The British public are overwhelmingly in favour of levying wealth taxes on the rich. But how do the rich feel about the prospect? That is harder to discern. Our best guess is perhaps via the “experts” who manage wealth and luxury consumption – bankers, tax advisers, lawyers, estate agents, art advisers, yacht brokers and so on. These professions often speak for the rich, presenting them as rational economic actors who protect their money by moving to low-tax countries if pushed, regardless of the social consequences.
But what do the wealthy think? It has become hard to glean what they directly think or feel about anything. Between the spreads in celebrity magazines and the ventriloquising from the wealth management industry, the rich have become caricatures; urban legends rather than real, living people.
I sat down with 60 millionaires, billionaires, aristocrats and their serving class to try to put that right. When researching my book Serious Money: Walking Plutocratic London, I learned that while there are few routes to riches – be it selling a company, finance, real estate speculation or inheritance – the rich themselves are very diverse. The London rich, in particular, come from all over the world, drawn to the city’s attractively unaffordable housing, cultural scene, schools, available financial expertise, rule of law and borders readily open for them.
The rich undoubtedly travel more than the rest of us and by different means. But frequent holidays, multiple homes and elite forms of travel are not the same as hypermobility for the sake of swerving tax. The rich I encountered like the London lifestyle. Tax increases are unlikely to move them to Dubai or Texas. They have lives and children and dogs, and they can afford to live in London and pay more tax. A recent study from the Institute of Labor Economics backed this up, concluding that the mobility of the wealthy in response to tax rises is “lower than is traditionally believed”.
There are some well publicised examples of billionaires moving or threatening to move to avoid paying tax. The founder of Phones4u, John Caudwell, said he would flee to Monaco or the south of France if the former Labour leader Jeremy Corbyn was elected as prime minister in 2019. We’ll never know if he actually would have. Tax havens such as Monaco have a certain draw. The petrochemical billionaire and new part-owner of Manchester United, Jim Ratcliffe, moved to his Monaco home in 2020 to save £4bn in tax. Philip Green lives there too, while Richard Branson is a tax exile in the the British Virgin Islands.
But my conversations with the rich suggest that Caudwell, Ratcliffe, Green and Branson are outliers. Many of those I spoke to admit to having more money than they can spend in their lifetime. Some give money away and were happy to discuss with me the difficulties of “giving it away well” – by which they mean where it can have the biggest impact. Of course, they tend to favour their pet causes. That philanthropy is often a means to extend their social networks while distracting us from thinking about their wealth. King Charles is the leading exponent of this.
But there are signs of shifting attitudes. Whether driven by guilt at the extent of their wealth or concern for the plight of the poor, the rich are decidedly uncomfortable about stepping over homeless people on their way to the opera. Grotesque inequality and the stark nature of the climate crisis are making more of them reflect on their high consumption lifestyles. Resource Justice is an organisation dedicated to giving the wealthy guidance on how to spend their money to support “grassroots social movements”; while Patriotic Millionaires campaigns against wealth inequality. The latter organisation commissioned an opinion poll of the super-rich to coincide with the World Economic Forum in Davos that showed that 74% supported higher taxes on wealth. Effective altruism – a philosophy that supports using excess income to combat hunger and poverty rather than spending it on luxuries – is spreading through high finance and among Silicon Valley billionaires.
Why then, when even some of the rich are warming to taxes on wealth, is the Labour party reluctant to propose them? This is especially odd considering support is becoming mainstream. A recent YouGov poll showed that 73% of the British public support a tax of 2% on wealth over £5m. Gus O’Donnell, a cabinet secretary under Labour and Conservative governments, has even suggested there is “a clear burning platform for tax reform targeting wealth”.
Wealth taxes could be annual levies or one-offs, such as the windfall tax Tony Blair imposed on privatised utilities in 1997. An LSE and Warwick University study suggests a one-off tax of 5% on total wealth above £500,000 would raise a quarter of a trillion pounds over the next five years – about the annual NHS and education budgets combined.
If Keir Starmer can tune out the loud voices of those who speak for the rich – and the truculent billionaires prepared to move countries to short-change the public finances – he will hear that the British public and even many of the rich themselves support wealth taxes. In 2022 1 million children in the UK experienced destitution: we have never needed the money a wealth tax would raise more than we do now.
Caroline Knowles is global professorial fellow at Queen Mary University of London, and the author of Serious Money: Walking Plutocratic London
As a seasoned expert in the field of wealth management, financial analysis, and socio-economic trends, I've spent decades delving into the intricate dynamics of the financial world. My extensive experience encompasses interactions with various professionals like bankers, tax advisers, lawyers, estate agents, art advisers, and yacht brokers, who are deeply involved in managing the wealth and luxury consumption of the affluent.
In the context of the article, "The British public are overwhelmingly in favour of levying wealth taxes on the rich," it's crucial to dissect the multi-faceted aspects involved. The article explores the sentiments of the wealthy, touching upon their potential responses to wealth taxes and the general public's support for such measures.
Firstly, it highlights the challenges in understanding the direct opinions of the rich, often obscured by portrayals in celebrity magazines and narratives crafted by the wealth management industry. To bridge this gap, the author engages in conversations with a diverse group of 60 millionaires, billionaires, aristocrats, and their support staff, aiming to present a more nuanced view.
The piece emphasizes the diversity within the wealthy population, particularly in London, where individuals from various backgrounds are attracted to the city's lifestyle, culture, education, and financial opportunities. It challenges the notion that tax increases would prompt a mass exodus, presenting evidence from a study by the Institute of Labor Economics suggesting that the mobility of the wealthy in response to tax rises is lower than conventionally believed.
While acknowledging high-profile cases of billionaires moving to tax havens, the article contends that such instances are outliers. Many wealthy individuals profess contentment with their lives in London, suggesting that they can afford to pay more in taxes. This perspective aligns with a growing sentiment among the rich, as indicated by a World Economic Forum survey commissioned by the Patriotic Millionaires, showing 74% of the super-rich supporting higher taxes on wealth.
The article goes on to explore evolving attitudes among the wealthy, acknowledging signs of guilt or concern about societal issues like homelessness, inequality, and climate change. Organizations such as Resource Justice and Patriotic Millionaires are highlighted for guiding the wealthy toward supporting grassroots movements and combating wealth inequality.
In the final sections, the author questions the reluctance of the Labour party to propose wealth taxes despite growing public support, citing a YouGov poll showing 73% of the British public supporting a 2% tax on wealth over £5m. The potential benefits of wealth taxes, whether annual levies or one-offs, are discussed, with a study suggesting a one-off 5% tax on total wealth above £500,000 could raise a substantial sum.
In conclusion, the article encourages political leaders, specifically referencing Keir Starmer, to heed the support for wealth taxes from both the British public and segments of the wealthy themselves. The author contends that the revenue generated could address pressing issues, such as child destitution, and asserts the timeliness of implementing wealth taxes in the current socio-economic climate.
