Last month, Nick Clegg announced his plans to tax the rich. Today, he reaffirmed that commitment, but this policy is not only foolish and misguided, it is likely to be counterproductive.
Nick Clegg's u-turn on taxation was reported late last month. This morning, Andrew Marr caught up with Clegg in Brighton where his party conference is being held. Marr was skeptical about Clegg's claim that the Coalition Government will be clamping down on the rich before the election, but he insisted that was indeed the case.
As ever, bashing the rich sounds good to the man in the street, to the oppressed housewife, the unemployed, the pensioner, but let them have no doubt what this actually entails, and what will be the end result.
When most thinking people hear about a clampdown on the rich they think of the super-rich: people like Bill Gates and Warren Buffett, or at a push, Paul McCartney, but the Treasury is already making plans to "clamp down" on the simply rich and even the moderately well off.
At the moment, the Inland Revenue focuses on people with assets of two and a half million pounds; it is now reported to be taking on a hundred extra staff in order to focus on people with assets of more than one million pounds.
What will this mean in practice? What it will not mean is targeting playboys and wasters, the sort of people who play high stakes poker all day.
It will mean hospital consultants. Currently, a consultant can earn up to just over £100,000 a year. Imagine a senior consultant married to a PA; they have a biggish house and maybe their eldest son is living at home and working. They will be within this remit.
It will mean small businessmen. Imagine your local mini-market, the sort run by the hapless Dev in the soap opera Coronation Street. A successful small businessman may own two or three such shops in the locality. On paper that may well make him a millionaire; maybe he lives over one of the shops and owns it outright, and has mortgages on the other two. He may sound rich, but he has stock to buy, staff to pay. And he is a much easier target than someone who is disgustingly rich, produces nothing, and can hide his wealth in all manner of trusts and schemes.
The British public should not be fooled by this rhetoric of the rich paying their fair share. When the axe falls, it will be doctors, senior teachers, people in middle management, and most off all entrepreneurs and your local businessmen who will be targeted by the new wealth tax. That will mean not less austerity but more as these people move elsewhere or simply shut up shop, their incentive to create wealth having been destroyed.
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