In Daily Telegraph-ese, the “squeezed middle” means the very rich

The Daily Telegraph thinks the ‘squeezed middle’ begins at more than twice the ninetieth percentile of earners, writes Left Foot Forward’s Daniel Elton.

In yesterday’s Daily Telegraph, head of personal finance Ian Cowie echoed Ed Miliband’s concern for the squeezed middle:

“Most people imagine that only people paid over £150,000 a year suffer tax at more than 50pc but many members of the ‘squeezed middle’ earning much less than that pay marginal tax rates of 62.5pc.”

From the use of the political phrase du jour, you might think Cowie was referring to people in the middle of the income spectrum who are being squeezed.

He is not:

“The explanation is a combination of income tax at 40pc, National Insurance Contributions (NICs) at 12pc and the clawback of personal allowances at the rate of £1 for every £2 of income in excess of £100,000 a year.

“That clawback – initially announced by Labour Chancellor Alistair Darling but upheld by his Conservative successor George Osborne – means the personal allowance, which enables everyone else to earn £7,475 before they must pay tax, has been lost altogether before earnings reach £113,000 a year”

The ‘squeezed middle’, for Cowie, refers to people who are earning salaries more than twice as much as those comfortably above the ninetieth percentile of earners, that is among top ten per cent of earners in the country:

Cowie also falls back on the Laffer Curve to attack the idea of progressive taxation altogether:

“There is nothing theoretical about the Laffer Curve, which demonstrates how tax revenues fall when tax rates rise; it is based on a common sense appraisal of human nature.”

The Laffer Curve, in its purest form, argues that although raising tax rates from, let’s say 0 per cent to ten per cent, will increase revenues, if you keep on increasing it, at some point revenues fall as individuals refuse to work as an increasing proportion of salaries are allocated to tax.

However, by arguing there is such a curve, Cowie finds himself in agreement with such rabid free-market capitalists as Nikolai Bukharin, designer of the New Economic Policy under Lenin.

What Right and Left really disagree about is where the peak of the curve is. In reality,  conservatives often believe in a  ‘Laffer Slope’ and not a curve at all.

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38 Responses to “In Daily Telegraph-ese, the “squeezed middle” means the very rich”

  1. Karan Mude

    In Daily Telegraph-ese, the “squeezed middle” means the very rich: writes @DanielElton

  2. Phil Wass

    In Daily Telegraph-ese, the “squeezed middle” means the very rich: writes @DanielElton

  3. James Mills

    In Daily Telegraph-ese, the “squeezed middle” means the very rich: writes @DanielElton

  4. Paul Trembath

    In Daily Telegraph-ese, the “squeezed middle” means the very rich: writes @DanielElton

  5. Michael

    In Daily Telegraph-ese, the “squeezed middle” means the very rich –

  6. Caer

    RT @TheRightArticle
    In Daily Telegraph-ese, the “squeezed middle” means the very rich –

  7. Peter Durant

    In Daily Telegraph-ese, the “squeezed middle” means the very rich –

  8. Bill Cawley

    RT @leftfootfwd: In Daily Telegraph-ese, the “squeezed middle” means the very rich

  9. Selohesra

    Would the very rich include the likes of Bob Crow in his taxpayer subsidsed house and other working class men of the people type union leaders?

  10. StephenHenderson

    Re.. the “Laffer Curve” can’t we just rename this the “Bush Curve” in honour of the Bush Tax Cuts they inspired?

    Alternatively we could rename Bushes policy as the “Laffer Cuts” just so that people understand the link between this theory(#) and the current US budget outlook.

    # by “theory” I mean simplistic self-serving cant.

  11. Dànaidh Ratnaike

    In Daily Telegraph-ese, the “squeezed middle” means the very rich: writes @DanielElton

  12. Mr Danger

    “While people earning that much may expect little sympathy from those paid less, few would class them among the ‘filthy rich’”

    The above quote is from Cowie’s blog entry. So Cowie himself says that these people are obviously high income, why is LFF ignoring that?

  13. william macvean

    I thought the the laffer curve had been discredited

  14. Leon Wolfson

    Selohesra – Yes, can’t have that nonsense of mixed neighbourhoods, gotta have sinks of failure where people get stuck!

  15. Daniel Elton

    [email protected] In Daily Telegraph-ese, the “squeezed middle” means the very rich: writes @DanielElton on @leftfootfwd

  16. George McLean

    @ Selohesra (why don’t you use your real name, by the way?)

    Bob Crow can defend himself, but as I’ve said on here before, the multiple of his earnings is far lower compared to the wage of his lowest-paid member than the ratio of an average company director’s wage to her/his lowest-paid worker … and Bro. Crow is to some degree accountable to that member unlike a capitalist. But, at the end of the day, I would imagine Bro. Crow wouldn’t winge about a higher rate of income tax on his earnings, nor an equitable imposition of NICs, nor a land value tax, nor … but you know all that, don’t you?

  17. George McLean

    PS Watch out, Leon. Here come the trolls!

  18. Ed's Talking Balls

    Watch out Leon (not his real name by the way, by his own admission, yet curiously George hasn’t criticised him for it), here comes the predictable labelling of those with different opinions as “trolls”!

    As for Comrade Crow, although he’s not the focus of the article, of course he can be classed as “very rich”. Trying to argue he’s not is like arguing black is white.

    Clearly those fortunate enough to be in Bob Crow’s position, e.g. union barons, bankers, doctors, politicians etc aren’t “all in this together”. Fortunately for them they’re shielded from the effects of recession. I don’t believe that Ed Miliband is on the side of the middle classes. I don’t believe any politicians are.

  19. Leon Wolfson

    No, it’s not my real name. Because, as I’ve said, I’ve seen someone I work for fire people who are left wing. I don’t happen to agree it’s necessary, as long as someone maintains the same identity, in any case.

    And sure, the rich are shielded. Thing is, that’s not the issue. The issue is the argument that people should be thrown out of social housing when they’re successful. That leads to areas being forever poor, rather than mixed areas – which are always considerably better for the inhabitants!

  20. Ed's Talking Balls

    Trust me Leon, I wasn’t having a go at you using a false moniker. Far from it. I don’t know of anyone who has been fired for their political views, however, but there we go. No-one has to justify their choice of name in my view.

    I guess what sticks in the throat with Crow is this man of the people act, when he’s supping champagne on the sly in Mayfair restaurants. Further, I suppose most people’s view on social housing is that it should be there for people in need. If people feel like that, it’s only natural that they resent Crow and Dobson.

    Personally, while I find much about Crow utterly contemptible, the thing that I dislike most is that his actions, supposedly to protect the hard working, prevent hard working people from getting to their jobs on time or at all. The fact that he takes delight in being so disruptive adds insult to injury. Vile man.

  21. Leon Wolfson

    Yes of course, if you’re a government unilaterally imposing pension changes while pretending to negotiate, of course he’s going to be “disruptive” – that’s his job after all.

    Moreover, I notice you haven’t addressed the housing issue.

  22. Ed's Talking Balls

    Nonsense. He indulged in spurious strikes during a period of unprecedented (and ultimately unsustainable, but less of that for now…) growth. He’s just a Trot agitator and is rightly regarded with disdain by hard working Londoners. The only problem is the power he harbours but if ever there was anyone who could turn public opinion in favour of stringent striking laws, it’s him.

    I wasn’t consciously trying to ignore the point you were making about housing. I was merely saying that I thought social housing was meant to be there for those who need it; given that Crow and Dobson no longer do, perhaps they could vacate and make room for the many that do?

  23. Leon Wolfson

    Ah yes, the trotting out (pun intended) the attacks on trade unions. At this stage, I’m quite willing to call for closed shops again because of the Tory attacks on perfectly reasonable concepts like wanting to negotiate terms for pensions.

    And again, the concept that people who are successful should have to vacate social housing creates sinks of failure, where you get large concentrations of low paid and unemployed workers. Mixed neighbourhoods are better for all concerned.

    The key is, of course, building more social housing, which has been neglected for decades.

  24. Ash

    Just a note of caution: given the way the Tories have justified cuts to child benefit and tax credits, it’s worth remembering that individual earnings and household incomes are two different things. A single-earner, two-adult, three-child household (e.g.) on £46,428 wouldn’t be anywhere near the 90th percentile of the income distribution. In fact they’d be close to the 50th percentile, and have an excellent claim to the title ‘squeezed middle’.

    (Doesn’t affect the central point about £100k + earners though.)

  25. Richard

    “I guess what sticks in the throat with Crow is this man of the people act, when he’s supping champagne on the sly in Mayfair restaurants.”

    Just like Call me Dave then.

  26. Selohesra

    George – why the fascination with my real name – it is not unique so even if we met neither of us would know if we the same people corresponding here. Perhaps we should all post under our NI numbers to avoid ambiguity.

  27. Ed's Talking Balls

    Yes Richard, precisely. Except only an utter fool would pretend that Cameron, with his family tree, enormous wealth and Eton and Oxford education, is anything other than a man of privilege.

    Bizarrely, some people seem to be taken in by Crow’s shtick. True, he’s not in Cameron’s league but he’s hardly struggling to pay the mortgage or put food on the table. He’s just a rich man preventing working people from doing their jobs.

  28. matthew fox

    The correct title is ” Your having a laugh curve ”

    When the 50p tax rate was introduced, revenues went up.

    Can some find Ed’s Balls Up’s medication, he seems to be channelling at the moment.

  29. Ed's Talking Balls

    I’ve no doubt that you are one of the fools who believe Crow is a diamond geezer, matthew fox. I can’t imagine it’d be too difficult to pull the wool over your eyes.

  30. Mr Danger

    “When the 50p tax rate was introduced, revenues went up.”

    Try thinking ahead more than one year.

  31. Leon Wolfson

    @20 – Yes, true, now let’s put tax on all kinds of revenue to the same level, rather than allowing non-labour revenue to benefit from lower rates, and spend a few billion on collecting due tax. It’s a good start, but doesn’t go nearly far enough.

    @17 – Yes, of course, it’s not like Unions are things people join themselves. Oh, wait! Let’s have an opt-out from the ConDem policies then, if you’re so keen on that kind of selection…

  32. Ed's Talking Balls

    I’m well aware people join unions. Goodness, where did I say they didn’t? Still, good destruction of that carefully constructed straw man.

    Unfortunately, commuters can’t opt out of being screwed over by Crow’s frequent, unnecessary strikes any more than the general population can put itself outside the reach of the rule of law.

    Despite claiming to respond to my point at 17, your post at 21 doesn’t even vaguely address the idea that Cameron and Crow, both very rich men, are not among the squeezed middle. Very simple point, no subtle nuances or what have you. Just a plain fact. I know you don’t feel comfortable unless obfuscating and/or describing your favourite make-believe Tory but, just for once, would you mind awfully answering a very simple question with a very simple answer?

    Are David Cameron and Bob Crow members of Ed Miliband’s “squeezed middle”?

  33. Leon Wolfson

    Of course you have to blame Crow for the strikes, you can’t stomach the prospect that they’re voted on by the members, for reasons they find entirely valid. You’re simply objecting to unions on principle

    Bob Crow has overseen his union *growing* in the transport sector – he’s an effective, skilled leader. He’s become moderately well off because of his wage, rather than by playing the money market and coming from a rich family by inheritance, unlike Cameron.

    I don’t give a shit about, and don’t use, the term “squeezed middle”. I care about money generated as a result of the market rather than by labour, which is depriving workers of a proper wage for the job they do.

    Actual benefits for workers, not your choice of buzzword.

    (I detest Crow’s politics, in the main, but he’s an effective and popular union leader. Your hatred of him is telling – it highlights your basic anti-worker views.)

  34. Ed's Talking Balls

    Well there’s a first. In roundabout fashion, you have answered the question I posed. Quite clearly Bob Crow is a very rich man, irrespective of the source of his wealth. That really should be a painless admission; it’s a statement of the bleeding obvious.

    Incidentally, your anti-worker sentiment shocks me. I thought you were left wing? Where’s the compassion for the millions of hardworking Londoners who frequently can’t get to work because of Crow? You aren’t quite living up to your carefully crafted caricature.

    I don’t object to unions on principle. I do, however, object to unions which strike regularly and unnecessarily. Hence I can take Unison et al seriously and respect what they have to say. The RMT, on the other hand, is a disgrace and harms the unions’ wider cause by fomenting resentment.

  35. Leon Wolfson

    I always answer your questions, you just don’t like the answers. How someone is wealthy is absolutely important to me.

    And striking is a legitimate tactic of workers, if other workers are inconvenienced then that’s too bad, but the anti-worker sentiment is your clear attack on strikes there.

    The RMT is one of the few unions with balls, and other unions could learn a lot from it, it’s a union which has both grown and defended it’s workers rights. Of course you’d prefer Union’s mostly-words approach.

  36. Dave

    For those with an anal fixation with Bob Crow, some figures to consider. RMT has 80,000 members, and he takes a salary including pension and benefits of between £133 -£145k (depending on which tabloid you believe) The Royal Institute of Chartered Surveyors has identical membership, but the basic salary of its CEO is £255k. Bob Crow has increased membership by nearly 50%. Andrew Feldman, Chairman of the tory party, claimed a basic salary of £120,000 as a reward for seeing membership fall by 80,000.
    Strikes affect the public, but they are only the symptoms. Look for the causes.

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