One of the right’s favourite put-downs of any argument against spending cuts is ‘there’s no magic money tree‘. On Twitter, on blogs, on Newsnight, Question Time and any other forum for discussion of deficits, spending, economics and austerity, you’ll hear this phrase trotted out with wearying regularity. It’s usually accompanied by a condescending smile that implies that the speaker is living in the ‘real world’, while his/her opponent is some poor, deluded idealist with no idea of what’s really going on in the big bad world.
Well, a very interesting article in The Guardian showed just what is going on in the big, bad world – and it’s really very bad news for the pro-austerity, pro-tax-cut, anti-welfare brigade. That is, if the majority of people ever understand just what it means. Of course, the above-mentioned brigade is rich and well-funded enough to spend a lot of money trying to obscure the truth so that people don’t understand what it means. But that won’t stop me and others from trying to get the word out.
The Guardian’s article exposes that there is an estimated £13-20 trillion in funds banked in secretive tax havens like the Cayman Islands and Switzerland by ‘mega-rich’ individuals. Of course, because they’re so secretive, experts can only estimate what’s there. It’s highly likely that that the real figure is far higher.
But let’s go with that range for now, and then let’s play with the numbers a little to get some kind of grasp of what they really signify.
The lower end of the estimate, £13 trillion, is almost exactly 10 times the GDP of the UK. That’s right – at least 10 times what our whole country generates in a whole year is sitting in secret, untaxed bank accounts. Now, that’s a lot of money – and it’s sitting in the hands of a tiny number of people. According to the article, around half of that total is owned by only 92,000 people. 5 times the annual income of the whole of the UK owned by a population of a medium-sized town.
Because the banks holding the funds are so secretive, we don’t know how much of that wealth is owned by people who should be paying UK tax. But let’s be cautious and say 5% – £650 billion. Now let’s be generous to those UK ‘taxpayers’ and assume they already paid 10% tax on it as they ‘earned’ it (the super-rich often pay much less than 10% because of slick tax dodges – remember, the rich but not super-rich Jimmy Carr only paid 1%!). That means if they’d been forced to pay the current top rate of UK tax as they amassed that wealth, a staggering further sum of £260 billion would have been paid into the UK treasury. To put that into context, the total UK national debt at the moment is around £850 billion. So instead of being at 66% of GDP, our national debt would be sitting at a healthy-looking 45% – purely from properly taxing a tiny number of people.
Of course, these are putative numbers – but they give an idea of the scale of the pot of gold sitting at the end of the rainbow in these sly and secretive tax havens that have grown wealthy from protective the riches of the ‘ultra-elite’.
And remember we’re only talking about a tiny percentage of mega-wealthy individuals here. Add in the vast corporate incomes on which only nominal taxes are paid, and the incomes of the ‘merely’ super-rich and extremely wealthy, and one thing is very, very, very clear.
In spite of the vested-interest protestations of the tax-avoiders and the politicians they pay to protect those interests, there is no lack of cash to fund a just and decent society that protects the vulnerable and upholds what is right. The money is just in the wrong hands and the wrong places.
We don’t need a ‘magic money tree’. We just need a fair and properly-enforced tax regime and what we know and feel is the kind of society we should be building and protecting is not only possible. It’s easily affordable.