TAX WEALTH, NOT WAGES: for a legal maximum income

 

Contrary to all the fuss and brouhaha, Boris Johnson's new taxation for health and social care is a pitiful failure to match the scale of monumental crisis in both social care and the NHS.

And equally damning, the Tories' new taxation scheme is one of the most unfair and regressive of all, in a state awash with taxes that hammer the lowest-paid whilst tickling the tummies of the grotesquely rich.

First, the headline facts. From next April, and for the three subsequent years, National Insurance Contributions will increase by 1.25 percentage points - which is a rise of over 10% on the current rate. In total that will raise an additional £36billion, spread over 3 years.

It's a UK-wide tax. In response to the backlash about this being Boris's 'social care poll tax', levied on Scottish workers to (allegedly) bail out social care in England, the Tories have conceded that £1.1billion a year will come to Scotland from this 'health and social care levy'. They furthermore 'magnanimously' granted the Scottish government the powers to decide how to use that extra funding, after being accused of undermining devolution.

Broken Tory Promises

In once again breaking a Tory election promise not to raise taxes – at the same time as also spitting in the faces of those who believed the Tories when they promised not to end the pension 'triple lock', whereby state pensions rise with inflation, average wages or by 2.5% - they try to fool people into thinking they are dealing with the catastrophe in social care, so blatantly exposed during 18 months of pandemic. They are not!

For starters, only £5.4billion of the total £36billion is to go to social care; the rest is to be poured into the gaping hole in NHS funding, which is facing its own escalating crisis. And of that sum, only £2.5billion is being allocated to funding of the social care workforce, training and associated council costs – despite England alone suffering 120,000 unfilled vacancies in that sector! Age UK reports that at least 1.5 million elderly people are not getting the care they need (and deserve).

The £1.1billion a year allocated to Scotland certainly puts to shame the pitiful £148million previously promised by Nicola Sturgeon – and now officially signed up to by the Scottish Green Party – in their entirely bogus claims of establishing “a National Care Service on a par with the NHS”.

But it still goes nowhere near tackling the crises in Scotland's care sector or Scotland's NHS.

Scotland's Health and Care Crisis

Shocking new figures by the nursing union, RCN Scotland, reveal that our hospitals are suffering the highest levels of unfilled vacancies in history. Almost 5,000 full time equivalent posts in Scotland's NHS remain unfilled – 7.1% of all roles in the service. In areas like the Highlands, Shetland and Dumfries & Galloway, over one in every 10 nursing and midwifery posts lies empty, unfilled, adding to the health catastrophe exacerbated by Covid-19. As a mental health epidemic sweeps the country, one in every 12 mental health nurse positions remains vacant, unfilled, unfunded.

And that says nothing of the terrible state of affairs in Scotland's social care sector.

NIC: Regressive, Unfair Tax on Wages

But as well as being nothing like adequate to the urgent tasks posed, the entire health and social care levy – the 1.25 percentage points increase on NIC contributions – is obscenely regressive, hammering those least able to afford it compared with the rich minority.

Under uproar about increased taxation of workers whilst share dividends were to remain untouched, the Tories have conceded that tax on share dividends will also rise by 1.25%. But let's not get too grateful! Let's look at the relative taxation rates, and how they hammer workers rather than wealth.

NIC is one of the most regressive taxes in the UK. The existing rate for all incomes between £9,658 a year and £50,268 is currently 12% - rising to 13.25% from April 2022. By stark contrast, all income above £50,268 only contributes a miserly 2% NIC – or 3.25% from April!

Wealth Inequality Even Wider

And of course it gets worse. Wealth inequality is infinitely greater than income inequality.

The millionaires and billionaires sink much of their wealth in mansions, yachts, super-cars, diamonds and the likes, and hire vast armies of accountants to devise devilishly ingenious ways to dodge paying taxes on their ill-gotten wealth – whereas you or I would face the jail for refusing to pay taxes on our wages.

Instead of walloping wages, health and social care should be properly funded by taxation on wealth. Here are a few illustrative examples of what could be done, in a fashion that would at least trim some of the worst excesses off the inequality inevitably produced by capitalism - a system that is constructed to create inequality.

Wealth Tax

Even a 5% wealth tax on all couples 'worth' more than £1million would raise £50billion a year – dwarfing the paltry £12billion annual income from the Tory scheme that disproportionately comes from the incomes of the lowest paid worker.

Or a puny 1% wealth tax on households worth over £4million would give the state an additional £20billion a year to fund health, social care and other public services.

Capital Gains Tax comes from selling something which has increased in value. But the highest rate of CGT is a modest 28%. If that was raised to 40%, it would give the state an extra £9billion a year.

Entrepreneurs Relief!

One of the lesser known, perfectly legal, tax schemes is called Entrepreneurs Relief! No, this is not some dodgy form of recreation, but legalised theft of public funds by the hard-at-profiteering. Over 50,000 business people benefit from this state handout. If it was included in Capital Gains Tax, and increased to 40% instead of being zero-rated, it would bring in £13billion a year!

The lowest paid millions unavoidably pay income tax starting at 20%. Just to show how 'equitable' capitalism really is, tax on earnings on stocks and shares is a puny 7.5% right now; we can hear the screams of agony from the big shareholders at facing a tax rate of 8.75% from next year!

Even a hopelessly inadequate rise to 15% taxation would gather £7billion a year extra for health and social care.

Legal Maximum Income

All these facts and figures are mere samples of what a progressive taxation system could do, at the expense of the millionaires, for the benefit of the millions.

But they also serve to highlight the need to transform the whole system with measures that would mean a vast transfusion of wealth and power away from the rich to the rest of us; the opposite to what has actually happened, particularly under successive Tory and Labour governments since the Dark Ages of Maggie Thatcher in the 1980s.

One of the policies pioneered by the SSP over the 23 years since our formation is a Legal Maximum Income, set initially at 10 times the legal National Minimum Wage. It's a policy which in turn I fought for and won as national conference policy in my own trade union, USDAW, the fifth-largest union in the country.

Frankly, the idea that a legally-enforced national minimum wage of at least £12-an-hour should be accompanied by a Legal Maximum Income equivalent to £120-an-hour is absurdly over-generous to the rich. But it would be a good start, in tackling inequality and providing Universal Free Basic Services.

And it could raise a fortune! At risk of boggling your brain, imagine such a policy applied even just to Scotland's 10 billionaires, whose combined wealth rocketed to £22.4billion last year. If a legal cap was imposed on them, at 10 times the proposed £12 minimum wage, that would leave about £21billion for Scotland's public services!

Or extend the geography of this Legal Maximum Income to the whole UK: the richest 250 people increased their wealth last year by over £1million a day, each, on average – every day!

A mere 171 people, the UK's billionaires, have a combined fortune of £597billion. Slap the cap on them, at 10 times the minimum wage, and you can do the sums for yourself.

Capitalism is Designed to Create Inequality

Capitalism by its very nature is a grotesque machine for creating inequality. As even the right-wing Sunday Times was moved to write when it published its annual Rich List in May 2021,

“Many readers will feel uncomfortable that such astonishing fortunes have been created as Britain battled a virus that has so far claimed 128,000 lives, increased unemployment to 1.7 million, ramped up government debt, clipped civil liberties and heightened levels of depression and other mental health illnesses.”

Uncomfortable? Furious more like, but all the more resolved to overturn that system. Which would require democratic public ownership of the major industries and services to fully tackle, but which a Legal Maximum Income would certainly begin to transform.

Socialism – not Tinkering with Capitalism

The Tories are openly the political wing of capitalism and its inherent inequalities and exploitation. Labour under Starmer is the New Labour New Tories! It's led by the knight of the realm who led the opposition to mild increases in Corporation Taxes on the giant corporations in this year's Westminster Budget debates!

But neither the SNP nor Scottish Greens fundamentally oppose the continued rule of capitalism, and therefore satisfy themselves with minuscule measures to redress the balance of inequality; measures that are puny in their scale.

The health, social care and general well-being of the population will not be noticeably improved by the funds raised by the regressive taxation schemes just announced, which will serve to exacerbate inequality.

The SSP's policy of a Legal Maximum Income of no more than ten times a living, minimum wage, rapidly reduced to ratios of 5:1 or less – alongside our fight for democratic public ownership of energy, transport, construction, major industries, landed estates and the entire financial system – is what is required.

Successfully proposing Legal Max Income policy at 2018 USDAW National Conference

NOW WATCH THE VIDEO!

This video was made over 3 years ago, so a few of the statistics are dated: we need a MINIMUM hourly wage for all aged 16 upwards of at least £12. 

But the message and policy is even more relevant today than then, with galloping inequality, exacerbated by the Tories' 10% hike of NIC taxation of ordinary workers. 

Copy and paste this VIDEO link in your search, or right click on it for options:

https://youtu.be/oIqKUohclN4

 

WHY SHOULD UNIONS FEED THE (LABOUR) HAND THAT BITES THEM?

There are growing signs that many trade union activists are seeking to break the strangulating ties with Sir Keir Starmer's Labour Party, seeking other means of struggle in defence of jobs, livelihoods and workplace rights. Two developments in the one week are signposts of this shift in outlook.

The three-way contest for the new general secretary of the giant Unite union was won by Sharon Graham, whose main campaigning slogans were ‘Back to the Workplace’ and ‘Payment by results’ for politicians, rather than blanket financial backing for a Labour party hell-bent on crushing the last remnants of socialism from its membership and its actual practices.

The right-wing candidate, Gerard Coyne, was the darling of most of the capitalist media, Blairite and Starmer's pet candidate.  He sought to play on discontent in the ranks with bogus calls for ‘change’, but his track record of cosying up to big business in partnership agreements and his virulent opposition to both Jeremy Corbyn and outgoing general secretary Len McCluskey did not inspire a right-wing coup by Unite members. In fact, Coyne’s vote crashed by 20,000 compared with when he stood against McCluskey in 2017.

UNITE: Sharon Graham Wins Despite Divided Left Vote 

Many workers understandably feared that Coyne might slip through the middle given the divided left vote, where initially there were three self-declared left candidates: Howard Beckett, Steve Turner and Sharon Graham. After putting up a vigorous challenge during branch nominations, with a powerful cache of left-wing policies and high-profile campaigning against the virus of Fire and Rehire, Beckett then withdrew and made the bizarre decision to support Turner. That left two candidates competing against the nakedly right-wing Coyne.

Although declared as the official United Left candidate in a hotly disputed vote, and supported by many of the Labour left and the Communist Party, Turner would have been a move to the right compared with the outgoing McCluskey regime, and much tamer in his approach both to employers and Starmer's right-wing cabal. For instance, Turner declared throughout that there was “no need for an attack dog general secretary”, advocating one prepared to do deals behind the scenes.

Workplace Organisation

Whilst the claims by an extremely well-paid full-time national official of the Union to be ‘The Workers’ Candidate’ is a dubious concept, nevertheless Sharon Graham's well-crafted message of building more powerful workplace organisation hit home with many of the best Unite workplace activists. It's true that a major part of her campaign team were actually full-time paid officials in her own Organising Department of Unite, but they were added to by a whole raft of shop floor fighters, attracted by her fighting talk. For instance, Manchester bus workers who recently defeated fire and rehire through prolonged strike action, and construction industry electricians who likewise defeated deskilling of their jobs by the employers, openly campaigned for Graham, as did hundreds of other workplace activists. 

For many Scottish Unite members, Sharon’s openness to the right of the Scottish people to a second independence referendum - in sharp contrast to her opponents - was an added attraction.

 

Loosening Ties to Labour 

But alongside her promise to pour resources into workplace organisation, her association with high profile campaigns to unionise - such as Action for Amazon – and leverage campaigns to bludgeon employers into concessions, the other significant appeal from her campaign amongst many activists was undoubtedly a refusal to give carte blanche to the Labour Party, including with Union members’ cash. 

She pledged to fight any local authorities, including Labour councils, which imposed cuts and to only support political candidates who side with the workers she represents: “payment by results”.

This undoubtedly points towards a rapid loosening of ties between many union activists and the Increasingly anti-worker, anti-socialist Starmer Labour Party. That process of course is miles further ahead in Scotland, where Scottish Labour is not even a shadow of its former self and is widely reviled amongst many of the most active trade unionists. 

Bakers Union Threatens Disaffiliation from Labour 

Even more stark evidence of the growing breach with Labour is revealed by the Bakers Union, which although small is one of the most combative, fighting unions around.

In April 2020, alongside the Fire Brigades Union and an array of left formations inside the British Labour Party, the Bakers Union launched ‘Don't Leave, Organise’ as an umbrella to resist the charge to the right in Labour, in the hope of reconquering the party for left-wing, pro-worker policies. Less than 18 months later, on 18th September, the Bakers Union are holding a recall conference to debate the possibility of disaffiliating their union from the Labour Party. 

That dramatic step, after helping found the Labour Party in 1902, follows the decision by the Starmer   leadership and their McCarthyite machine to expel Bakers Union President, Ian Hodson, from the party, as part of a wider purge of socialists. In a survey of members earlier this year the majority of Bakers Union members voted for disaffiliation from Labour. It remains to be seen whether the Union sticks by its ‘don't leave, organise’ philosophy or makes the break from a party utterly incapable of mounting serious opposition to the reviled Tories. As Bakers Union general secretary, Sarah Woolley, has said, “We will not accept bullying from any bosses or a party that seems to prefer to be on the bosses’ side.” 

Make the Break – Why Feed the Hand that Bites You?! 

The events in both Unite and the Bakers Union highlight what the Scottish Socialist Party has argued for over 20 years: the modern Labour Party, particularly since the Blair/Brown leadership, transformed into a nakedly capitalist party of New Tories. And although a brief interruption to that process occurred with the election of Jeremy Corbyn, his removal even from party membership and Starmer's gallop to the right have reasserted the anti-working-class nature of that party.

Increasingly, the demand first championed by the SSP over 20 years ago to ‘Make the Break from capitalist Labour’ will revive in popularity amongst trade unionists. 

Why should union members’ fees be used to prop up the party that at local government level attacks them, and nationally is incapable of seriously standing on the side of workers and prefers to cosy up to big business? 

To invert the ancient proverb, why feed the hand that bites you?!

Reject Non-political Trade Unionism 

The SSP firmly rejects the notion of non-political trade unionism. Every daily issue facing workers throws up political choices and questions. 

The battery of anti-union laws which suppress wages, conditions and workplace rights and permits vicious thuggery like Fire and Rehire are the result of political decisions - first by Thatcher's Tories and subsequently by successive Labour and Tory governments. 

Pay cuts and job losses amongst half-a-million Scottish workers employed in the public sector are decided upon by politicians, whether Tory, Labour, SNP or Scottish Green.

Workers need a political vehicle to defend and advance their rights and conditions. Individual members of Unite, the Bakers Union or any other trade union can assist that struggle for political change in favour of the working class by joining Scotland's socialist party, the SSP.

Active trade unionists can enhance the democracy of their unions by demanding rule changes that allow members a multiple choice of pro-trade union parties (including the SSP) which they can fund through the political levy.

Sharon Graham, the Bakers Union leadership and others can boost the struggles of workers against the onslaught by the employers and governments both through workplace organisation and militant collective action, and by helping to build a mass political alternative to the Labour Party which has so demonstrably abandoned workers. 

This article was written on 25 August 2021 for publication in the Scottish Socialist Voice. 

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