A week after the historic shellacking handed out to Donald Trump and the Republicans in America’s midterm elections, the outcome of another significant vote was announced on Tuesday.
In California, one of the most Left-wing states in the Union, voters roundly rejected a wealth tax on billionaires.
The proposal (known as Prop 40), which would have slapped a 5 per cent levy on assets over $1billion, was defeated by 53 per cent to 47 per cent.
The Democrats swept the board in the midterms, increasing their majority in both chambers of the state legislature and winning convincingly the races for governor and mayor in both Los Angeles and San Francisco.
But Prop 40 crashed and burned among Californians, worried about the potentially catastrophic economic consequences of penalising wealth creators.
As Tom Leonard reported in the Daily Mail, a number of billionaires – including Google founders Sergey Brin and Larry Page – had already left the state in anticipation of the proposition being passed.
America may have taken a lurch to the Left last week, largely as a result of a desire to give Trump a bloody nose, but the flame of free enterprise and wealth creation still burns brightly, writes Richard Littlejohn
When Tesla and Starlink boss Elon Musk relocated his businesses to Texas to escape California’s high taxes and excessive regulation, between 3,500 and 6,000 jobs were lost.
There were fears that an exodus of billionaires would have a devastating effect not just on the labour market but on tax revenues in general.
A clever TV advertising blitz, funded to the tune of $400 million by tech bros, featured firefighters and teachers fearing for their jobs and concerned that a large-scale collapse in tax take would devastate public services.
America may have taken a lurch to the Left last week, largely as a result of a desire to give Trump a bloody nose, but the flame of free enterprise and wealth creation still burns brightly.
Del Boy Trotter’s optimistic ‘This time next year, Rodney, we’ll be millionaires’ lies at the heart of the aspirational American dream.
Sadly the same can’t be said of British voters. In a recent YouTube poll, 75 per cent supported some kind of wealth tax here. That may have given encouragement to those Labour MPs and far-Left activists clamouring to introduce a wealth tax in Britain. But the California vote should give them pause for thought, although it probably won’t.
California voters gather for a rally in support of Prop 40, a wealth tax on billionaires which was rejected on Tuesday
The British Left is driven by the politics of resentment, not reality. Around 16,500 high net worth individuals have left the country since Labour came to power, taking an estimated $120billion with them – equivalent to the entire UK education budget and defence spending.
Yet having lost a sizeable proportion of Britain’s sprinkling of billionaires, the Left is now turning its attention to millionaires to make up the shortfall.
Having milked family farms for every last penny, they are now targeting anyone lucky enough to live in a home worth more than £2million.
Labour is pressing ahead with plans for a ‘mansion tax’ under which those who live in high-value flats and houses will be hit with an annual council tax surcharge of between £2,500 and £7,500 – whether they can afford it or not.
The Valuation Office has already warned that the threshold could be lowered to £1.5million. The Government denies that, but remember the original £150,000 threshold for the higher 45 per cent income tax rate was lowered to £125,000 – by former Tory Chancellor, Jeremy Hunt.
You can’t trust any of them, so Labour would have no compunction reducing the mansion tax cut-off.
Many of those facing these astronomical bills are millionaires on paper only, asset rich but cash poor, largely because of the rise of property prices especially in London and the South East.
When this tax grab was announced by former Chancellor Rachel From Complaints, I noted that there are plenty of older people on fixed incomes still living in the homes they bought donkey’s years ago for a few thousand pounds, yet are now worth a small fortune on the open market.
For instance, a modest terraced house in a not-especially fashionable North London suburb which we bought in 1985 for £95,000 with a monster mortgage was recently valued at £1.9 million – firmly in mansion tax territory.
We moved out 12 years later, but some of our former neighbours – now pensioners – are still living there. Where the hell are they expected to find an extra £2,500 a year?
The problem with the British Left is that they have the economic literacy of a sulky Kevin the Teenager.
It’s so unfair.
They just want to ‘soak the rich’ without thinking through the consequences. Make people two-and-a-half grand worse off and they’ll have less disposable income. That means they’ll probably cut back on ‘luxuries’ like trips to the pub and eating out, at a time when the hospitality industry is already struggling and shedding jobs, as a result of Labour’s sky-high taxes, red tape and increases in national insurance and the minimum wage for young employees.
Better-off home owners will probably decide to lay off staff such as cleaners and gardeners. Labour’s tax grab will backfire on the very working people they claim to champion.
Home improvements will be postponed, especially as we learned this week that valuation officers will be visiting homes demanding to conduct ‘internal inspections’. Outrageously, anyone who refuses to let them will face a fine of up to £500.
So if you don’t want some jumped-up jobsworth in a hi-viz jacket measuring your downstairs loo, nosing around in your knicker drawer, sifting through your cupboards, and checking to see if you’ve installed a new kitchen or bathroom, you’ll be landed with a criminal record.
Yet still the Left isn’t satisfied and is agitating for an additional wealth tax which would impose a two per cent levy on anyone with assets of over £10million.
In California, they only wanted to target super-rich billionaires. In Britain they want to go after the moderately wealthy, even though it would inevitably lead to millionaires following the 16,500 wealth creators who have already left the country.
Chauffeurs, domestic staff, high-end eateries and luxury stores have already suffered from the exodus of high net worth individuals, not to mention the billions of pounds of tax revenue lost to the Exchequer which could have been spent on Labour’s sacred schools’n’ospitals.
After Tony Blair’s landslide in 1997, Peter Mandelson said that Labour was intensely relaxed about the ‘filthy rich’ provided they paid their taxes. It’s about the only statement he’s ever made with which I agree.
Even Gordon Brown went easy on the wealthy – until his 50 per cent income tax grenade before the 2010 election, designed to discombobulate the Tories – because he realised their taxes financed Labour’s programme.
The Blair government appreciated that encouraging wealth creators at home and from abroad to invest and spend their money here benefited the country as a whole.
The modern Labour Party has forgotten those lessons, prioritising ideological purity and rampant welfarism over economic growth and stability.
When we are forced to look back on the Blair, Mandelson and Brown government as the good old days, you know we’re in trouble.
As regular readers are aware, I’ve just spent some time in the States covering the midterms. Despite the Left turn last week, American enterprise and capitalism is alive and well and embraced by ordinary voters. In October alone, the US created 165,000 new payroll jobs
Today, I’ve never known a wider divide between our two countries economically or philosophically. Since the banking crash in 2008, the US has grown almost 25 per cent while the UK has stagnated.
We’ve now fallen behind once dirt-poor Mississippi. Yet the Left appear to be hell-bent on making us poorer still. I’ve never been more depressed about the state of Britain – and I lived through the bankrupt, turbulent, sclerotic 1970s.
Since Labour won power with just one in five of those eligible to vote, I’ve been searching for the right slogan to describe the state of the nation.
I’ve road-tested Basket Case Britain, Banana Republic Britain, and now with the transformation of Labour into a hard Left, anti-capitalist, economically illiterate, full-blown socialist party, I think I’ve cracked it.
Welcome to Bolshevik Britain.