Thursday, April 23, 2009

What is the point of the 50p tax rate?

The short answer is that it is fantastic politics, and many opinion polls say it is popular.

The problem I have with it is that I want the rich to pay lots of tax, not tax the rich a lot. They may sound like the same thing but they are not.

I wrote this about how the 45% tax rate could cost money, but consider the actual evidence. When the rate of income taxes were eventually rationalised in 1988, to make the top rate 40%, the tax take from the rich went up, and when Denis Healey raised them the tax take went down.

So what you need to decide, is whether you want more cash from the rich (in which case rationalise the tax system to make it simpler, and reduce tax breaks) or whether you want to punish them and then get less cash so you have to tax everyone else more.

I know what I want.


manwiddicombe said...

I can't help but add my voice to the number of comments regarding the Labour manifesto pledge not to raise the top level of taxation that has been included in every manifesto since 1996.

Only a maximum of 13 months left until the election .. .. .. ..

Anonymous said...

why not do both ie reduce tax breaks and increase top rate of tax? increase capital gains tax also. its a win/win, either we then take more tax, or we call the bluff of our parasitic captains of industry and they leave for foreign shores. they've done such a fine job of late after all, and shown real leadership and responsibility to justify their inflated wages.

Benedict White said...

Anonymous at 10:02 PM, April 25, 2009,
So lets get this straight, you are happy to raise less tax from this group and presumably pay more tax yourself, because you don't like them? Brilliant. Not.