How much money do you have in your bank account right now? Do you feel that the situation would be improved or worsened if you earned £70,000 a year? To most, the answer will be the former. After all, the average salary for full-time workers in the UK is £27,600. And the average household income is lower than that. So you’re unlikely to know what it feels like to earn £70k, but you imagine it feels pretty damn comfortable.
This is the feeling Labour is relying on when saying it wants to increase taxes on the rich, with shadow chancellor John McDonnell defining “the rich” as those earning “above £70,00 0 to £80,000 a year”.
His parameters proved controversial. Unsurprising really, given most people paid to judge these things are disproportionately well-off (journalism is dominated by the middle-class and privately-educated). Even if you’re not earning that salary yourself, you are more likely to know someone else who is, or have parents who do or did, if you’re from a privileged background.
A few arguments against McDonnell’s assertion have a point (that assets and inherited wealth tell a better story of someone’s circumstances than their salary, for example), but most are laughably out-of-touch. Ask your average voter if they think £70k is a lot of money and they would say yes.
My colleague Stephen dug out a passage from Talking to a Brick Wall: How New Labour Stopped Listening to the Voter and Why We Need a New Politics, a book written by Deborah Mattinson of public attitudes surveyor BritainThinks, which shows this:
— Stephen Bush (@stephenkb) April 19, 2017
The general picture is that salaries hovering above the average are seen as high. Yes, the focus group described is from 1994, but £50k back then (which translates into around £90k now, according to the Bank of England) was seen as “very well off”.
But what the extract also tells us is that you can’t make popular taxation policy off the back of this. It would be “greedy”, “old-fashioned”, “for the poor” and “not for me”:
Context was GB eager to show that TB was wrong – on this occasion he wasn’t…describing £70k as ‘wealthy’ was and is disastrous https://t.co/X81GPxt3YO
— Deborah Mattinson (@debmattinson) April 19, 2017
This is clear from more recent polling. YouGov polling from 2014 suggests voters back redistribution of wealth in theory, but as soon as you translate that into taxes on the rich, you lose their support. Indeed, 44 per cent to 38 per cent opposed the suggestion of a top rate of tax of 80 per cent in the year before the last general election, and there is consistently a majority in support of inheritance tax being reduced.
After Jeremy Corbyn mooted an earnings cap, YouGov found a 13-point lead for those who think a maximum salary is a bad idea.
You can talk about inequality all you like and people will nod and agree and feel hard-done-by and in need of some more cash, but making popular policy off the back of that sentiment is tough.
It is easier to sell tax rises to fund public services – YouGov found majority support for raising income tax or national insurance to help the NHS in January – than tax rises on the better-off simply for being better-off. Perhaps because everyone hopes one day to be better-off and not “punished” for it.
Just ask Ed Miliband. The former Labour leader’s manifesto and philosophy focused on fixing inequality. Polling suggested his mansion tax proposal was fairly popular, but it turned out the electorate – generally unlikely to own a mansion – didn’t like the idea of it in the end. This rejection was what led to constant cries of “aspiration” from wannabe Labour leaders in 2015.
McDonnell is right in his opinion that voters see £70k as well-off, but wrong for trying to eke a tax rise out of it. Labour will benefit far more from their positive policies to help the lower-paid – such as their £10 minimum wage and universal free school meals, which are popular – than making arbitrary rules about how much their voters are allowed to earn.