Over 30 economists demand Keir Starmer introduces an absolutely critical policy

Over 30 economists from the UK and around the globe have written an open letter to Keir Starmer. They are demanding that Labour brings in a modest wealth tax on assets over £10 million, which would raise tens of billions every year.

“Outrageously imbalanced”. We need a wealth tax

The economists, including high-profile author on inequality Thomas Picketty, write:

The UK – like many advanced economies – has seen wealth concentrated in fewer and fewer hands. Data shows us that a tiny minority of people now own an outrageously imbalanced share of the country’s wealth. Fewer than 50 families own more than 30 million people in the UK, while globally the richest 1% own more than 95% of humanity.

Indeed, this year’s Sunday Times rich list shows that the 350 wealthiest families in the UK have maintained vast wealth at £773 billion.

The academics continue:

At the same time, more people than ever are reliant on food aid in the UK and wages don’t pay enough for the majority to do much more than scrape by and survive. This disparity is economically destabilising, undermining economic growth and proving fertile ground for the dangerous rise of right-wing populism.

The Financial Conduct Authority (FCA) revealed in May that 21% of UK people have less than £1,000 in their bank. With high rents and mortgages payments resulting in financial precarity, people are wary, save more money when they have it or simply do not even have the cash to spend. That stifles growth because there is low aggregate demand for products and services.

On top of that, super rich people buy up assets – they do not buy a thousand dinners per day nor a thousand t-shirts, even though they could afford to. But a mass of lower income people would. This purchasing of assets such as housing further drives up prices for the rest of us. At the same time, if the money was more evenly distributed there would be more demand for essentials and luxuries because 1,000 people will buy 1,000 dinners in a day, for example.

“History should embolden our resolve”

Writing to Starmer, the economists further point out that sycophants for the elite are using the same playbook as their counterparts did historically. They put:

In centuries gone by, critics claimed income tax was too technical or difficult to implement and administer. The same arguments are being used now about a wealth tax, while income tax has become a given. These arguments shouldn’t stop us now and history should embolden our resolve.

The Institute for Fiscal Studies (IFS) is arguing that very point:

In practice, implementing a wealth tax would be difficult. It would require the government to set up a new administrative apparatus to value wealth – and valuation would be extremely difficult for some assets, such as private businesses

The thing is, assets already have a market value. And HMRC already has some procedures in place for valuing assets. Other countries such as Spain and Norway also have issued wealth taxes so the UK government can learn from their approach. Most new policies need more administrative work in place – that doesn’t mean you don’t implement them. Further, the fact that inequality is so obscene means that there will be a low amount of people that a wealth tax will impact, making it simpler.

Featured image via the Canary