Associate Professor of Economics, University of Warwick
This survey provides a detailed and informative overview of people’s attitudes to high wealth, including highlighting some of the complexities in those attitudes. For me, three points really stand out.
First, it is abundantly clear that the British public are not “intensely relaxed about people getting filthy rich”. Seven out of ten Brits are concerned about a society in which some have wealth of over £10m while others live in poverty. While there are inevitable political differences in answers to such questions, they are smaller than one might imagine: these concerns are shared by six in ten of those who voted Conservative in 2019, and eight in ten of those who voted Labour.
Primarily these concerns seem to be driven by a mix of unequal opportunities to achieve these high levels of wealth and the influence of money in politics. Completing the quote from Peter Mandelson, there is also a view across the political spectrum that the wealthy aren’t paying their share of taxes — a point to which I will return.
Second, attitudes to people with wealth are strongly shaped by opinions about whether that wealth is deserved. Deservingness is necessarily subjective, and framing matters a lot. Opinions about inherited wealth appear to differ widely depending on whether the recipient’s parents earned the wealth themselves – 49% said ‘accumulating wealth in this way is fair’ – or received it from their ancestors – only 32% said this was fair.
Opinions around fairness are also sometimes surprising. Almost twice as many people (53%) said it was fair for a landlord to accumulate wealth as for a city trader (29%). And this isn’t driven by anti-banker sentiment: the same is true for a footballer (33%). I find this particularly interesting, because bankers and footballers are likely to have built more of their wealth from saving income, while landlords have more often benefited from rises in house prices outside of their control. Surveys often suggest higher support for taxing unearned gains than wealth which come from savings. However, in this case building wealth from work appears to be seen as less ‘fair’ than building it from other wealth, or even from inheritance; perhaps this is because those high incomes are themselves seen as unfair.
Third, views on tax are surprisingly consistent. When asked comparatively how wealth should be taxed relative to work, slim majorities preferred wealth to be taxed more than work rather than being taxed less than work. But the clear majority in all cases was for wealth to be taxed neither more nor less heavily than work.
In line with the current tax privilege of income from wealth relative to income from work, almost seven in ten people thought more should be done to tax individuals with the highest levels of wealth. Only one in twenty thought they should be taxed less. For the latter group, the key worries were around mobility and people leaving, highlighting the need to ensure that taxes take into account how people will respond.
What does this mean for policy? I have previously written about the need to tax wealth better relative to work. The current tax system charges National Insurance Contributions at 12% to someone working full time on the minimum wage, but at 0% to their landlord when s/he gets paid the rent. It charges a tax rate as low as 10% to someone receiving £1m in the form of capital gains. Even the 20% headline tax rate on capital gains is far lower than the top income tax rate of 47% including National Insurance. This creates inequities both between rich and poor, and among the rich: Rishi Sunak pays both a lower tax rate than a nurse, and a lower tax rate than a banker taking home £2m in earnings. But the reforms that fix just these problems – equalising capital gains tax rates with income tax rates, extending National Insurance Contributions to unearned income – would actually not have much impact on the very wealthiest.
Those with wealth above £10m – just 22,000 people, around one adult in every 2,500 – are much more able to plan how they hold their wealth to minimise the tax they owe. If there is a desire to reduce wealth concentration among the wealthiest, “there are limits to the extent of redistribution that can be achieved using existing taxes on wealth, even after effective reforms” (Wealth Tax Commission, 2020). An annual wealth tax is the only policy that can be really effective in raising substantial revenue from this group, and recent polling has found that this continues to enjoy high levels of support.
The findings of this present report suggest that, despite mixed opinions on who does or doesn’t deserve their wealth, there is clear appetite for exploring such policy options among all demographic groups, socioeconomic groups, regions of the country and political persuasions.
