Friday, 22 May 2009

How would a "Greed" Tax work?

Europe: The Greediest Corner of Our Planet
By Raphie de Santos

Europe has been officially declared the greediest continent on the planet. A report* published in 2003 showed that Europe had more US dollar ($) millionaires than any of the world’s continents. Europe had 2.6 million (m) such individuals followed by the United States with 2.2m and Asia pacific with 1.8m. These are individuals who have over $1m in liquid wealth – essentially assets that can be disposed of at short notice which excludes homes.

A modest, one-off wealth tax of just 10 per cent on these millionaires would generate a trillion dollars to create eight million jobs across Europe.

Scotland’s share of that tax would amount to £6.5 billion – enough to create and sustain 80,000 jobs over the next three years, with an average annual salary of £25,000.

We could build tens of thousands of new homes to rent and turn empty buildings and homes into social housing. We could reduce class sizes by employing thousands more teachers and learning assistants. We could insulate every home in Scotland.

Call it a ‘Wealth Tax’, call it a ‘Crisis Tax’ – or even call it a ‘Greed Tax’. It would be a mighty step out of recession, paid for by those who caused the crisis.

The one off wealth tax could be repeated with annual tax of 5% on the liquid assets of these millioniares. This would give them 20 years to adjust to a more normal lifestyle!

Is such a tax justifiable? Most of this wealth has come from goods and services. These goods and services have been made by the majority of the population with their manual and mental labour. The millionaires can then only make money if we the majority buy these goods and services. Essentially through a greed tax we are only getting our money back.

Of course greed does stop at the super wealthy rich. There has been a massive redistribution of wealth in favour of the top half of society. In the UK the bottom 50% of the population has gone, in three decades, from owning 12% of the liquid wealth to owning 1%!

Tax all household incomes over £50,000 a year at 100%. A fundamental of capitalism is privilege, authority and deference, and behind personal power is economic power. This measure would collapse luxury industries like high fashion, grotesquely expensive restaurants and the market for Mercedes – in other words undermine obscene waste and conspicuous consumption. More rational forms of green consumption would follow.

In the UK the richest 10% of households have an average income of £100,000**. Such a wealth tax would generate an extra £9 billion pounds per year for Scotland. Across Europe this would be a trillion Euros!

In Scotland the extra 9bn is equivalent to a third of the entire Scottish budget for 2009/2010. It could fund a whole new health service for Scotland. Alternatively every year with the money we could build 600 new schools or 150 new hospitals or provide 100,000 extra homes. What we would do with the money would be decided by the needs of the majority of the population in a democratic fashion. It would be a society based on meeting people’s needs and not the obscene greed that we now have.

*World Wealth Report, Merrill Lynch Global Private Client Group New York.
** Office of National Statistics.

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