Azara Blog: TUC general secretary wants the "super-rich" to pay more tax

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Date published: 2007/09/09

The BBC says:

The "super-rich" should pay more tax in an effort to reduce child poverty and fight crime, says the general secretary of the Trades Union Congress (TUC).

Brendan Barber said "loopholes" for UK citizens who spent time abroad meant tax breaks worth £4bn a year, putting a greater burden on lower earners.

These had to be closed, with the money raised spent on reducing child poverty - a key cause of crime - he added.

But Mr Barber denied his campaign was guided by the "politics of envy".

Speaking ahead of the TUC annual congress, which starts in Brighton on Monday, he said: "Today a significant group of super-rich float free from the rest of society, and think that tax is for the little people.

"Today the rest of society pays a heavy price for the wealth gap - whether middle, low or no income."

Mr Barber said this "distorted" the housing market, adding: "The gap harms social cohesion - and without joining the moral panic about crime rates in the UK, it's noticeable that many countries with a fairer distribution of income have lower crime rates."

Some 112,000 people currently benefit from "non-domiciliary tax breaks", he added.

When asked about the size of City bonuses, Mr Barber said they had reached £14bn in total this year.

But he added that the TUC was not calling for a change in the rate of income tax for the highest earners.

Unions, he said, had to "build support for a new progressive consensus of equality and redistribution - not based on the old politics of envy but on a new politics of cutting the costs of inequality".

Poverty costs the UK economy £40bn a year - more than £600 a person - according to the TUC.

The BBC unfortunately just repeats what Barber says without any critical analysis. First of all, what is a "super-rich" person? Is it the top 0.1% or the top 1% or the top 5% or what? Whatever percentage you choose, it better not be very big, otherwise the term is meaningless rhetoric. And given that it is a small percentage, it is ludicrous to say that these people "distort" the housing market. The reason the house market is "distorted" (i.e. prices have risen sharply the last decade) is because not enough houses are being built, pure and simple. This is because the middle class refuses to allow enough houses to be built, in particular enough land to be released for housing. It has nothing to do with the "super-rich". (And also, the market is not "distorted", it is just supply and demand, i.e. Economics 101.)

And the tax "loopholes" he is talking about could perfectly easily be closed, only the government knows full well if they did so it would have little impact on government tax take, because these people would just move elsewhere. London needs the super-rich more than the super-rich need London. This is the problem with this pathetically dated world view of Barber.

And what does it mean that "poverty costs the UK economy £40 billion a year"? Presumably Barber is referring to direct governmental costs like social benefits and indirect governmental costs like health care. But what is his "solution" to this "problem", if it is not to tax high earners more and take that money and hand it over to poor people. So the direct costs remain and presumably Barber is going to claim that miraculously the indirect costs would disappear. This is to confuse correlation (poor people are less healthy) and causation (poverty "causes" ill health, so to eliminate ill health you throw money at poor people).

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