So Ed has a policy at last. It had the gestation period of an African Elephant, but it’s a bouncing baby Wealth Tax! Congratulations!
No great surprise, I suppose. Given that both the Libs and the Reds are now signed up to this idea, it’s going to happen, I'm afraid. Dave and George cannot win an election without fair boundaries and a decent economy; we know they won’t have the former and it is unlikely, given current form, they will have the latter.
Wealth Taxes are iniquitous, but populist. This one is pitched in such a way as to affect ‘only’ the stinking rich. Given that a five bedroom terraced house in the right part of Clapham is valued at £2m+, and may be lived in by a retired couple on a fixed income who are asset rich but cash poor, the victims may be neither stinking nor rich, unless they like the idea of equity release schemes in their 70s and 80s. If the house is home to professional folk and their family, they are almost certainly paying over 60% of their income in tax already.
This confirms what we all knew, that the additional rate of tax, first at 50% and about to be 45%, doesn’t bring in enough money and results in tens of thousands more people consulting their accountants about avoidance, who otherwise wouldn’t have done. Brown knew it wouldn’t work when he designed it to go off like a time bomb after an election that he was bound to lose. It remains a strategic error of huge proportions that the Tories did not insist on defusing the bomb on Day 1 of the Coalition; we must suppose that the idiotic Vince Cable was the main obstruction.
Once you have a Wealth Tax, it is hard to get rid of it. Probably, it only gets chucked out after the country goes so far downhill that radical change is supported by the electorate (see Thatcher, 1979-83). So this one will probably be around from 2015 when Prime Minister Miliband takes over, until 2025, when Prime Minister Brutus Balls gets chucked out by the electorate and is forced to leave the country with his wife and family under cover of darkness. By then, just imagine what a fetid state the country will be in. I imagine it will be unrecognisable, an increasingly feckless and uneducated British underclass joined by huge numbers of Eastern Europeans and our Islamic friends. It will be defined no longer by the British Character, but instead by a nightmare Tower of Babel-meets-Bedlam-meets-the Cafeteria of the UN.
It is unlikely that once this country gets used to food stamps, cradle-to-grave welfare entitlements and a state that takes up 75% of GDP, that it will vote to give them up – at least until we become an Albania. By this stage, the Wealth Tax will, mutatis mutandis, be a Property Tax, affecting half the population.
All you need for enlightened capitalism to work is to Set The People Free. But when the people allow economic warfare to be waged on job- and wealth-creation, and vote themselves an income they have not earned, they give up their freedoms and imprison themselves. They won’t like it when they are told this, but eventually they will know it to be true.