Higher taxes on the richest people are the key to funding Labour’s policies

Lots of people have roughly the same response to Labour’s current policies, in particular its spending commitments: ‘but where will the money come from?’ It’s not just the Tories or the media, though they are a major source of this widespread ‘common sense’ in society. It’s coming from millions of ordinary voters, as a major reason not to vote Labour.

On one level it’s an odd objection, for the answer is obvious and simple: progressive taxation. In the current climate that means increasing taxation on the wealthiest people. Labour’s exact taxation policies are not yet clear, but we know that it will increase corporation tax and also income tax on those earning over 80k a year.

That’s not the only way a hypothetical Corbyn-led Labour government could meet its spending commitments. There are several other contributing factors, e.g. investing in job creation may cost money, but it also reduces unemployment and therefore the spending on social security. Increasing the minumum wage has a similar effect. And so on. But taxation is the core of the answer.

So, in a way it’s odd that many people come out with this objection. But it’s understandable too.

For one thing, the concept of redistributing wealth through taxation (however modestly) has been taboo in mainstream politics for over 30 years. It’s an idea that many people find rather alien, however much it might tally with their own interests – and with the interests of their family, friends, neighbours and colleagues. It’s an idea that we need to relentlessly champion and drive into the mainstream.

Secondly, most people don’t grasp how much wealth there actually is in this country. They assume that increasing taxes on the top 5% couldn’t make much difference. In fact it could make an enormous difference. People tend to underestimate just how obscenely unequal a society we live in.

Thirdly, there is also a tendency (encouraged by press and politicians) to falsely think that the country’s accounts are analogous to an individual’s or a family’s accounts, i.e. if you spend more then you have less. But a national economy can benefit, in myriad ways, from spending and investment. This basic point is deliberately obscured.

All of these obstacles make it harder to popularise the taxation policies – and more widely the economic policies – that Corbyn and McDonnell are promoting. Nonetheless, it is a breakthrough that such ideas are being voiced by the official Opposition and getting at least some kind of hearing in public political debate.