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.
38 Responses to “In Daily Telegraph-ese, the “squeezed middle” means the very rich”
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.
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.
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.
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.
Mr Danger
“When the 50p tax rate was introduced, revenues went up.”
Try thinking ahead more than one year.