I has spent nearly a decade advising the UK’s wealthiest families on how to preserve their wealth. As we witness extraordinary increases in the cost of living, we need to talk about the elephant in the room: wealth inequality.
The UK is the fifth largest economy in the world. Yet Britain is the second most unsustainable of the 36 major economies, according to a recent study by L’Atelier BNP Paribas, an independent research subsidiary of the French bank. Depressed wages coupled with high housing and childcare costs have been a persistent problem in the country for decades, and now, according to its report, extreme wealth inequality threatens to spark civil unrest.
Families already under severe financial strain face the prospect of a ‘cost of living tsunami’ as prices of daily groceries rise by 50%. At the same time, the wealth of billionaires has skyrocketed over the past year. The UK now has a record total of 177 billionaires, according to The Sunday Times Rich List 2022.
I have a particular sensitivity about the uncritical extreme wealth platform, due to my past life as a private wealth attorney. An intellectually stimulating area of practice, I intended to continue my career indefinitely, until a friend told me that there were more food banks than McDonald’s branches in the UK. I was horrified to discover that the gap between rich and poor was so extreme. To me, that’s something incredibly troubling about the economic health of this country.
I had already begun to reflect on the critical role of taxation for investing in public services and felt growing unease about wealth disparities, as well as the existence of harmful narratives around taxation. Somewhat awkwardly, advising on how to “mitigate” wealth taxes was a fundamental aspect of my day-to-day role. Once I realized I was in a state of cognitive dissonance on the issue of wealth inequality, it became clear that I was part of the problem. As a player in the global economy, I was operating in a system that exists primarily to preserve and accumulate assets, as well as to minimize taxes for the wealthy. There must have been a relationship between my professional role and the increasing levels of concentration of wealth revealed to me.
I have come to the conclusion that, in its present form, our economic system perpetuates wealth inequality on purpose. Economic gains are concentrated on a very small proportion of the population and political choices have been made to avoid redistributing these gains more equitably. After a dramatic change in direction, I now work with a growing number of wealth holders who recognize that wealth inequality destabilizes our economy and endangers the fabric of our society. They advocate for higher wealth taxes so that ordinary families and low-wage workers are not burdened with a disproportionate financial burden.
A billionaire wealth boom should be no cause for celebration at a time when many people in the country cannot afford to heat their homes and put food on the table. As inflation, which effectively becomes a tax on ordinary people, spirals out of control, the wealthiest remain largely tax-free. Many of those in the top 10 of The Sunday Times Rich List are not on The Sunday Times Tax List, a list of the UK’s 50 biggest taxpayers. Contrary to what this government claims, the impact of the rise in the cost of living is not attributable solely to inflation and reveals the true extent of a serious economic imbalance that has existed for a long time.
While it is encouraging to see the implementation of a temporary windfall tax as part of the £15billion cost of living support program targeting low-income families, the measures do not provide not an adequate long-term solution for our most vulnerable. What is urgently needed, alongside these measures, is a fundamental overhaul of our tax system so that wealth is taxed more effectively and those with the most resources contribute their fair share.
We need to start telling the whole story of the economy and why the sudden increase in the cost of living is having such a disastrous impact on ordinary people. Wealth is not created in a vacuum and choices about how we collect income are political. We need to have an honest conversation about how extreme wealth is generated and amassed, and force this government to recognize that the fairest way to redistribute this wealth is through a fair system of progressive taxation.