50p tax rate: play the world’s smallest violin for the rich

I won't be playing the world's smallest violin for those affected by the proposed 50p tax rate, and neither should you.

Predictably we’re hearing the same old line of argument from those who oppose Labour’s proposed 50p tax rate: the rich will only work if you give them money and the poor will only work if you take it away.

These God-like wealth creators are apparently so worried at the prospect of paying an extra 5 pence in the pound that they are planning to up sticks and move their families and their companies abroad (even though there is no evidence this happened when the tax was in existence in the last parliament), leaving the rest of us wallowing in some kind of socialist dystopia.

Really, though, cutting through the nonsense, Labour’s announcement yesterday that it will raise the top tax rate from 45p to 50p is about fairness.

In 2012, directors of FTSE 100 companies increased their pay by 14 per cent. This is 20 times the rate of increase experienced by the average worker – contrary to what the government claimed on Friday, average wages are still increasing at half the rate of inflation.

As Luke Hildyard of the High Pay Centre recently put it, most FTSE 100 directors aren’t risk-taking entrepreneurs, but bureaucrats who’ve taken over long-established organisations.

It’s ironic that right-wing commentators are talking about how little the 50p rate would supposedly raise – while at the same time defending regressive policies which raise far smaller sums.

George Osborne abolished the top rate of tax after claiming it ‘only’ raised £1bn. And yet, this is a chancellor who is happy to put some of society’s most vulnerable people under the cosh through measures such as the Bedroom Tax (supposed to raise £465m) and cuts to legal aid (supposed to raise £350m).

The 50p rate would raise significantly more than both these measures by any estimation. It is also worth noting that Ed Balls has said he will reduce loopholes that allow tax avoidance as well, so it’s likely the 50p rate will raise significantly more than it did the last time.

And finally, to argue against the increase because it will supposedly encourage tax avoidance is rather rich when at the first hint of public sector workers going on strike the same people are rarely shy of accusing the trade unions of “holding the country to ransom”.

I won’t be playing the world’s smallest violin for those affected by the proposed 50p tax rate, and neither should you.

16 Responses to “50p tax rate: play the world’s smallest violin for the rich”

  1. jas

    as according to me it would be the fairer decision with 50p tax rate.. http://proxyrental.net/

  2. Jon

    Your argument seems a bit confused. Are you supporting the tax rise because;

    1. it balances the budget
    2. the threat of people leaving the country is idle
    3. ftse 100 directors aren’t entrepreneurs and so deserve to be taxed more?

    In response;

    1. £1bn won’t come close to balancing the budget – sorry to be the bearer of bad news! This is political theatre rather than economics let’s stop pretending.

    2. How do you know? If the top 1% pay 30% of all income tax and even a tenth of them leave that’s vital services that will have to be cut because Ed Balls was wrong about the “triple dip” and needs something to get him back in the game. He’s a busted flush and is betting the future health of public services for the sake of his own reputation. So the rest of us pay because he’s a vain little man who made a mistake? No thanks.

    3. So, is Ed Balls proposing to exempt entrepreneurs from the 50% rate? I hadn’t heard that nuance. Your point about risk taking is odd and irrelevant if not.

    It’s not about standing up to the rich, it’s about being rational as a society. We can’t afford to shrink our tax base any more. This kind of crap (and the energy price freeze) make Labour resemble student politicians protesting about everything and with grown up answers to nothing. Balls is Cameron’s best recruiting sergeant.

  3. Josh Ferguson

    You’re wrong. Not about the 50p tax, I believe that taking half of anybody’s income in addition to charging 20% on everything they buy, then telling them that in order to pick up their bins and fix the pavement down the road they will have to pay another tax is wrong. Not to mention taxes on just about everything else from car tax (supposedly linked to making up for the carbon emissions, though how that can be when green energy development is stagnation incarnate, is beyond me) to inheritance tax.

    You’re wrong about the rest. The tories were the ones who gambled the financial health of the country for political purposes. Of course they had a fall-back argument, ‘the entire global financial crisis was Labour’s fault’… so they could get away with slashing spending and waiting until the inevitable growth came (even if it’s no higher than population growth at present) and then proclaiming that their policies have worked and George Osbourne is an economic genius rather than the ideological buffoon he is.

    The rest of your argument is just as bad as the article, rabid party political extremism.

  4. neilcraig

    There is no question that when taxes rise the incentive to avoid them does too. Nor of the fact that when Thatcher brought down the rate the amount paid went up.

    No serious economist disputes that this rise is more likely than not to bring down the total collected and beyond that, that it is certain to act as a disincentive across the economy.

    Of course if the objective is to reduce the amount of money the rich have, and that this is a sufficiently desirable goal that reducing overall gdp is irrelevant then Labour will go for it – and clearly that is the case.

    If socialists were to believe society should maximise human wellbeing then they would set taxes accordingly, but obviously that is free enterprise – anathema to socialism.

    Still it does show socialism to be a meanspirited, hate driven, anti-progress belief system doesn’t it?

  5. Josh Ferguson

    ‘meanspirited, hate driven, anti-progress’, that’s a bit much. This isn’t a policy aimed at socialists, it’s aimed at low income, poorly educated workers. If you’re looking for someone meanspirited, look no further. For me, society shouldn’t be focusing on enabling everyone to live at the same standard, we should be focusing on helping everyone achieve their potential. Of course there needs to be a basic standard of living, but far too many people from poor backgrounds are not set up to be able to compete with wealthier people.

    There should be no private schools, it’s a farce that you can pay for your child to receive better education than others. How any modern society can allow children to suffer abjection on this scale is appalling.

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