There's a lot of talk about wealth but do we understand it, its creation and its taxation? Perhaps there's too simplistic a view of wealth? It's obviously not distributed fairly when many in work are also claiming universal credit but should we differentiate income versus assets? Just some observations, I'm not claiming to have an answer, just some points for debate (I mean debate on the points not the pointless, stupid, insulting of contributers) ...The City of London does manage wealth. To what extent does it create it? It certainly provides jobs for many but there's definitely a distinction between the salaries provided for operational staff (IT, regulatory, data processing & analysis, etc) and the bonuses, commission, share options on top of the salaries paid to traders, financial advisors, directors, etc. The extent to which bonuses and share options are extended to operational staff will vary between organisations. Share options are often the way to real personal wealth; however, they may be invalidated by redundancy, job moves, or company failures; although once exercised, there's income from dividends as well as possible gains share values. (And the country's exchequer can gain from both income tax on dividends and capital gains tax on share value increases creating national wealth.) Overall, though, any wealth generated will be concentrated on a few running the City's organisations and the investors whose money they manage - and the investors may be anywhere around the world so may not be UK tax payers (only corporate taxes on free income). Remember, when discussing wealth, assets such as shares, bonds, property, art, etc are usually the bulk of the "value" and this can change significantly with time - sometimes overnight - and can only be realised in terms of cash when its value is realised at a point of sale - which is when it's usually taxed. But then, cash itself has no inherent value on the open money markets other than confidence in a country's economy and is just a like any other commodity in a capitalist marketplace? I suppose cash is the most liquid of assets so the one easiest to tax?I would guess most wealth is generated by large organisations - big tech, defence, entertainment, bio tech, etc - where the tax paid can be minimised by manipulating where profits are realised. Small businesses do provide employment and incomes but do they generate vast amounts of wealth? Many fail or close after a few years - possibly because of unrealistic finance models, poor management skills, external pressures, or it's just too much effort? - although a few will grow into the large wealth generators (but remember, Apple nearly failed in the late 90s). Then we have, as noted elsewhere, the private equity and other investors that leverage organisations with large borrowing - whether that be care homes, water companies, pub chains, etc - and are often the ones that pay unrealistic high street rents from their borrowed money to greedy landlords? Outside of the City, should natural resources: water, oil, gas, coal, etc be considered as national assets owned collectively by all with a just fee paid to organisations to extract, process and distribute them? And how much is wealth equality driven by culture; for example the Norwegian and Emirates national sovereign finds, or Luxembourg's free public transport for all?There also needs to be a watchful eye by regulators on financial engineering to make sure we don’t have a financial crash like the one of 2008 caused by subprime mortgages being dressed up as triple A debt. In a global market place it's worth remembering that markets don't always continue going up - and who bails them out? Usually governments and taxpayers as in 2008!Perhaps it's wrong to say "the City" creates wealth itself, it pays itself for managing the value created by businesses manufacturing products from commodities, creating intellectual property for a variety of purposes, or providing services that people need and want (of which, the City's financial services is one). Hopefully, that recursion of City services' value doesn't mean there's no real value!
Michael Ixer ● 11d