Success != Being Rich

I don't usually write anything on here that may be related to politics (that's usually left to my twitter account) but there is something I heard today that irked me enough to write a blog post on it. It relates a lot to running a business but also to life in general so hopefully it will be of interest to those who are reading it.

For those who don't know, I'm based in the UK. Yesterday the UK government announced the budget for the next year. As well as hearing about how we're all basically doomed the government announced that there will be a new 50% tax band for those earning over £150,000 a year. This means for every pound you earn over £150,000 a year, half of it will go to the government to pay for various public services.

Of course there has been outrage from many of the 1.5% of the population who earn over £150,000 a year and this is partially understandable. Nobody likes paying taxes, but they're a necessary evil and help to pay for things such as health care, roads, schools, parks, refuse collection, police, fire services, defence and many other crucial services. Unfortunately some of the rich feel they're being punished for being successful.

Perceptions of Success

The BBC News had a businessman on their channel to talk about the implications of the tax rise. He felt it was unfair that the successful were being punished for their success. Of course what he really meant was "rich". There is a common perception that in order to be successful you have to be rich. To me this is incredibly flawed. A CEO of a failing company can be incredibly rich but the owner of a small, but successful business may not be rich (thought they probably aren't poor). Yet for some reason the CEO is seen as more successful in life.

Its this perception that leads to many people's desire to be rich. They want to be seen as a success. The problem is it is wrong. Taxing people 50% on their earnings over £150,000 isn't taxing the successful. It isn't really taxing the rich either. It is taxing the greedy.

Massive wages = greed

OK, so that is a little unfair. Some people need bigger wages. Perhaps they're in a career where they can't work until they're 65. No-one would have any qualms with police officers, fire officers, sports stars, soldiers, physical labourers etc earning higher than average per year. Their wages may go down after they are required to change career or forced to retire because they are too old, or have picked up an injury caused by their work, so earning more while they're in their prime makes sense.

I'm also not advocating everyone should be paid the same wage. Those who are highly skilled should be paid more then average. Those who put themselves in danger and/or save lives should be paid a hell of a lot more then average (and also a lot of respect). A varying pay scale is perfectly fine. It is also a case where you may need to earn more depending on the number of people dependant on you (eg children) or where you live (eg London is a much more expensive place to live than Blackburn).

The problem is with those who earn a lot of money each year, more than £150,000, and then spend it on themselves. These are often the people complaining the most about higher taxes for the rich. Of course not everyone who earns that much money is greedy. Some people earn a lot of money but give a huge amount of it away to charity. Nobody could call those people greedy (indeed I believe all money given to charity should be fully tax deductible to encourage more to give to charity).

But those who have a lot of money left over after they have given to charity and paid for the essentials that everyone needs are just being greedy. They'll likely buy themselves a much bigger house they need, or an extremely pricey sports car etc. Things they don't need with a huge amount of disposable income. Things to signify "success".

The Right Thing To Do

So if you are earning that much money, you really have no right to complain. If you are running a successful business and taking £150,000 a year in wages or more then you're being greedy. You could give yourself £50,000 a year and still be incredibly well off. You could have a large house, 2 very nice cars, go on holiday abroad once a year etc.

But what about the other £100,000? Well that could be given to charity. Think about how much good you could do with £100,000. Or how about hiring some more staff. You could hire three people for £33,000 a year. That's a pretty decent wage and you've just helped lower the unemployment figures by 3 people.

The reason that those who earn a lot of money are taxed at a higher rate is that the money they have being taxed at that rate is disposable income. They don't need it, they simply want it. That money can be used for a lot of good and improve the lives of a lot of other people.

Success really needs to be redefined, or rather it's actual definition needs to be reclaimed. Success should be based on how well you perform, not on how much you earn.

Businesses vs Individuals

Businesses are slightly different to individuals. If a business earns a large profit then it's not necessarily a bad thing. In fact that is success. Of course how they use that profit is key. They may give all their employees a share of it, or invest it in research and development. They may save it in order to protect themselves against times when they make a loss or for future plans such as expansion which will create jobs.

Of course, that doesn't mean businesses should be entirely immune to criticism either. If they do make a huge profit they should also not complain about it being taxed. The money that gets taken away as tax goes towards many things that help them as a business prosper, and also in improving the lives of their individuals.

Tax money that goes into improving schools helps provide more skilled workers for the business. Tax money that goes into transport helps the business move their goods and workers around. Tax money that goes into communications infrastructure helps the business expand while being able to keep track of everything. The taxes being taken from a business's profits aren't really a loss of money, but an investment in the business.

Success = Doing Well

As I said earlier, taxes are a necessary evil. But higher tax rates on higher earners is not taxing the successful. There are plenty of people earning under £150,000 who are successful, to say otherwise would be saying 98.5% of the population are failures.

Success as a word needs to be reclaimed to mean doing well, setting out goals and meeting or surpassing them. If we can do that then maybe we can see society becoming more equal and those who do earn a lot of money choosing to help others with it, rather than themselves.

(16) Comments

---