Denis Healey is often misquoted as saying he wanted to “squeeze the rich until the pips squeak” in the 1970s. He never actually used that phrase. What Labour’s finance spokesman did predict, however, was that his proposed top tax rate would spark “howls of anguish from the 80,000 people” wealthy enough to pay. With Labour in power again, it seems plus ça change, plus c’est la même chose. On Thursday this newspaper reported that Rachel Reeves, Healey’s successor in the Treasury, was looking at taxing the rich more by increasing capital gains tax. That would be a very good idea. Yet “howls of anguish” fill the airwaves and can be found on newspaper front pages. Ms Reeves should ignore them.
For decades the rich have projected ideas that support their interests, notably by reframing political language to valorise “wealth creators”. Post the financial crisis, this has been a harder sell. But plutocrats won’t easily give up their muscle, privileges and wealth. In Britain, the grossly unfair distribution of power fuels the effort to protect 3,000 individuals in private equity from Labour’s plan to make them pay their fair share in tax. It’s absurd to think that successful capitalists require an annual state subsidy of £188,000 just to perform their roles. However, this is probably only the beginning of Labour’s efforts. On paper, Britain’s tax system seems relatively progressive, with a headline rate of 47% for those earning over £3m. In reality, nearly a quarter of this ultra-wealthy group pays less than 12% in taxes.
