Class is still a taboo word even though class differences and inequalities are now wider than for almost 100 years. But slowly and painfully New Labour in the face of defeat is inching back from Mandelson’s infamous “wholly relaxed about people becoming filthy rich” to some inkling of fairness. The Budget was littered with signs of retreat from the most egregious excesses of the past. The new 50% top tax rate is targeted exclusively on those with over £150,000 a year (just 1% of the population). The loss of personal allowances hits those above £100,000 a year (2% of the population). Frozen inheritance tax thresholds are directed at the top 6%. The bankers’ bonus tax is mainly focused on the top 7-8%. And the mansion stamp duty tax will affect only homes worth more than £1 million – just 1.5% of properties.
Of course the rabid Tory press scream that this is a spiteful attack on hard-working middle and high-earners. But if they thnk this is aimed at Middle Britain, what does that tell you about how out of touch they are? The median income in Britain today is just £22,000. One third of the population has to survive on less than £15,000, so Middle Britain is broadly those between £15-30,000 a year, whereas none of the Budget taxes will affect anybody below £70,000 a year. This is not spite, but tell-tale signs of a switch back towards fairness.
Of course the Budget should go further to have a serious impact on class injustice:
* Instead of at present the poorest tenth paying 46% of their gross incomes in tax while the richest tenth pay just 34%, this gross unfairness should be reversed.
* Instead of at present the rich being exempted from payment of national insurance contributions above 1.5 times national average earnings, this arbitrary cap should be removed so that they pay their fair share like everyone else.
* Instead of at present the rich being able to redefine income as capital gains and this pay only 18% instead of 40%, CGT should be put back level-pegging with higher income tax at 40%.
* Instead of at present the rich, mostly the top tenth, pocketing 91% of the nation’s wealth while the bottom tenth have no net wealth because they owe more than they earn, a new tax on wealth should be brought in, preferably a gifts tax rather than an inheritance which can be too easily avoided.