scroungers, is not only manifestly absurd, but damaging to the nation and destructive to one’s own morale. Isn’t it better to assume that your tax bought a wheelchair, educated a talented but disadvantaged kid, saved a diabetic, paid for a great teacher – which it does the vast majority of the time?

So, stop moaning about percentages. Stop weeping about the £600,000 you take home every year shrinking by a few thousand. It is offensive to the people who survive on a hundredth of that. Count your blessings and help those who have not had such good fortune; not to the tune of whatever percentage you consider fair, but as much as you can. Do the right thing. It is the only meaningful way to “make your mark”.

An Occupy protester in an Anonymous mask. Photograph: Getty Images

Greek-born, Alex Andreou has a background in law and economics. He runs the Sturdy Beggars Theatre Company and blogs here You can find him on twitter @sturdyalex

Getty Images.
Show Hide image

Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.