Centre-left think tank the Resolution Foundation is one of many groups calling on Rachel Reeves to reduce wealth inequality by hiking capital gains tax (CGT) and inheritance tax (IHT) in her Halloween Budget on October 30. They also want her to hammer tax breaks on private pensions.
Like many in the Labour Party, it thinks “unearned wealth” isn’t taxed as heavily as it should be, and wants Reeves to put that right.
There’s a problem, though. An awful lot of this wealth has been earned, often the hard way.
Hiking capital gains tax bands will hammer those who have built their own businesses from scratch, for example.
When they sell, they could hand over 45% of its value to HMRC. And that’s on top of all the tax their company paid over the years, such as corporation tax, employer’s national insurance and VAT.
Labour’s CGT raid will also hammer buy-to-let landlords. They’ve become hate figures on the left, and there are definitely some dodgy ones out there.
But the good ones bought their first properties using deposits they’d very much earned, took a risk by taking out a big mortgage, and worked hard to do up and maintain their properties.
I don’t see their rental income as unearned.
On the other hand, if somebody handed me £7,500 towards some new clothes, I probably would. And I’d probably have said: “Er, that’s a bid odd. No thanks.”
Reeves didn’t think that was odd at all. Instead, she took the money. Which puts her in an awkward position, if you ask me.
Especially since it also comes on top of another £350,000 of freebies and payments that she’s also declared.
Plus all the good stuff PM Sir Keir Starmer and his deputy Angela Rayner grabbed for themselves without actually earning it.
I get that. Freebies are fun. Who doesn’t like them? Better still, you don’t have to pay tax on them.
But you have to be wary of accepting them if you’re about to launch a tax raid on people who don’t have friends willing to give them £7,500 towards a smart new wardrobe.
Especially if those people could do with an extra jumper or two, not to look good on the telly, but to avoid freezing to death after losing their Winter Fuel Payment.
It almost makes me wish Jeremy Corbyn was still Labour leader and his Marxist chancellor John McDonnell was about to deliver his first Budget.
Taxpayers would be even more terrified but at least Corbyn and McDonnell would be coming for our money from a point of principle. They couldn’t be bought for the price of a nice trouser suit.
I don’t know how Reeves has the nerve to launch an assault on the nation’s wealth while potentially wearing a trouser suit that she blagged for free.
And while the PM looks on in a smart pair of designer spectacles of dubious provenance.
If Reeves really wants to go after unearned wealth, why not introduce a freebie tax instead? The whole country could get behind that. With the exception of the Labour front bench.
