Cooking the Books 2 – Something (a lot) for Nothing
Rishi Sunak, the Chancellor of the Exchequer, cannot be pleased. It seems that his political rivals have been using his wife – the daughter of one of India’s richest capitalists and a capitalist in her own right – to sabotage his political career. It is true that there is something incongruous about a rich politician presiding over the pain, in terms of higher gas, petrol and diesel prices, that the government has decided is worth workers paying as a result of their sanctions against Russia.
The media and the Labour Party made great play of the fact that Sunak’s wife was a ‘non-dom’, someone whose tax domicile is another country and so who can pay taxes there rather than here, in her case India where they are lower. But which state – India or the UK – she pays taxes to is irrelevant from the point of view of those who work for wages. What is relevant is how she gets her income in the first place.
According to the BBC, ‘She owns £700m in shares of the Indian IT giant Infosys, founded by her father, from which she received £11.6m in dividend income last year’ (bbc.co.uk/news/uk-politics-61045825).
£11.6 million a year is £233,077 a week, without having to do anything, not even these days to clip coupons. Who said the idle rich no longer exist? But where does it come from?
The immediate source is the dividends on the £700 million’s worth of shares in the capitalist enterprise founded by her father. But where did the wealth of that company come from? According to the company’s website:
‘From a capital of US$250, we have grown to become a US$106.44 billion company’ (infosys.com/about/history.html) .
Maybe, but how did that happen? It will be a typical story.
Infosys was started in 1981 by a group of software engineers. In 1992 it became a public limited company. The following year it was ‘floated’, selling shares in it to outside capitalists and financial institutions. These will have invested their money with a view to obtaining a share of future profits while the company used the money to expand its activities.
For the first few years the original founders would have worked hard to build up the business, though $250 would not have taken them very far; they would have had to borrow more from somewhere, even if from their friends and relatives but more likely a bank. When they had acquired enough they could begin to take on employees. These too would work hard but, unlike the founders, would not have benefitted fully from their work; a part of the value they added would have gone to the company as profits, most of which would have been re-invested to expand the business.
As the business expanded the original capital made up a smaller and smaller part of the total capital which would have been built up out of the profits produced by the workers and by invested outside capital (built up too out of the profits of other workers).
So, the Chancellor’s wife’s wealth comes from the exploitation of workers. The dividends that enable her to live an idle life of luxury come from the same source. They are a pure property income, what the tax authorities in Britain used to call ‘unearned income’ – before they realised that ‘unearned’ could mean ‘not earned’ and so be interpreted as ‘ill-gotten’. It’s an income that she – and others like her – get just because they have titles of ownership of means of production and to a share of the profits their operation by wage-workers brings.
That’s the scandal, not that she played the system to pay less tax.