Just how seriously should we be taking the prospect of the Jeremy Corbyn government? Not very, according to the bookies, who this week have been offering 9-1 against him becoming Prime Minister on 13 December. But then again, read the proposals which have been floated by shadow chancellor John McDonnell and you might well come to the conclusion that that is a one in nine chance of having your assets ravaged.
It is certain that a Labour victory would cause a plunge in the UK stock market in response to the party’s pledge to seize 10 percent of every company’s stock and put it into a fund for the benefit of the workers – or at least partially for the workers, as the small print reveals they would each receive a maximum of £500 a year in dividends, with the rest of the money going to the Exchequer. And of course there is always the prospect that McDonnell could come back for more – if he feels he has got away with seizing 10 percent of a company’s stock, why not 20 percent or 50 percent as he works his way incrementally towards the common ownership of the means of production?
If the certain prospect of a having an extra five percent tax on incomes above £80,000 a year does not bother you too much, McDonnell’s past enthusiasm for a wealth tax almost certain will. In 2012 – before he became shadow chancellor, that is – McDonnell endorsed a proposal by University of Glasgow media studies professor Greg Philo (sometime mistakenly referred to as an economist). Philo proposed that the wealthiest 10 percent of the population be subject to one-off levy of 20 percent of the value of their assets, which McDonnell claimed could be used to pay off 80 percent of the national debt (although at the time it would have been more like half the national debt).
To get caught by this swingeing levy you would not need to be particularly rich: according to the ONS you only need £1.25 million worth of assets – property, shares, cash or anything else – to be counted amongst the top 10 percent.
While a wealth tax is not official Labour policy, the party has done little to dismiss the idea. It can be taken more or less for granted that any tax which has not specifically been ruled out by McDonnell will be on his radar somewhere – even if a wealth tax ends up being limited to a more modest mansion tax.
On the positive side, the 9 to 1 odds against a Labour government does at least provide an opportunity for hedging. If you reckon, for example, that a Corbyn victory would result in a 10 percent fall in the value of your assets, you could always place a large stake – equivalent to one per cent of your total wealth – on a Jeremy Corbyn victory. If he loses, you are going to lose your stake, obviously, but you will keep 99 percent of your assets. If Corbyn wins, on the other hand, you win big – enough to compensate for the 10 percent of your assets you would lose through Corbyn’s policies.
I am not sure about the maximum stakes William Hill or Paddy Power allow on their political bets, mind. But in theory, at least, there is a way to protect yourself against Jeremy Corbyn which doesn’t involve you having to pack your bags and flee to a tax haven.