The top ten per cent in Britain pocket over £300 billion a year. Just a ten per cent tax bite from that flow would be enough to offset all the cuts that the Government is making.
Yet shadow chancellor’s Ed Balls’s minimal proposal to tax fewer of the rich, and more lightly — to raise the top income tax rate from 45% to 50% — has brought an outcry.
Digby Jones, former chief of the bosses’ federation the CBI, and briefly a minister in the last Labour government, squealed that it meant “kicking” those who “create wealth and jobs”.
Stock exchange boss Xavier Rolet said it would stop new enterprise. “The right tax rate for entrepreneurs is what motivates investment”.
Others claimed that it would make bosses take their businesses elsewhere. Oddly, international competition is supposed automatically both to pull up the incomes of the rich towards the highest levels in the world, and to push down the incomes of the worse-off towards the lowest.
Capitalist bosses, when and if they expand, no more “create” wealth and jobs than feudal lords did when they seized new territory, or slaveowners when they developed new plantations, or landlords “created” the houses we rent from them.
The machinery, equipment, facilities, and communication networks which individual workers need in order to toil productively are created by the labour of other workers. They appear in capitalist society as the property of bosses, or even as created by them, only because of the lopsided operation of wage labour.
Not because of any natural law, but because of capitalism, we are employed only when the new value created by our week’s labour exceeds the price paid for, and the value, of the commodity we sell in the labour market, our labour-power. Only when capitalists draw profit from the exchange which gives them control and ownership over the whole flexible, ever-expanded, creative force of labour, in return for the limited pittance of wages sufficient to keep the pool of labour-power in trim.
Some capitalists work hard, and have talent? Yes, but they primarily work hard at, and have talent at, outdoing other capitalists in the competitive battle for shares of the wealth produced by workers’ labour.
Revealingly, most top capitalist bosses have little training in or knowledge of the technologies of the production from which they draw their loot. In capitalist management hierarchies, the least well-paid is usually the production manager, the one most likely to know something about the job or even to contribute to productive effort.
The organised working class should take control of the wealth we have produced, and organise our work directly for ourselves and for social benefit. We want public ownership of the banks and big industry under democratic control.
In the meantime, we want at least to recoup some of the costs of public spending from the ultra-incomes of the rich. At present, even though income tax rates make it look as if the rich pay modestly more, in fact, thanks to tax avoidance and the impact of taxes like VAT which hit the worse-off harder, the rich are taxed more lightly than the worse-off. In 2006-7, the bottom 10% of households had a tax take of 46% of income; the average, 35.3%, and the middle ranks about the same; and the top 10%, just 34.2%.
From World War Two through to 1979 — and most of that time, under Tory governments — top income tax rates were between 98% and 83%. For a while, in 1947-8, the rate was 147.5%. Even for the first decade of Thatcher, the top rate was still 60%. Only after the miners had been defeated and the morale of the labour movement weakened did the Tories dare reduce the rate to 40%.
There was still great inequality in the higher-rate decades. The rich found ways round the top tax rates. Equally, the higher tax rates did not stop wealth and jobs being “created” at a much quicker rate than in these times when, we are told, wealth and jobs can be coaxed into existence only by bribing the rich with tax cut after bonus after pay rise after dividend pay out after tax cut.
The rich did not need the tax cuts which Thatcher set rolling. But they liked them. The tax cuts made things easier for them. They were part of a process which, for the last 30-odd years, has sent inequality spiralling, and spiralling again.
We want equality. As a first step, and as a necessary step to fit ourselves to demand and implement economic equality, the labour movement should fight to limit and reverse inequality. It can be done: even now, the inequality spiral has had its work cut out to get further than reversing the shift to reduced inequality made between the end of the 1930s and the end of the 1940s.
A 50% tax rate is only an initial gesture, or token. Every penny of what the top bosses salt away is looted from the efforts of the working class.