The richest one per cent of Britons contribute 30 per cent of all the Income Tax collected in this country. This, supposedly, is a ‘killer fact’ – deployed with devastating complacency by the free-market right: Rising inequality? No need to worry about that! The rich are kindly paying your taxes for you – so just you run along.

There are two massive problems with this argument.

Firstly, it is highly selective. Income Tax is only one tax among many. Indeed, it isn’t even the only tax on income; once National Insurance is factored in, the system isn’t nearly so progressive. Add in all the taxes and duties and things become yet flatter.

Secondly, the fact that the top one per cent are paying so much Income Tax these days only serves to highlight the long-term growth in their share of our national income – and the stagnation in the incomes of ordinary working people.

It’s a long-term trend that can be seen on both sides of the Atlantic. For instance, under that nice Mr Obama, a staggering 95% of the income gains from 2009 to 2012 went to the richest one per cent of Americans (now that’s a killer fact).

The rich have been hoovering up the lion’s share of growth for decades, but before the banking crisis the visible effects were masked by debt-funded consumption among the other 99%. With cheap credit harder to come by, income inequality has become more fully manifested as consumption inequality.

In an article for  New York Times, Nelson Schwartz sets out the key facts and figures:

“In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.

“Even more striking, the current recovery has been driven almost entirely by the upper crus… Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.

“More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income…”

The debate over inequality still rages at a political level, but Schwartz observes that businesses and investors have already made their minds up:

“…in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away…

“Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts… big stores and restaurants are chasing richer customers with a wider offering of high-end goods and services, or focusing on rock-bottom prices to attract the expanding ranks of penny-pinching consumers.”

The big losers are retailers “whose wares are aimed squarely at middle-class Americans” like “Sears and J. C. Penney” whose shares “have fallen more than 50 percent since the end of 2009, even as upper-end stores like Nordstrom and bargain-basement chains like Dollar Tree and Family Dollar Stores have more than doubled in value over the same period.”

What is bad for retailers who base their business model on middle class aspiration is surely also bad for political parties who do the same.

Of course, while ordinary working people may have less money to spend these days, they have just as many votes. Only it won’t be aspiration that guides them in the polling booth, but anger.

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