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”
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?
George McLean
PS Watch out, Leon. Here come the trolls!
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.
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!
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.