Is wealth inequality causing the big issues of our day?

Whitewavemark2

To my mind a wealthy person is one whose passive or unearned income is one who earns over £50 million a year.

Good grief! £50m a year isn’t just wealthy is it!

GrannyGravy13

butterandjam I am surprised that overall assets of £2 million puts someone in the top 5%

I assumed it would be higher now that property prices have risen 🤷‍♀️

Property prices have been stagnant for several years, small rises in some years, but now falling slightly.

The economic and international situation is making people cautious about committing themselves to taking on mortgages at a time of rising interest rates.

This why the government is unlikely to meet its pledge to build 1.5 million homes during this Parliament.

Cossy

Whitewavemark2

To my mind a wealthy person is one whose passive or unearned income is one who earns over £50 million a year.

Good grief! £50m a year isn’t just wealthy is it!

My reaction, too, Cossy.

The subservience to ‘wealth’ on this forum sometimes astonishes me.

I feel so sorry for those poor souls jogging along on more than £1 million a year. How dare we think of depriving them of any of it…

There seem to be two completely opposing views of what our economy should look like. One says that our finances should be arranged so that the whole population is able to lead a decent life and is cared for. The other is indifferent to want and hardship so long as the wealthy can hang on to all they have.

I don’t know why they bother to start threads like this.

I’m also rather astonished at pensioners income range starting at £100,000 per year. On what planet is that?

I don't think most people on Gransnet have any concept of how wealthy and exclusive the 'super-rich' really are.

Whitewavemark2

To my mind a wealthy person is one whose passive or unearned income is one who earns over £50 million a year.

Seriously???
If that is the case, poor Prince William is a pauper since the Duchy of Cornwall only generates £20 million of income per year.

paddyann54

What is this “class” thing?
I grew up in the west of Scotland and hadn,t heard s peak of class until my late 20s when I did a college course.
Our lecturer asked what class we would be aiming our skills/ businesses at.In all honesty it wasn,t something that was on my radar ,one of my classmates insisted she would be aiming for upper class customers as she herself was “middle class”
When questioned why she believed that was the case ,it was because she had a washing machine and fridge freezer.
She certainly gave the rest of us a laugh.
I think class is a construct to cause division ,where I grew up there were people of diffferent backgrounds in very different jobs.
From a concert pianist to a postman.
We all got along just fine
Now the media uses class along with religion and culture to cause havoc and the constant media attention on the likes of the Kardashians or Beckham family make a lot of young folk feel there’s no point in getting a job at the lower end of the pay scale as they,ll never reach those levels. Which are now seen as the goal they should be aiming for .
Me?Iust wanted a business that paid the bills …whoever the customer was

I agree with your post 100%. Especially in England ( I don’t know about Scotland) One of my daughters ,who happens to be quite successful in her field , lived in the UK for a while and had never come across this ‘ class’ thing to such an extent. It really upset her. I had assumed it was a thing of the past but maybe not.

Before you start flapping in horror, the argument I am trying to build is the one that shows that extreme wealth is beginning to skew the worlds market place, politics and wealth distribution.

When the wealthy accumulate so much wealth day on day, year on year, ask yourselves - “what do they do with it”?

They can’t possibly spend it. If Musk decided to spend his money at 1million pounds a day it would take him nearly 5000 years to get rid of it, and that isn’t taking into account the money continuing to pour into his coffers from unearned income.

What they then do with all the surplus floating about is to reinvest it. - what else is there to do with it unless they give it away.

They reinvest in assets like property, government debt and stock etc. the result of using this enormous buying power is that they have the power to influence the price of property, the stock market and governments etc. which is why we have seen the market and property prices continuing to rise even in times of economic hardship, and decisions made by people like Reeves continually tied to the market and the need to keep it sweet. That together with the ability to buy your votes via their enormous power through SM, or direct funding of political parties, who in turn must dance to their tune means that the rich are getting richer snd the poor, poorer.

Inequality is growing existentially, and the crises for the poor and indeed the middle classes is getting worse year on year. There is nothing at present that is in place to stop this crises.

Which is why I am arguing for a greater redistribution of wealth via the tax system.

A tax on wealth.

Now we can bicker over what constitutes extreme wealth etc, - I have used the extreme examples of billionaires snd trillionaires to argue my point, that imo is secondary to establishing the principle that inequality in any society is a bad thing for all sorts of reasons - not least for fairness and the only way to fix this at present is via redistribution by the tax system.

How that income is spent is of course for another debate.

Once the principle of a wealth tax is accepted, we can then turn our attention to thresholds and rates.

Norway and Switzerland have rates between 0.5% and a little over 1% - collected on world wide assets of individuals year on year. Seems overly generous to me, and not one which would resolve the problem of inequality, but I suppose it is a start. The wealth levels - I can’t remember but can be googled. But at least they have established the principle of taxing the wealthy.

We aren’t even off the starting block.

GrannyGravy13

butterandjam I am surprised that overall assets of £2 million puts someone in the top 5%

I assumed it would be higher now that property prices have risen 🤷‍♀️

That kind of comment just shows how hopelessly out of touch some people are. It's really no wonder Reform can appeal to people who claim those at the top just don't understand them.

keepingquiet

I don't think most people on Gransnet have any concept of how wealthy and exclusive the 'super-rich' really are.

The "super-rich" make up a tiny percentage of people, which is why people who aren't in the same wealth bracket as the Beckhams or Alan Sugar don't realise that they are wealthy.

The median income for all employees in the UK is £32,890pa, which means half of all employees earn less than that. Most people's most valuable asset is their home. The average UK property value is £290,000. Many of those properties are, of course, mortgaged and some people don't even have any property.

"Median household wealth in Great Britain was £293,700. The wealthiest 10% of households had household wealth of £1,200,500 or more." (ONS)

It's not difficult to see that most people in the UK have nowhere near a £ million in assets. If they do have a £ million or more, they are very firmly in the top half of the wealth bracket.

In a way I started this thread because I am concerned at what the “super-rich” are doing to the world, trying to argue for a way to prevent their colossal undemocratic, inequality making power.

I can understand why it has widened into wealth tax for that tier below the super-rich, who are still eye watering wealthy.

The whole principle being, that inequality cause by the wealthy activities is bad for everyone.

It is healthy to ensure some redistribution is carried out year on year through the tax system.

Thomas Piketty was covering this topic 15 years ago in his extensive and extensively researched work, Capital in the 21st century.

Adam Smith noted the pernicious effects of wealth and money acquisition over 200 years ago. And proposed solutions.

Keynes’ insights drove the most equalising decades in recorded western history, not only in the UK but also in the US (e.g the New Deal)

We, the UK are still in the grip of Thatcher and her ludicrous household budget theories and in denial about the source and function of money.

Discussion of wealth control seems strangely futile.

Whitewavemark2

Once the principle of a wealth tax is accepted, we can then turn our attention to thresholds and rates.

Norway and Switzerland have rates between 0.5% and a little over 1% - collected on world wide assets of individuals year on year. Seems overly generous to me, and not one which would resolve the problem of inequality, but I suppose it is a start. The wealth levels - I can’t remember but can be googled. But at least they have established the principle of taxing the wealthy.

We aren’t even off the starting block.

I don't know how wealth tax fits in with the other taxes in Switzerland
It is levied by the Cantons, and may be additional to council tax that we pay, it's not just a tax on the very wealthy the threshold can be as low as CHF 35000 and is paid on net wealth. However it fits in with other taxes it's not a significant tax issue, a great many choose Switzerland as a low tax state.

In the UK if you want to tax the wealthy more extend the Council Tax to include higher value properties ,it's a lot easier than everyone submitting a wealth report every year.

Yes Piketty is almost certainly the foremost economist but Stiglitz (sp) is another and there are a few American economists which outline the way a wealth tax should and can be applied. But this isn’t an economics lecture😄😄

This is me arguing that the accumulation of wealth must be controlled because without doing so the world is going to hell in a handcart.

Your last sentence was a tad Unfortunate, but hey Ho.

david49 I was just illustrating that wealth tax is possible - not advocating for a particular method.

But establishing the principle is a big step forward.

"In the UK if you want to tax the wealthy more extend the Council Tax to include higher value properties ,it's a lot easier than everyone submitting a wealth report every year."

It would be a start.

We have just been away in Jersey to stay with dear old friends who are in the super wealthy league.

One of the main reasons they are on Jersey is so they can continue their Family Foundation which is a social enterprise helping many people.
UK tax system would make this very difficult.

They employ hundreds of people in the UK, spend money wisely to benefit the local economy, are incredibly altruistic and of course are giving back to society.via their foundation.

Why should they give more and more, IMO they contribute enough as it is, if it wasn’t for the spending power of people like this a lot of businesses would suffer.

It isnt a new phenomenon in the past it has been much worse in the past, the Feudal System, the Industrial Revolution had far greater disparities where the poor had nothing at all. In countries like India and many others that is still the reality.

For us in the UK the one overriding issue is housing cost, the past taxation system has made domestic property too attractive, too much money has been invested ,it's not just a place to live but your main investment. There are many millionaires just from their property value, most of them 60 plus.

That has nothing to do with billionaires, they only get rich because we choose to buy their products, if we keep buying them they will get richer, there is nothing we in the UK can do to stop wealth flowing to them unless we stop buying their products.

sago

Yes of course, if that was how all wealthy people behaved it would be a much smaller problem, but my argument is that the wealth owning class as a whole don’t behave like that. The wealth they accumulate is largely used to extract even more wealth from the rest of us or the government (through debt) etc.

Accumulated wealis not as a whole used altruistically.

I am not against wealth per se.

None of us know if the wealthy use their money for good, unless we know them, like sago or they publicise their philanthropy.

Without entrepreneurial ambition, without large corporations we would not have many of the innovations which make our lives easier and/or enjoyable.

Big pharmaceutical corporations literally save lives.

Big corporations employ hundreds if not thousands.

Tax yes, but not in a punitive way that disincentives.

David49, You have made a number of very valid points.

I'll address just one (I have something else to do) and that's about billionaires. I agree. There is little we in the UK can do about Musk, Zuckerberg, Bezos et al apart from not using their products.

david49

So at the moment, the U.K.s growth is roughly 1% GDP. The super wealthy’s growth is say between 20-50% pa, and that wealth has come from the likes of me and thee, the less well off and middle classes as well as governments, in the form of stocks, property and debt. So it doesn’t take much imagination to understand where the wealth is flowing.

Sago

We have just been away in Jersey to stay with dear old friends who are in the super wealthy league.

One of the main reasons they are on Jersey is so they can continue their Family Foundation which is a social enterprise helping many people.
UK tax system would make this very difficult.

They employ hundreds of people in the UK, spend money wisely to benefit the local economy, are incredibly altruistic and of course are giving back to society.via their foundation.

Why should they give more and more, IMO they contribute enough as it is, if it wasn’t for the spending power of people like this a lot of businesses would suffer.

What would happen to their money if they didn't own it?

As it happens, I know somebody who is in and out of the UK top 100 rich list. He lives and is domiciled in the UK and has no problem paying UK tax. He also gives away a huge chunk of his wealth every year.

keepingquiet

I don't think most people on Gransnet have any concept of how wealthy and exclusive the 'super-rich' really are.

I think you could be right.