When the famous bank robber Willie Sutton was asked why he robbed banks, he famously responded, “Because that’s where the money is.” This insight led to Sutton’s Law – an act of parliament introduced by Rishi Sunak allowing him to rob you blind.

Well, it’s more a series of policies than a specific act of parliament. And, so far, I’m the only one actually calling it that.

You see, Sunak was a banker himself, so he’ll hardly steal from his mates to fund the government. He’s there to make sure it goes the other way around, if anything. But that’s another story.

When it comes to paying Sunak’s salary in his new job, you’re where the money is.

Of course, they’ll call it taxes, not theft. But if you don’t pay, the consequences are mighty similar to being mugged in slow motion. They get the money in the end either way, it’s just a question of how painful things get for you in the meantime.

The “theft” has already begun too. Thanks to inflation shifting people into higher tax brackets, HMRC reports that households have paid 10% more in tax between April and December than last year. That’s an average of £821 more.

If you thought taxation without legislation, as inflation is now, is bad, just wait for what’s coming next.

Small business owners will get squeezed too, with higher corporation tax in the works. After being told to shut down during the pandemic, small businesses are now the ones being told to pay for the shutdowns too…

Now there’s no denying the government needs money given the deficit and the debt. Things have been getting a bit out of control on both fronts. The UK government almost went bust when the pension system melted down a few months ago, after all.

And it’s not like raising taxes actually works, so they’re going to have to do a lot more of it in the future. The government’s windfall tax on oil and gas companies has collected 25% less than expected so far. And that’s before the likes of Harbour Energy reduce investment in the UK and cut jobs over the windfall tax.

With such unexpected shortfalls, they’ll have to raise rates again.

The result for us investors is obvious. With higher taxes, we’ll have less savings and less wealth, making us more reliant on welfare in retirement. And that, in turn, will require more taxes to pay too.

Hargreaves Lansdown – which, it should be noted, has absolutely no skin in this particular game – estimates that: “Only one in three wealthy households are on track for a ‘comfortable’ later life”.

That is a bit vague, but the statistic from the Pensions and Lifetime Savings Association is that a comfortable retirement should cost £54,500 per year for a couple: meanwhile, only a third of the top 20% of households by income are on track to hit this with their savings and investments.

The definition of comfortable retirement includes £1,300 per person for new clothes and footwear per year, which is about what I’ve spent over the last ten years, but let’s work with their numbers anyway.

If being in the top quintile of earners is not enough to set you up for a comfortable retirement, something is seriously wrong with the system.

But it’s not quite bad enough to prevent the government from making it a bit worse.

The idea of the report from the broker is that you should contribute more money to the likes of Hargreaves Lansdown, of course. That may be a good idea, if the government weren’t attempting to pass Sutton’s Law and target those who do save and hand the cash over to the City.

According to The Telegraph:

Isa savings should be capped at £100,000 to stop wealthy families from benefiting too much from “costly and unnecessary” tax breaks, a leading think tank and charity have said.

All savers would face a total limit of £100,000 of tax-free cash under proposals set out by the Resolution Foundation and the Abrdn Financial Fairness Trust.

Fairness? Trust?

£100,000 doesn’t even buy you two years of comfortable retirement…

The research organisations pushing for taxes on ISAs are upset that the ISA system benefits the rich over the poor. But that was the whole point. Firstly, it sought to incentivise people to save more so they get “rich”. And secondly, it encouraged people to save for their own retirement so that they are not a burden on the welfare system – which is designed to help the poor.

The poor who did their patriotic duty, saved, and got rich as a result, now have the government sending them a thank you card with a tax bill inside. The bill gets transferred via the welfare system to those who didn’t save.

But, apparently, Britain is consistently the worst country for savings in the developed world. So taxing savings is just the right thing to do then, isn’t it?

The news on cash ISAs is just the beginning though. It’s not like they pay more than the rate of inflation anyway.

In coming years, I expect Sutton’s Law to be expanded widely as governments go after “where the money is”. And retirement savings are where they’ll find it. After all, they created the incentives to pool it there. Now they’ll drain the pool.

Just another reason to get some of your wealth off the financial grid, as I recommend you do for an even more important reason here.

Nick Hubble
Editor, Fortune & Freedom