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Earning £70k? Whoever wins the election, you’ll probably pay more tax

The Guardian logo The Guardian 6 days ago Gaby Hinsliff
Arla Organic's Coffee Week Latte Art Throwdown: ‘Latte drinking has become a byword in Brexit circles for supposedly thoughtless affluence.’ © Getty Images ‘Latte drinking has become a byword in Brexit circles for supposedly thoughtless affluence.’

It’s a strange quirk of the rich that they never really think they’re rich. Comfortable, perhaps. Fortunate, maybe. But even when they’re rolling in it, people usually avoid the R-word. Famously, a survey of dollar millionaires found almost half denied they were wealthy, arguing that only applied to people with $7.5m (£6m) or more. Billionaires presumably feel poor compared to trillionaires. There’s always someone with a bigger yacht.

Related: How much do you have to earn to be rich? £70,000, says Labour

And that’s true right down the scale. People tend to marry and make friends with a relatively narrow social circle of colleagues, old school or university mates and fellow school-gate parents, which is why most regard themselves as middling-ish earners; they’re confused about where they really stand, because they’re measuring themselves against an unrepresentative group. So higher-rate taxpayers are often shocked to discover they’re in the top 20% of earners, and doubtless some on £70-80,000 a year dropped their toast when shadow chancellor John McDonnell defined them on the Radio 4 Today programme this week as rich, and thus eligible for higher taxes. Rich? Moi? Ridiculous.

But technically, it’s true. Secondary school heads and NHS doctors, accountants and software engineers, and anyone else earning over £70,000: you’re the top 5%. It might not feel like it if you’re living in London and priced out of buying a home, but yours are the pips available for squeaking and to the other 95% – especially in those vast swaths of Britain where living costs are lower – they look pretty squeakable. You could buy a family home in the posher bits of Hull on half that salary.

Yet as McDonnell’s shadow cabinet colleague Emily Thornberry conceded the next morning, many of the 5% will be shocked to hear the R-word because to them “rich” means other people: Philip Green on his yacht; tax-dodging tech moguls; oligarchs and bankers and trustafarians. You know, those rich. The ones nobody likes. “Rich”, like “elite”, is becoming not just an economic but almost a moral judgment now – although at least the concept of wealth still bears some relation to fact, while elite has become so overused it’s virtually meaningless.

Is drinking takeaway coffee elitist? Labour MP Andy Burnham seems to think so. He responded this week to reports that, after Brexit, the Home Office could offer temporary work visas to EU nationals working in coffee shops and pubs, by calling the idea rightwing and bizarre, adding: “God forbid the idea of waiting longer in the morning for their posh coffee.” A clear nod, surely, to the way latte drinking has become a byword in Brexit circles for supposedly thoughtless affluence: shorthand for people who support immigration because the only migrants they know are serving them in Pret, not competing for their jobs.

Setting aside the other glaring flaws in this argument – not least that immigration-dependent industries from farming to social care may eventually need covering with such temporary visas – the strange thing is that coffee isn’t even that posh any more. You can get a flat white in Greggs. There’s a Costa in every provincial town.

Mocking latte drinkers now is practically the equivalent of knocking people for having a fridge in the 70s, a once-decadent luxury that had become the norm. It says something about the feeding frenzy now surrounding elites that an intelligent man, whose parliamentary salary puts him in McDonnell’s “rich” category, feels the need to redeem himself by getting chippy about takeaway cappuccinos.

Yet, counterintuitive as it sounds, there’s a risk for Labour in jumping aboard the current posh-bashing wagon which doesn’t necessarily apply to other parties. As Gordon Brown’s pollster Deborah Mattinson has argued, when focus groups were asked about his desire to raise taxes on the rich they didn’t balk at the definition of “rich” or even at the risk that one day they might be eligible. They just complained that it was old-fashioned: it reminded them of 70s Labour.

The paradox is that raising taxes may scream “politics of yesterday” to voters Labour needs to win over, when in many ways the idea has never been so contemporary. Crumbling public services, a mountain of debt to repay, and an ageing nation of pensioners with a post-Brexit aversion to letting young, taxpaying foreigners move here all adds up to one logical conclusion: tax rises loom almost regardless of who wins in June.

The paradox is that raising taxes may scream 'politics of yesterday' to voters Labour needs to win over

McDonnell may have let the cat out of the bag somewhat early – both Thornberry and Jeremy Corbyn talked studiously today about hammering corporate fat cats rather than individuals – but he was arguably just stating the obvious. As the Institute of Fiscal Studies’ Paul Johnson has argued, keeping public services in the style to which we’ve become accustomed means looking again at income tax, VAT and perhaps new wealth taxes, not just closing popular loopholes.

The 5% who don’t feel rich, but look it, must surely be in the frame. The mountain Labour must climb now isn’t just overcoming people’s natural reluctance to hand over money, but making the idea feel fresh, urgent and suddenly essential to the public good, rather than a rehash of everything Corbyn’s been saying for 30 years.

Some thought has clearly gone into this. Corbyn’s rather passionate speech had a clear whiff of the spirit of summer 2015 – when he was the underdog who few thought could win and was therefore free to surprise audiences by saying exactly what he thought – only this time it gave a deliberate nod to subsequent populist uprisings.

The echoes of Donald Trump, bulldozing past all those who said that the Mexicans would never pay for a wall or that the US wouldn’t choose an inexperienced man over a safe female pair of hands, were too strong for coincidence. To hell with playing by establishment rules, Corbyn declared: he’d write his own, ignoring the elites who said it couldn’t be done.

Granted, a man vowing to defy the maths of an 18-point Tory polling lead rather resembles a man standing on a skyscraper, vowing to defy gravity by jumping off with no parachute. The chances of Corbyn flying where Ed Miliband so recently hit the pavement seem remote. But this is perhaps the beginning, not the end, of a conversation about taxation, wealth and elites. An old consensus feels as if it’s slowly starting to crack. At least, perhaps, we will all soon know where we stand.

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