Yes. It's been suggested we should get behind abolishing the 50p tax rate. I don't think so.
Three reasons.
Firstly – I don’t think the current rate puts off entrepreneurs and wealth generators. As Simon Jenkins put it in his brilliant piece the other day…
“I know very few rich people who got rich to make money. They got rich because, other than spivs and gamblers, they enjoyed their work and were good at it. How much they made might be due to competition, greed, love, prestige, personal rivalry or, as JK Galbraith said of senior executives, a "warm personal gesture by an individual to himself". But there is no evidence that output rises or falls in response to shifts in post-tax income, except for some hourly-paid workers. It therefore does not respond to changes in marginal income tax”.
It’s also worth saying owner managed businesses often end up paying themselves out of dividends on income, and so don’t pay PAYE tax rates anyway. So to say it puts people off being entrepreneurs just isn’t true.
Secondly – if there are even marginal amounts of money coming into the Exchequer that the Treasury reckons they can cope without, I’d rather this was given to the less well off. That’s why I like the idea of taking anyone earning £10k or less out of income tax altogether – and why as a second step I’d rather extend that to £12500, the level anyone working full time on the minimum wage would earn.
Thirdly - cutting top rates of tax at the same time as we make austerity driven cuts to public services and benefits just isn’t tenable. It would be morally reprehensible. The fact that it would make everyone think we were nothing more than light blue Tories and undo any ground we’ve made up after the tuition fees debacle is a side issue – it’s the morality of the politics that’s the most important issue here.
The French ‘Les Super riches’ want to pay more tax.
Warren Buffet wants to pay more tax
Even Sir Stuart Rose wants to pay more tax.
Lets do everything we can to help, not hinder them
Fourthly, the effective 60p tax rate for those earning just over £100K (caused by the gradual withdrawal of the personal allowance at that level of income) needs to be removed before the 50p rate for those on £150K+ if we believe in a fair and progressive taxation system.
ReplyDeleteAnd its removal should also come a very long way behind the raising of the personal allowance to £12,500, taking those on the minimum wage out of income tax altogether.
Ah yes Tim - quite right - Millennium Dome elephant has a great piece on the 60p tax rate
ReplyDeletehttp://millenniumelephant.blogspot.com/2011/09/day-3902-lets-tackle-britains-highest.html