David Cameron this week outlined his admiration for Nigel Lawson's period in the Treasury. This is consistent with his stockbroking heritage.
David Cameron this week outlined his admiration for Nigel Lawson’s period in the Treasury. But is this consistent with his earlier commitments to tackling inequality or the stockbroking heritage he boasted about?
On Wednesday, the Times reported comments made to a gathering of top financiers:
[Cameron said he] was in favour of flatter taxes. “I’m a Lawsonian, basically,” he said. Under Nigel Lawson’s Chancellorship, income tax was cut and other taxes were simplified, but some indirect taxes went up.
The Institute for Fiscal Studies’ ‘Poverty and Inequality in the UK‘ report contains the critical information about Lawson’s years in No. 11 from 1983 to 1989. As the chart below shows, Lawson’s tenure saw the sharpest rise in income inequality that Britain since records began.
As Sunder Katwala at Next Left has recently pointed out, the result of Lawson’s tax policies:
“was massive redistribution to help those at the top while regressive taxes like VAT went up. That Lawsonian approach did not reverse, but instead contributed to, stark increases in poverty and inequality, which Dave is famously against.”
The reason for this dramatic increase is explained by the chart below from the same IFS document. The chart explains how incomes have changed across the distribution. It compares the Labour government (bar chart) with the last Conservative government (black line). It clearly shows how over the respective period, top earners did better under the Conservatives.
Perhaps this is why Cameron was careful to use his Huge Young Memorial lecture to say:
“That doesn’t mean we should be fixated only on a mechanistic objective like reducing the Gini co-efficient, the traditional financial measure of inequality or on closing the gap between the top and the bottom …
“And we should focus on closing the gap between the bottom and the middle”
After all, attacking the top would mean attacking his heritage. From the same Times article:
“My father was a stockbroker, my grandfather was a stockbroker, my great-grandfather was a stockbroker.”
16 Responses to “Why Cameron’s stockbroking heritage explains his love for Lawson”
Left Foot Forward
Why Cameron's stockbroking heritage explains his love of Lord Lawson http://bit.ly/5m6eTi
Dave Talbot
Cameron, his stockbroking heritage and his love of Lawson http://is.gd/5jrPh @leftfootfwd
Josh
What about inequality of taxation contributions? In America, the top 25% of earners pay 86% of all income tax. The top 1% the same as the bottom 95% combined. That same 1% pay just under 40% of all income tax in America.
In the UK, the top 1% pay 23% of all income tax, compared with 11% when the top rate of tax was 83%. The top 10% of earners in the UK pay 53.6% of all income tax. The top 5% will pay 43%.
Why do socialists only concentrate in inequality of income? What about inequality of taxation? Libertarians believe in taking everyone out of taxation, and if any tax is necessary, it should be a local sales tax because it is voluntary, as one dosen’t have to consume.
The Laffer Curve, often mocked by those on the Left, works. I shall repeat one figure to prove this. According to the Institute for Fiscal Studies, in 1979, when the top rate of tax was 83%, the top 1% of earners contributed 11% of total tax. In 1997, with the top rate at 40%, that number had risen to 22%, and it currently stands at 23.9%.
When socialists start to apply their dogma of enforced equality to tax contributions as well as income, they will deserve a fair hearing. But until then…
Josh
I must say however that Left Foot Forward is a lot more professional, balanced and intellectual than LabourList. Mr Straw and his comrades may be wrong on everything, but at least they are wrong eloquently.
Anon E Mouse
Josh – I agree with your last comment – mind you no one ever said LabourList was intellectual and judging by a lot of the contributors one can see why…