Who wants to be a Billionaire?!

Greg Jones considers the fate which may await the UK’s super rich following this week’s UK General Election…

Well, wouldn’t most of us like at least to try, if we’re honest?

Yet although the number of billionaires around the world is on the increase, (as inflation gradually erodes the value of money over time) there is a risk they may become an endangered species.

Labour MP Lloyd Russell-Moyle thinks they shouldn’t exist.

US politician Bernie Sanders (echoing French economist Thomas Piketty) believes they should be taxed out of existence.

What have billionaires done to deserve this vilification?

The answer lies partly in the ever-widening gap (yawning chasm?) between the “have lots” and the “have not very much”. Earlier this year, Oxfam reported that the world’s 26 richest people own as much as the poorest 50% (the current estimated global population is 3.8 billion). More recently, UK campaigning charity the Equality Trust has observed that the six richest people in the UK (all billionaires) control as much wealth as the poorest 13 million. Such a gulf between human beings evokes a range of emotions including both alarm and anger.

There is also the public perception – relentlessly fuelled by social media – that billionaires are not paying their “fair” share of the taxes which need to be raised to fund the spiralling cost of, inter alia, social care and public infrastructure (notwithstanding such oft-quoted statistic as that e.g. the top 1% of earners are collectively responsible for one-third of all income tax receipts).

With the next UK election now days away, Labour leader Jeremy Corbyn has further fanned the flames by vowing that if Labour were elected he would “go after” five specifically named individuals, an egregiously intemperate undertaking even for someone so used to courting controversy as Mr Corbyn is.

But the 2019 election will be fought on the streets of Oldham and Islington, not on the playing fields of Eton and Harrow. The UK’s billionaires represent a mere handful of votes, so a manifesto which promises to give them a bashing will be music to many ears.

I have been fortunate to act for a number of High Net Worth Individuals – not necessarily all billionaires, it has to be said – over the course of my professional life and for the most part they do not resent paying tax. They are generally appreciative of the fact that the civilised and cultured society in which they wish to live has to be paid for. What they resent is being portrayed as greedy tax-dodgers who should be legislated out of existence for having the temerity, not only to be very wealthy, but also for wanting to keep their financial affairs private. This resentment creates an ever- present lurking threat of migration.

I wonder if there is mileage in the parties meeting halfway?

Let’s consider the numbers. A billion is (in both the US and UK these days) a thousand million, ie 1,000,000,000. Whether pounds or mere dollars, that’s a lot of dosh. And the very wealthy have many billions. The transfer of a fraction of that wealth would make a huge difference to the quality of life of the rest of the population without – I would be so bold as to suggest – making a jot of a
difference to the lives of the billionaires and their families.

US Senator Elizabeth Warren has proposed a wealth tax of 6% on estates in excess of $1 billion, which has led to a public spat with comfortably-off computer wizard Bill Gates. But if the reported wealth of the top five US billionaires is anywhere near accurate, this could bring in an additional  $26 billion of public funds. If this were a one-off tax, it would represent a significant contribution to the exchequer; if it were annual (and the larger estates have the capacity to grow at a rate far in excess of 6%) it might even wipe out the US budget deficit over time (clearing the $22 trillion of National Debt might take a little longer….).

A similar levy in the UK could raise around £5 billion (based on the 2019 Sunday Times Rich List estimates). But rather than this being extracted forcibly, à la Dick Turpin, I am sure there are enough very wealthy individuals who would be ready and willing to enter into a meaningful and constructive dialogue with the UK government – whatever its political persuasion – to explore ways in which they can contribute additional funds to the public purse without the usual antagonism and vilification. It would be an arm-round-the-shoulder rather than a finger-jabbing approach which shows appreciation for the individuals’ achievements and outlines the worthy causes which will benefit from a transfer of wealth. Earlier this year in the US, a wealthy consortium including mega-investor George Soros and (Facebook co-founder) Chris Hughes actually petitioned to pay higher taxes specifically to combat inequality and climate change, and I am convinced that there is a collective social conscience which can be tapped into if the approach were consensual rather than adversarial.

Just a thought.

Meanwhile, if you’re still waiting to make that first billion, just be careful what you wish for…

Greg Jones

About DQ

DQ is a leading Isle of Man based law firm with an international reach.

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