I He spent nearly a decade advising the UK’s wealthiest families on how to preserve their wealth. As we witness extraordinary rises in the cost of living, we need to talk about the elephant in the room: wealth inequality.
The United Kingdom is the fifth largest economy in the world. However, Britain is the second most unsustainable economy out of 36 major economies, according to recent research by L’Atelier BNP Paribas, an independent research firm of the French bank. Low salaries along with rising housing and childcare costs have been a persistent problem in the country for the past few decades, and now, according to her report, extreme wealth inequality threatens to spark civil unrest.
Families already under great financial stress face the prospect of a “cost of living tsunami” as daily groceries prices rise by 50%. At the same time, the fortunes of billionaires have risen over the past year. The UK now has a record total of 177 billionaires, according to the Sunday Times Rich List 2022.
I am particularly sensitive about building massive wealth without criticism, due to my past life as a private wealth attorney. An intellectually stimulating field of practice, I had intended to continue my career indefinitely, until a friend told me one day that there were more food banks than McDonald’s in the UK. I was horrified to discover that the gap between the rich and the poor was very severe. In my opinion, this represents something incredibly disturbing about the economic health of this country.
I was already beginning to think about the critical role of a tax on investment in public services and felt an increasing level of unease about wealth disparities, as well as having harmful narratives about taxes. Somewhat uncomfortably, advising on how to “ease” wealth taxes was an essential aspect of my daily routine. 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 an active player in the global economy, I’ve worked in a system that exists mostly to preserve and accumulate assets, as well as reduce taxes on the wealthy. There had to be a connection between my professional role and the increasing levels of wealth concentration that was revealed to me.
I have come to the conclusion that our economic system, in its current form, intentionally perpetuates wealth inequality. The economic gains are concentrated among a very small percentage of the population and policy choices have been made to avoid redistributing these gains more equitably. After a drastic change of direction, I now work with a growing number of wealthy people who recognize that wealth inequality is destabilizing our economy and endangering the fabric of our society. They advocate higher taxes on wealth so as not to burden ordinary families and low-paid workers with a disproportionate financial burden.
The billionaire’s wealth boom shouldn’t be cause for celebration at a time when not many people in the country can afford to heat their homes and put food on the table. While inflation, which effectively becomes a tax on ordinary people, is spiraling out of control, the rich remain largely immune to taxation. Many of those featured in the Sunday Times Top Ten Rich List do not appear on the Sunday Times Tax List, a list of the UK’s 50 largest taxpayers. Contrary to what this government claims, the effect of the increase in the cost of living is not only attributable to inflation, but rather reveals the true extent of a serious economic imbalance that has long existed.
Although it is encouraging to see the implementation of an unexpected temporary tax as part of the £15 billion cost-of-living support package targeting low-income families, the measures do not provide a suitable long-term solution for the most vulnerable. What is urgently needed besides these measures is a fundamental redesign of our tax system so that wealth is taxed more effectively and those with greater resources contribute their fair share.
We need to start telling the whole story about the economy and why a sudden increase in the cost of living is having such a disastrous effect on ordinary people. Wealth is not created in a vacuum and the choices about how we raise revenue are political. We need to have an honest conversation about how massive wealth is created and amassed, and force this government to recognize that the most equitable way to redistribute that wealth is through a fair system of progressive taxation.
Stephanie Broby is a former private wealth lawyer who is now the founder and CEO of the Righteous Ancestor Movement
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