Why would you say anything if you won the game? McGough admits that her “hard” working-class background may have left her feeling “enough” now. She left school for her first job at age 16 and founded her first company with her ex-husband with “two laptops and a list of contacts”. Luck and timing played a part: her RF compliance business ended up being part of a growing industry, and the ability to hire workers from the European Union contributed to its success.
The patriotic millionaires like to emphasize the economic argument that wealth taxes can increase stability and sustain both a healthy, educated workforce and a middle class of consumers with disposable income – so paying more taxes could ultimately be good for wealthy businessmen. For McGough, however, it’s about fairness and common sense in an era of rising inequality and deteriorating public services. The richest 1 percent of Britons own more wealth than the poorest 70 percent combined. “I see it as a problem when you have so much money that you no longer need a functioning society,” she says. “The country needs the super-rich to pay their fair share of taxes.”
The million dollar question then is how much tax?
The group bases its proposals on wealth tax and inequality research, with an added dose of pragmatism: “Inheritance tax will never change,” says McGough. In the UK, the group is calling for an annual wealth tax of 1-2 per cent on wealth in excess of £10m, which would affect around 20,000 people but could generate up to £22bn a year, according to analysis by the Wealth Tax Commission. the LSE and the University of Warwick. That would be almost enough to give the entire public sector an inflation-linked wage increase.
While wealth taxes are not a new idea, many of these taxes were abolished in the 1980s and 1990s, and only four European countries – Spain, Norway, Switzerland and Belgium – collect net wealth taxes, with levies in France and Italy on selected assets.
The lawsuits against a wealth tax range from “I already pay enough”, which McGough says he has dealt with a lot, to arguments around administrative costs, the risk of capital flight and the possible increase in tax avoidance and evasion. It was a mix of bureaucratic problems and fears of a crisis of confidence in the markets that prevented Harold Wilson’s government from introducing a UK wealth tax in the 1970s.
Concerning capital flight, it is admitted that some wealthy individuals may leave or move their money due to tax increases. But analysis by Cristobal Young, an assistant professor of sociology at Stanford University, suggests the majority would stay. While 5 percent of billionaires live transnational lifestyles between London, Switzerland and tropical tax havens, the other 95 percent live in the country where they were born, educated or started their businesses.
A new class of conscious multi-millionaires – the UK arm has yet to find its first billionaire – is using their access to advocate new wealth taxes directly to all parties in parliament, working with Tax Justice UK. Events focused on tax and investment and social mobility are planned for 2023, though the group is generally opposed to this kind of influence of wealth on politics through private lobbying and undermining confidence in democracy. For now, the invitations to Westminster are seen as a necessary evil.
Perhaps the moves are also a signal that self-interest extends beyond the business case. While some billionaires build luxury bunkers, American members such as investors Nick Hanauer and Karen Stewart deal with pitchforks and the fate of Marie Antoinette and the Romanovs.
The patriotic millionaires’ plea to tax the rich could cut through precisely because it comes from the rich themselves. Researchers from King’s College London and the University of St Gallen, Switzerland, examined the history of wealth taxation in 2021, with data dating back to 1880 in 45 countries. They found that the forces of democratization and modernization, and even the outbreak of war, usually do not accelerate the introduction of wealth taxes. Instead, they have mainly been used as an emergency tax when countries faced the shock of an economic recession. As with McGough’s own success in business, timing can be everything.
This article was first published in the May/June 2023 issue of WIRED UK
