When Bolder Options Stare Them In The Face

Paul Knaggs writes:

In the latest episode of Labour’s ideological contortions, the party has now ruled out a wealth tax. Gone is the fiery class warfare rhetoric, replaced by assurances Labour will not rock the fiscal boat or demand much from comfortable elites.

Labour has now joined the Tories in protecting the dragon hoards of the mega-rich. What a shocker from this party of the people! Why tax those who can easily afford it when you can squeeze working-class stiffs instead?

You are left wondering what principles remain as Labour triangulates itself into blurry centrism, abandoning pledges as quickly as they are made. Today’s assurances that the wealthy have nothing to fear will surely disappoint those dreaming of a fairer society. But pragmatism prevails as Labour concludes the progressive wishlist must be sacrificed to gain power.

Apparently, the magic money tree only bears fruit for the top 0.3%, not the unwashed masses. But fear not, Starmer once paid lip service to soaking the wealthy, so all is not lost! Except now even that toothless pledge has gone the way of his socialist principles.

The justifications would be comical if the implications weren’t so dire. Labour can’t possibly ask multi-millionaires to pay a bit more – it might, gasp, raise billions! Best leave them to enjoy their gilded lives untroubled. How will they afford the caviar otherwise?

A report from the TUC earlier this month said a “modest” wealth tax on the richest 140,000 individuals – around 0.3% of the population – could deliver a £10.4bn boost for the public purse. But in an interview with the Telegraph, Reeves said “no” to any new wealth tax. “I don’t have any spending plans that require us to raise £12 billion. So I don’t need a wealth tax.

Reeves also said the party had ditched Starmer’s 2020 Labour leadership pledge to increase the top rate of income tax. The first of Starmer’s ten pledges to Labour members when running to succeed Jeremy Corbyn was to “increase income tax for the top 5% of earners”.

“Yeah. The tax burden is its highest in 60, maybe even 70, years. There have been 24 tax rises in the 13 years of Conservative government,” she said when asked if the promise was dead. “I don’t see a route towards having more money for public services that is through taxing our way there.”

At the moment earnings over £125,140 are taxed at 45%. Liz Truss had tried to lower it, but was forced to abandon the plan after her mini-Budget caused chaos in the markets.

Of course, Labour spinners will cast this as “responsibility” and “electability.” But it represents a deeper abdication of courage to confront inequality and vested interests. Labour is betting frustrated voters will settle for platitudes and tinkering over meaningful reform. A risky wager, with many core supporters feeling politically homeless.

Anneliese Dodds, the chair of the Labour Party, defended the decision to rule out wealth taxes. “Labour has been clear that we will not impose a wealth tax,” she told Times Radio on Sunday. “That’s been our policy for some time. But we will take difficult choices around taxation because we do think we need to have a tax system that’s fair for working people and that supports economic growth.”

Let’s cut through the platitudes and euphemisms – Labour has signalled it will continue austerity-lite, despite ample opportunities to chart a new path. Rather than asking those with broadest shoulders to contribute more, their plan seems to be robbing Peter to pay Paul, as the saying goes. The inconvenient truth is that both Peter and Paul come from the working-class ranks who can least afford further squeezing.

For all Labour’s progressive posturing, this reveals a certain spinelessness when faced with wealthy interests. Radical proposals melt away, sacrificed at the altar of electability and pragmatism. The end result looks suspiciously like tinkering around the edges rather than fundamental reform to reverse savage inequality.

This represents a failure of imagination and courage when bolder options stare them in the face. Why not take the path less travelled for once? The answer, it seems, is a lack of conviction to see it through. And so we limp on down the well-trodden road of managed decline, with an out-of-ideas Labour unable or unwilling to chart a new course.

Then again it’s hard to be different when the reality is all parties have bought into the neoliberal consensus. This only confirms that Starmer’s Labour and the Tories are two cheeks of the same backside – both poised to inflict further pain on ordinary people already crushed by the cost of living crisis. Why demand fiscal responsibility from obscenely rich corporations and individuals when you can take aim at the poor instead?

So much for a meaningful choice come election time. But for the colour of the rosette, one could barely slide a cigarette paper between the establishment parties united in their deference to the wealthy. If you crave substantive change rather than cosmetic tinkering, best look elsewhere.

Labour has cast its lot – and it’s not with the have-nots. The door is now open for a true progressive movement to give voice to the voiceless, while this craven imposter parroting Tory policy cedes that ground. The Faustian pact with big money is sealed.

What use victory if principles are discarded in the process? At this moment it looks like Labour will win the battle for number 10 but the working class will lose the war.

And the Morning Star editorialises:

Tonight, the rich can sleep easy in their beds. Labour has ruled out a wealth tax if it wins the next general election. And to make it absolutely clear, shadow chancellor Rachel Reeves has emphasised that Labour would not increase the top rate of income tax.

Reeves chose the Telegraph to give her personal pledge. “I don’t have any spending plans that require us to raise £12 billion. So I don’t need a wealth tax or any of those things,” she said. “We have no plans for a wealth tax.”

And if any doubt remained, she said the party leadership had jettisoned Keir Starmer’s pledge, made when he was campaigning to become Labour leader, to increase the top rate. In effect Labour is proposing to maintain the Tory policy of taxing consumption rather than income or wealth. This naturally falls unequally on people with the least wealth and lowest incomes.

Compared to Labour’s present plan and even after she reduced income tax rates in her first Budget, Margaret Thatcher maintained a 60 per cent top rate. At present earnings over £125,140 are taxed at 45 per cent. For more than 50 years, progressive taxes on income and wealth have been reduced and regressive taxes — VAT and National Insurance contributions — have been increased.

Labour has set its face even against the Trades Union Congress tax policy which calls for a “modest” wealth tax on the richest 140,000 people in Britain which, says the TUC, could raise more than £10 billion to help pay for public services. TUC research suggests that a “one-off wealth tax” of 1.7 per cent on people with assets above £3 million, rising to 3.5 per cent for those with more than £10m, “could deliver a £10.4bn boost for the public purse.” This, the TUC says, affects only the richest 0.3 per cent.

The first of Starmer’s 10 pledges when running to succeed Jeremy Corbyn was to “increase income tax for the top 5 per cent of earners.” With this U-turn Labour Party chair Anneliese Dodds, who Starmer sacked as shadow chancellor when he promoted Reeves to that position, completed the demolition of her reputation for careful good sense with the nonsensical claim that “Labour has been clear that we will not impose a wealth tax and that’s been our policy for some time.” To this she added that Labour would take difficult choices around taxation, “because we do think we need to have a tax system that’s fair for working people and that supports economic growth.” 

What these “difficult” choices might entail if Labour has abandoned a shift towards taxing the rich and their wealth is not hard to see. It means cuts in public expenditure and or increased regressive taxes on working people. The idea that maintaining or increasing the wealth of the richest results in a “trickle-down effect” and, as Dodds suggests, “supports economic growth” is thoroughly discredited. The British capitalist system depends on investment income and capital gains being taxed at lower rates than income from work.

In a recent study the London School of Economics wealth tax commission concluded that a one-off wealth tax was preferred over increasing taxes on work or spending. A one-off wealth tax on millionaire couples paid at 1 per cent a year for five years, they found, would raise £260bn. By way of contrast Reeves’s spending plans rise not even to a modest £12bn. Labour’s latest policy reversal is the clearest sign that Starmer’s electoral strategy hinges on assuring the rich and powerful that neither their wealth or power is threatened by Labour. This is Westminster Labour’s new philosophy of never-ending poverty for working people.