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Wealth, Elites and Tax Justice

Wealth is built up in families and households. It’s inherited. A substantial amount of wealth (despite all the talk about meritocracy) is not earned, it’s passed on.

Professor Mike Savage

Professor Mike Savage from the III introduces his theme Wealth, Tax and Justice:

Interview with Professor Mike Savage

1. Tell us about the kinds of inequalities this theme looks at

2. Tell us something about the makeup of your research theme team 

3. 
Give us a few examples of research currently being done by members of your theme

4. What are the very big questions that researchers in these areas are contributing toward answering?

5. Which people, groups and organisations are stakeholders in your theme’s work? 

 

Nairobi 16 9

 

Tell us about the kinds of inequalities this theme looks at

The theme is about the issue of wealth inequality. The reason why we focus on wealth is because a lot of the work on inequality is about income inequality: such as how much you get paid and inequalities in income. Income inequalities are a very big issue and are tending to get bigger and bigger but wealth inequalities are, in some ways, more fundamental. That is because there’s usually more inequality in wealth compared to income because people with lots of wealth can just pile it up. There’s no upper limit in terms of how much you can accumulate at the top end. Similarly, some people at the bottom could be in debt and actually have negative wealth, whereas you can’t really have negative income in the same way. You get polarisation more marked when you look at wealth. Issues around wealth are troubling because they raise issues about how wealth gets inherited and passed on. You can’t pass on your income. You can’t transmit your income to other people, whereas wealth is built up in families and households. It’s inherited. A substantial amount of wealth (despite all the talk about meritocracy) is not earned, it’s passed on. 

We can also look at issues around gender and race inequalities which are very important. Wealth is often built up in families so you can get big issues around gender inequalities in households and with regard to who gets access to the wealth. The work of Luna Glucksberg in the Institute looks at the ways in which women are often marginalised in multiple ways. Racial inequalities are important too because wealth tends to be held by people who’ve had it in families for a long time and they tend to be privileged white people. Even if minorities are getting access to some kinds of reasonably well paid jobs they often haven’t got access to wealth in the same ways. It gives you a very important angle. Although people like Piketty have made it a big issue, we know much less about it than we do about income inequality. The aim of our theme is to try and do a lot of comparative work to try and put the standing of wealth inequality on the map.

Tell us something about the makeup of your research theme team

We have about 20 colleagues from the LSE who are theme members and have committed to being involved in our work. We deliberately devised the team to come from different disciplines. It includes people from Economics, Social Policy, Law, Sociology, and History. That is deliberate because we think that the people we are working with at the LSE are really doing some important and innovative work. By pooling our interest we can do some really important synthesising. That is an important feature of the theme. We also have hired two Research Officers, Tahnee Ooms and Nora Waitkus, who are beginning work this September. Nora is from Germany, Tahnee is originally from the Netherlands and has been working doing a PHD in Oxford. They all really give a lot of strength to this theme too.

Give us a few examples of research currently being done by members of your theme

All the theme members are currently doing some work around the general issue of wealth inequality. Some projects I would single out is the work being done by Andy Summers in the Law department. Andy is doing really interesting work and has got access to the HMRC’s taxation data. He is looking at the issue of non-domicile tax payers in the UK, which is a very topical issue in terms of how much you are finding financial flows overseas. People are parking their wealth in London and being resident elsewhere. He’s one of the first people, along with his colleagues in various others universities, to get access to this data. The early indications are that there are a lot of non-domiciles in the UK. London in particular is a depository for offshore flows of large amounts of finance and wealth. That’s very interesting.

Some of the work that I am leading on is doing some projects on the comparative study of elites. There are very big wealth holders who have a large impact because of the amount of money they command (Donald Trump is one obvious example of that). What most research on elites has focused on is elites in particular countries, projects focusing on elites in the UK and Norway, Chile etc. What we’re trying to do is bring things systematically across national boundaries to think about how they interact with other elites using a mixture of methods: partly ethnographic, e.g. spending time in elite surroundings; partly using survey sources or quantitative sources (like taxation data); partly using interviews where we can. My hope would be that we can really develop a strong comparative programme around wealth elites.

 What are the very big questions that researchers in these areas are contributing toward answering?

I think the key question is how much more worrying is inequality when we focus on wealth rather than income. We know that in many nations there is a growing gap between the rich and the poor in income terms, but this can be the tip of the iceberg. We don’t really know how wealth is organised and how the very wealthy are really driving issues across politics and having influence in the media. That’s the kind of the thing which we will be exploring.

One very interesting hypothesis we will be able to shed some light on is one that colleagues such as Katharina Hecht and colleagues in the social policy department such as John Hills and Tania Burchardt have been working on. We’re now finding that in some parts of the world there is a group of very wealthy people who are so wealthy that they don’t need the State. They don’t need any kind of public services. They can buy their own homes, they send their kids to private school, they can buy whatever they want (medical care, transport). For them the State and the public sector doesn’t matter.

We know that a lot of public spending in the past has helped people that are very wealthy. Transport subsidies tend to benefit people who commute a long way to work, the health service and education services often benefit the well off, so even wealthy people do have an interest in public services. However, if we are now moving into a phase now where some super wealthy people just have no connection with the State and they don’t need the State, then that is very concerning. The decisions they’ll be making about politics will not be informed by their feelings about the need for public services. The theme tries to look at those dystopian issues which will be a very important thing to do.

Which people, groups and organisations are stakeholders in your theme’s work? Whose expertise/experience feeds into your theme’s work, and who could benefit from it and how?

We have got a lot of academic stakeholders and the people I’ve mentioned so far in our theme are people at the LSE. We are also working with overseas partners and we have very good connections with colleagues working in South Africa, University of Cape Town and University of Witwatersrand. We also have links in Chile with the Centre of Cohesion and Conflict Studies. The idea of looking at these things comparatively is very significant. Part of our stakeholder work is to try and draw together a group of international collaborators.

Beyond that, we have been talking to groups such as Oxfam who have put wealth and inequality on the agenda. What we want to try and do over the next year or so is develop links with tax justice organisations. The issue of tax justice is very high profile. People are debating questions such as ‘do we need more inheritance tax’, ‘do we need wealth tax’. I think these issues about how we tax people with lots of wealth won’t go away. They’re fundamental to try to think about how we develop a more progressive politics. Drawing those kinds of campaigning groups in to our theme will be very important.