The Rich Get Richer

The US (and presumably UK and other Western countries) have been following ever more capitalist tax policies over the last 40 odd years. This follows an earlier trend in the first half of the 20th century (which lasted up until the mid 1970's on both sides of the Atlantic), for the wealthiest 1% of societies to be expected to pay more in taxes i.e. For the differential between them and us to gradually decrease. But on the advent of Thatcherism and Reaganism in the late 1970's and 1980's this trend was reversed. Since then, there has been an ever increasing widening of the gap between the top of the top 1% of the wealthy, and everyone else (including the rest of the top 1% of the wealthy).

If you believe in cycles, then its probable that this wealth gap has now passed the limit of what Western democratic societies will generally accept, and there is now increasingly louder calls for the very rich to be reined in, and for them and the large corporations to be forced to stop dodging the tax bullet (some large American Corporations have been paying the same level of taxes as small family firms), and to pay all their tax dues.

There is no denying that when millions are facing tough times, and some are even facing malnutrition or even starvation in southern Europe and elsewhere, then its hardly equitable to still believe that making the super rich, even richer, and then trickling the wealth down via their purchases of cars, will work (it never did, it was a massive morally blind alley for the Right to go down this path). In the US there are still proponents of this kind of social wealth distribution, but even there its doubtful if this sort of argument can be made into a vote winner anymore.

The figures collated by the US Congressional Budget Office suggest the the very rich have increased their wealth by as much as 275% in the last few decades (partly by tax avoidance). Over the 28 years covered by this CBO study, US incomes had increased overall by 62%, allowing for tax and inflation, BUT the lowest paid fifth of Americans got only a small share of that: their incomes had grown by a modest 18%. Those in the middle income households were also well below the overall average increase with modest gains of just 37%, and even the majority of America's richest households saw gains of barely above the overall average at 67%.

However the vast majority of the income gains over the past 30 years had gone to the top 1% of US households. Their incomes had almost quadrupled, with rises of 275%!!

The UK has also seen much the same situation, where a longer term study of the distribution share of national income going to the richest 1% since 1918, which has show that we are reverting to the sort of societal wealth imbalances not seen since the days of the late Edwardian era "Upstairs Downstairs", with the same fall and rise of the proportion of the wealth owned by the richest as seen in the US. The top 1% are now on course to return to the relative wealth gap as it was in 1918.

The UKs Wealth Gap mirrors that seen in the US

No societies in the modern age can survive this sort of blatant wealth grab by the wealthy robber barons (aka Oligarchs), and the same social equality pressures that drove the urge to redistribute wealth more equitably in the first seventy years of the last century, are likely to emerge again. The greed that has caused the wealthy to keep on grabbing, is likely to be the cause of their own downfall, because even the US is unlikely to be quite the safe haven for the extremely wealthy that it has been in the past.  

If I was a betting man, I would suggest that tax compliance and redistribution of wealth will become a bigger issue over the next decade, especially if the austerity measures being taken now, turn into decades of stagnation. We are getting ever closer to returning to the world of 'Downton Manor' or perhaps we should rename that 'Downturn Manor'?