Behind the social media-orchestrated campaign that has driven up prices of the market’s lame beasts, there lies a desire to inflict damage on a hated system. It’s real-life gaming, with the extra satisfaction of making the rich poorer and the poor richer (if only fleetingly). And what could be more perfect than using a free-to-trade broker named in honour of the outlaw who took from the rich to give to the poor. As one wit on Twitter commented: “I know this GameStop stuff is funny, but you have to remember this is hurting real people who own multiple boats.”
How and if regulators will attempt to prevent future pile-ons and protect small investors from financial harm, is anyone’s guess right now. But the episode underlines how the pandemic is reshaping the world beyond the grim statistics of illness, death and the economy. The lasting effects of coronavirus will include not just how we live, work, learn, consume and run businesses, but crucially how we share wealth.
That is an issue that is permeating discussions around tax in particular. It is feeding a renewed determination to force businesses and certain sections of the population to shoulder more of the heavy tax burden that lies ahead.
Despite many businesses facing ruin, others have had an extraordinarily profitable year. Tech giants in particular are the focus of plans to finally deliver a proper global framework for a digital tax. But small businesses are not exempt from the tax reformers’ ire. The Institute for Fiscal Studies argues that the one in five of the UK workforce who manage their own business get beneficial tax treatment compared with employees and that this “large, unjustified and problematic bias” must be ended.
Think-tanks and advisers have been busy pushing out other papers outlining ways to ensure the wealthy and the elderly also face retribution. With the young being one of the most economically impacted groups in terms of job losses and prospects, coronavirus is heaping a new injustice onto their pre-pandemic discontent. Research by the Resolution Foundation shows that someone heading into their 30s in the last decade had 25 per cent less wealth than someone reaching the same age a decade earlier, while someone reaching their 60s had 50 per cent more wealth than someone getting to the same age 10 years before them.
In view of that it is harder to argue against the case for taxes on wealth and assets - even where there is no income to pay them. Recent proposals include a wealth tax that would include pension pots and homes, and a property tax that would replace the existing council tax with one that is continuously updated and proportional-to-value. This would mean, for example, that the council tax on a property that is worth nine times more than a less valuable one would be nine times as much as that on the latter (currently it is a maximum of 3.5 times). Pensioners who opted to sell up to avoid a much higher charge would also face the prospect of having to accept a lower price from buyers reluctant to lock themselves into high future tax payments.
Higher tax rates and smaller tax-free allowances on investment gains and reduced tax relief on pension contributions are also under consideration.
The chancellor is facing difficult choices, as he decides who, ultimately, will pay the nation’s bill. But tax rises of one sort or another are inevitable, as is the fact they are highly likely to be coming the way of the boomer generation. The ending of the pandemic will bring immense relief for all, but its painful effects will endure for some for many years to come.
