Soak the rich and sack the rich

There is an undercurrent in present political life that says the rich must pay their way at a time of economic crisis. There are indeed still all too many socialists who wrongly think that if they just put the tax rates on the rich up the money will come pouring in and all our problems are solved. They do not see the queues to go to live in Switzerland, to relocate businesses abroad and to hire better tax lawyers and accountants to find ways round the higher tax rates.

I have a modest proposal for the Conservatives. They should go out on a policy that they intend to make the rich pay more tax. After all, in the 1980s, Tory tax policy led to the rich paying much more tax, and paying a much bigger proportion of total income tax raised. That Tory government did it by cutting tax rates. More rich stayed here. More rich came here. More rich paid more tax here. More ventured their money, created jobs and businesses and paid more tax. That is what we need to do again.

I also think we need to cut back on the large number of very highly paid people in the puiblic sector. It would be a welcome cut of public spending to thin out the public sector rich list, to get rid of the phoney bonuses and the fancy jobs. There are too many quangos and quango chiefs, too many mega salaries in low risk public corporations, too many overpaid public sector bankers.

So here’s a great Conservative policy for enterprise and for growth, for deficit reduction and for social justice – let’s soak and sack the rich in a way which will make us all more prosperous. Let’s do it by cutting tax rates and quangos.

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48 Comments

  1. Ian Jones
    Posted February 2, 2010 at 12:37 pm | Permalink

    There are only 2 economic models which work:

    1. Rich pay no tax, middle class pay little tax and the poor work for the middle class.
    2. rich pay no tax, middle class pay a lot of tax and the poor get benefits from the Govt.

    Labour chose option 2 but after 10 years of power are now reverting to their class war. Tax the rich and they leave, the middle classes have no jobs because they depend on the rich mans investments, the poor get poorer.

  2. oldrightie
    Posted February 2, 2010 at 12:46 pm | Permalink

    The "rich" is anyone who fails to vote Labour.

  3. Norman
    Posted February 2, 2010 at 12:50 pm | Permalink

    If the Conservative party set this in 24pt type and made it page one of your election manifesto the election would be in the bag.

    Socialism winning three consecutive elections was an abberation, please let's not forget that and can normal service now resume?

    • Mucker
      Posted February 2, 2010 at 2:53 pm | Permalink

      Spot on!

  4. Richard Manns
    Posted February 2, 2010 at 12:50 pm | Permalink

    Could you tell Cameron? I've been sitting around, hoping that he's just avoiding offending the electorate, as Thatcher did in 1979. But, sometimes, I wonder if this man's going to copy Heath, rather than Thatcher. Sometimes one does worry why he's so cautious, given that the country is more right-wing in opinion than it has been for decades, but I must defer to his experience.

    • APL
      Posted February 2, 2010 at 2:41 pm | Permalink

      Richard Manns: ".. but I must defer to his experience."

      And there is your problem, he has none. A former advertising executive who thinks it all a matter of 'perception'.

      Yes I fear Cameron is a Heath not a Thatcher.

      With the economy circling the drain, the most stupid stubbon inept prime minister 'supposedly' in charge, yet Cameron can manage barely a fistful percentage point lead in the polls, six months before the election.

    • Mike Stallard
      Posted February 2, 2010 at 4:15 pm | Permalink

      What worries me even more is that he is sort of sitting around with a couple of acolytes thinking up more and more clever wheezes like an advertising exec. I am not at all sure how in touch he actually is with his MPs and I am almost certain that he sees his blogging as in opposition to most of the other blogs – like this one, for instance. What is more, most of his pronunciamentos seem to be made well outside parliament, and therefore without any real discussion.
      So how out of touch is he? What nobody needs is another Blair.

      • eddyh
        Posted February 2, 2010 at 7:48 pm | Permalink

        You mean another B'liar.

  5. Mick Anderson
    Posted February 2, 2010 at 12:59 pm | Permalink

    I hope that Mr Cameron and Mr Osborne both read your blog, and understand the logic behind it.

    Then they can advertise and implement this as official policy….

  6. Javelin
    Posted February 2, 2010 at 1:22 pm | Permalink

    Very few people over £150K a year are PAYE. They are either directors and receive dividends, or receive monies over £100K as bonuses. In both cases they simply defer the dividends or don't realise the bonuses for another year, or pay into the pension pot.

    The 50% tax rate was political hot air by the deluded Mr Brown.

    The Conservatives and Labour both have to admit 2 things

    1) We need to deprecate unreal unsustainable (Government) jobs

    2) We need to create real sustainable (Wealth Creating) jobs

    The only way to achieve 2 is to make the UK more attractive for real "risky" investments by reducing taxes and regulation. This means cutting jobs. The party is over. The social engineernig is over. We need real sustainable jobs.

    The US will power ahead over the next 10 years, driven by the culture of small Government and low taxation and new businesses. The UK will stagnate under high taxes and large blundering corporates.

    The North of England has been destroyed under New Labour. Living in their New Labour socialist fantasy land. Creating Government jobs to service themselves. A wasted 10 years when they have pretended to play at Government. Creating unstainable jobs and letting the world catch them up and over take. The North needs low taxes, international airports and new companies more than the South. The North needs to vote Labour more than the South.

    • Adam
      Posted February 2, 2010 at 3:59 pm | Permalink

      Correct. Especially about the North. One of my personal mantras is about the need to do everything possible to help the North be the best place in the world to do business. This has to be one of the main missions.
      As I'm a Conservative activist in the South this isn't an argument I get to deploy in that capacity very often.
      Boris has the counter argument that you get more bang for your buck investing in London. That might be true but London seems to do pretty well anyway and building up the economy of the North won't hurt London, quite the opposite.

    • Michael Lewis
      Posted February 2, 2010 at 5:35 pm | Permalink

      Completely agree.

  7. Bob
    Posted February 2, 2010 at 1:25 pm | Permalink

    It's not about raising money, it's about equality, and since Labour can't make everyone rich, they want to make everyone poor (with the exception of the party cadres and their sponsors of course).

  8. Andy
    Posted February 2, 2010 at 1:26 pm | Permalink

    Excellent.

    The rich should pay more tax. The only way that has ever worked to achieve that goal has been to lower tax rates and create more rich people.

    I'm currently reading Atlas Shrugged for the first time. I am finding it almost prophetic with respect to our current economic troubles. It is certainly idealised (and dull in places), but the ideas are based on sound reasoning.

    Essentially: stop punishing people for being successful; stop rewarding people for being unsuccessful. Surely there can be only one outcome?

    • Stuart Fairney
      Posted February 2, 2010 at 7:17 pm | Permalink

      Yes indeed, you get less of what you tax, and more of what you subsidise. If you tax success and subsidise failure…

  9. Stuart Fairney
    Posted February 2, 2010 at 1:41 pm | Permalink

    That would be a very clever presentation indeed.

  10. waramess
    Posted February 2, 2010 at 1:43 pm | Permalink

    Well, I guess that's one way to dumb it down so that even Ossie gets it.

    We are talking about the wealth creators, the people who give us jobs and who invest in our industrial and financial future

    Yes, tax them less and remove the burden of regulation from them and they will reward us in spades, not because they want to but because that's how it works.

    But, even for the sake of Ossie don't dumb it down because we really want to give the rich the right message even if Ossie can't get it.

  11. Roger
    Posted February 2, 2010 at 1:44 pm | Permalink

    Why can't Cameron and Osborne see the obvious logic in your reasoning? Every day as our lead in the polls shrink I could scream at our confused messages and missed opportunities. I can see the next election becoming a disastrous let down.

  12. Derek Buxton
    Posted February 2, 2010 at 2:00 pm | Permalink

    Very good article, you sound just like a Conservative, a creature rarely seen these days, well for twelve years or more. If you were my MP I could conceivably vote for you but all I've got is a pretend conservative, so that's a dead duck. I cannot in all concience vote for Cameron and his clique.

    • Stuart Fairney
      Posted February 2, 2010 at 7:19 pm | Permalink

      I regret I also have an MP who is new and still lusting after minsterial promotion, so the party line is unflinchingly adhered to.

      Whether or not said MP has a personal intellectual capacity is uncertain and unknowable from the House of Commons performance.

  13. Ruth
    Posted February 2, 2010 at 2:36 pm | Permalink

    Echoing comments above, could you please tell the Conservative leadership what they should do? I'm getting rather disheartened by the wishy-washy c..p being put out by them at the moment.

    Maybe those who read your blog are the only intelligent people in the country, and the rest really are several brain cells short of a brain, but this "let's not upset the electorate by telling hard truths" approach is not going to make things better. We need a plan, a clear one, a strategy, not a series of daft announcements.

    • Graham De Roy
      Posted February 7, 2010 at 8:28 pm | Permalink

      If those who don't read this blog possessed more intelligence, the Tories would have a 20 per cent lead in the polls. If Cameron had any economic policies that were anything other than anaemic, they would have a 30 per cent lead in the polls.

  14. Lola
    Posted February 2, 2010 at 3:22 pm | Permalink

    All very joined up, but I don't reckon the Boy George has graduated to joined up writing yet.

  15. Stronghold Barricade
    Posted February 2, 2010 at 3:42 pm | Permalink

    Are you the only conservative voice to pick up on Mandy's speech yesterday to increase further the taxes on the rich to reduce the deficit?

  16. Mike Stallard
    Posted February 2, 2010 at 4:22 pm | Permalink

    Less tax means, to me, freedom and more chance to do a lot of good. Even seriously silly people do good when taxed less: they buy things! They employ people (if they can get away with it). The Chicago School proved this. So why do we doubt it? And that includes the rich.
    Cutting back the Welfare State will do nothing but good. It produces gutless, whining, self pitying, swindling liars who know their rights. The idiots who feed the "customers" – or is it the "clients"? – get fat, virtuous and narrow minded and selfish.
    If not, we go the way of Argentina, Greece…..

  17. Josh
    Posted February 2, 2010 at 4:36 pm | Permalink

    How about the abolition of tax for those earning less than £25,000 a year, and a flat tax of 10% on those earning above that. The government has no right to be profligate with our money. Government spending is taxation deferred and we should be able to spend the money we work so hard for.

    • Graham De Roy
      Posted February 7, 2010 at 8:33 pm | Permalink

      Spot on with regard to taxing those who earn less than the average wage. Think of the money you would save by sacking those incompetents at the "working" tax credit office.

  18. Frugal Dougal
    Posted February 2, 2010 at 4:45 pm | Permalink

    I know someone who had a job abroad that didn't work out, and who is presently living abroad because, should he return, tax laws will take away jsut about everything he had – so there's some more monay that isn't going to stimulate any more recovery here.

  19. Lindsay McDougall
    Posted February 2, 2010 at 5:55 pm | Permalink

    Agreed 100%, so let us target the people who are well off but not on merit.

    Oh, dear – RBS executives yet again. What is wrong with my suggestion that:
    (1) No bonuses are paid to any RBS staff until the value of HM government's share holding reattains the amount that was paid for it (by, in reality, taxpayers);
    (2) RBS must devise and publish a scheme of negative bonuses to apply in years when the bank performs poorly (in the case of their investment department, this can be measured relative to the change in the FTSE index);
    (3) Any bonuses must be paid two or three years in arrears so that the figures underlying bonuses are confirmed?

    I would like John Redwood's opinion on this three part proposal.

    Public sector excutives and managers and admistrators who live north of the Severn-Wash line have similar salaries to those living south of the line, in spite of their housing costs being generally much lower. Why is this? Can we not get rid of national wage and salary rates, and instead negotiate by region?

    Reply: I have proposed lower pay for the RBS high earners, and no bonuses for them all the time taxpayers are losing money.

  20. Amanda
    Posted February 2, 2010 at 6:10 pm | Permalink

    Mr Redwood, I am sorry to hijack your blog and go off topic, but is there anything you, and the more sensible elements of the Conservative Party, can do to wrest the controls out of the hands of Messers Cameron and Osbourne? They seem determined to steer the ship on to the rocks where it will be totally wrecked.

    Today Gordon Brown announced the most diabolical attempt at destroying what is left of our tattered constitution with his selfish proposal to change the voting system. Now George Osbourne says that he is going to hire Stern to advise on a Green Bank. That is the same Stern who is very central to the MMGW scam that has lied to us in attempt to destroy our standard of living and stal our money.

    The only difference between the dispicable nature of these announcements is that the first man has been shown to be incapable, the second is yet to be shown.

    Please, doooooooo something !!

    • Derek W. Buxton
      Posted February 3, 2010 at 2:17 pm | Permalink

      Yes Amanda, I would second that. This pair are going nowhere, fast. As for Georgie's green jobs, they sound to me like huge costs not benefits. It quite puts you off Eton Scholars!

  21. Brian Tomkinson
    Posted February 2, 2010 at 6:23 pm | Permalink

    Now we have Osborne's 'benchmarks' any chance he will tell us just how and when he would start the process of achieving them?

  22. Mark M
    Posted February 2, 2010 at 7:53 pm | Permalink

    Very nice. Other than scrapping public sector bonuses. I'd rather see more public sector pay to be 'bonus-able' i.e. linked to performance. Perhaps if civil servants actually had to achieve something in order to get paid we'd see a productive public sector.

    I'm sure they won't mind. After all, they all claim to be in the service to serve, right?

  23. Mark
    Posted February 2, 2010 at 7:58 pm | Permalink

    There is a nice irony with what the Chancellor did with CGT. He reduced the rate – along with the scrapping of any indexation relief via tapering. Of course, by then the stock market was crashing and the value of buy to let portfolios was dropping – but the incentive to crystalise gains was there, and perhaps accelerated sell-offs. He has left behind an incentive to convert income to short term capital gain and not to make any investments that only have a longer term payoff.

    Perhaps someone should persuade the BBC to do some interviews at Cointrin and ask about the property rental market around Geneva and Zurich – both for homes and office space. It's really something they could have so easily tacked on to covering Davos, but I expect they were keen to make sure they had seats in the row behind Lord Mandelson on the return trip.

  24. Emil
    Posted February 2, 2010 at 8:07 pm | Permalink

    John. As ever you talk perfect sense. If only your leader and shadow chancellor would have the courage to say the same things. *sigh*

  25. E
    Posted February 2, 2010 at 9:11 pm | Permalink

    Speaking as a public sector worker (Community Psychiatric Nurse) I am anxious not to see services (health, education, social services) cut. But I also want to keep my job (although I would be happy to see some of the numpties with job titles like "Acting Head of Effectiveness" that work at my hospital loose theirs).

    How to square this circle? If this government or any prospective government for that matter was serious about reducing the public deficit they would be advocating an across the board public sector pay cut of 10%.

    With the possible exception of members of the armed forces on active service, every politician, civil servant, teacher, nurse, doctor, social, worker, train driver (yes I know the train companies have been privatised but they are still heavily subsidised out of the public purse) probation officer, prison officer, police man and judge should be "invited" to take a 10% pay cut.

    That way we might see the libraries, schools, hospitals stay open but I really can't see that getting past Bob Crow and his mates can you. If "Dave" had any real balls he might suggest such a policy instead all we get are "efficiency savings" and unspecified cuts in unspecified places.

  26. Bazman
    Posted February 2, 2010 at 9:33 pm | Permalink

    One of the points missed is that the rich should pay as a percentage of income the same as the rest of the population. Many believe that they should not pay any taxes and I can't really shed a tear for the bleating middle classes who actually benefit most from the tax and spend system.
    Interesting to see where the Tories now stand on their obsession with inheritance tax that these days. Standing by that one or not?
    Could always tax the poor more as an incentive to get rich, after all it's they who use services the most.

    • The Voice of Truth
      Posted February 3, 2010 at 2:04 pm | Permalink

      This next statement does not even take into account the latest theft by our unelected PM – a little balance to your totally incorrect comments. According to HMRC’s estimates, the richest 10% of taxpayers pay 53% of total income tax. The current average rate of tax for someone on GBP150/- is 31.6% (about GBP47/-) compare that to 14% for someone on GBP20/- (GBP2,800). So the former is paying 17x more tax than the latter whilst only earning 7.5x more. Not only that the former group are unlikely to get any government social benefits apart from child benefit (tax credits etc.) So in my mind they do
      !

    • Derek W. Buxton
      Posted February 3, 2010 at 2:24 pm | Permalink

      The "green taxes" proposed does just that, taxes the poor to make the rich richer. We also have to eat and use energy. You would think that with all their talk of "social justice (no I have never believed in any such thing), this would have been taken into account.
      If you read this MR. CAMERON, yes "GREEN TAXES IMPACT MORE ON THE POOR THAN ON THE RICH"

  27. THE ESSEX BOYS
    Posted February 2, 2010 at 10:04 pm | Permalink

    Sensibly this comes back to the procedure we praised here last week…you use a QUANTUM measure for the tax take and not a percentage rate.

    Market planners find this second nature and big brands are built on the practice.
    100 units at 40% gross margin produces more income than 75 units at 50%, And at the 40% margin/lower price more users will continue to enter the market to buy and try the product and come back for more.

    As for the cost side of the equation our 40% margin will grow by cutting unproductive overheads, in this case by culling the public sector fat cats. Soon we shall be selling 110 units at 45% and our quantum 'profit' will have risen from 37.5 to 49.5…that's nearly one-third more!
    Lovely jubbly John – let's try it!

    Having had the collywobbles yesterday after some perceived financial shakiness within the Tory leadership it was reassuring to hear the way you explained policy on the Jeff Randall program this evening. I hope Messrs Cameron, Osborne and Hammond are learning the words, the demeanour and the confidence.

    • Graham De Roy
      Posted February 7, 2010 at 8:40 pm | Permalink

      Speaking of Jeff Randall, Cameron needs to plead with him to be a Tory peer in the Lords and get him in the team before it is too late. Oh, and Simon Heffer too.

  28. Fox in sox
    Posted February 2, 2010 at 11:30 pm | Permalink

    It's very disheartening to watch mr Cameron and mr Osborne miss so many open goals. I hope that they are just trying to lull new labour into a false sense of complacency.

  29. concerned
    Posted February 3, 2010 at 12:16 am | Permalink

    John,

    I am watching treasury questions and like you blog. As others have said above, this is actually conservative thinking.

    With regard to treasury questions, i wonder how you can sit there with sound logic and reasoning with moderate and reasonable policy solutions to a grave problem whilst most around you (on both benches) are robot drones who do not get the seriousness of the situation.

    I have listened to questions on pay day loans, minimum prices for alcohol and hospitals, questions about carbon capture and storage, equality and so on, yet any serious questions relating to private sector interest rates, the structural deficit or even an understanding that the deficit is the rate of borrowing – not the debt, are shrugged off with a swipe at the conservative party or waffle about the level of so – called investment or a litany of the government record.

    It is a shame that our sovereign body is so full of individuals who do not get it. Please continue to push, in your polite and reasonable way for some sort of realistic solution – rather than the starry eyed utopianism that seems to have infected so many of our right honorable servants of all colors. Although I do quite like Darling; seems a reasonable chap in an awful situation (he can see the books!)

  30. Fed up with Socialis
    Posted February 3, 2010 at 9:22 am | Permalink

    John,

    The problem is that you don't seem to be in the same party as Cameron and Osborne.

    Very disheartened this morning to receive their "benchmarks for Britain" email – what is this? Just the recycled Blair "pledge card"? Tell them we don't want "heir to Blair". We want smaller more efficient government that doesn't nanny and doesn't do social engineering. We want our civil liberties back, and a bonfire made of all the knee jerk tabloid driven legislation of the last 10 years.

    Again I say – there is nothing different on offer it seems, so it will hardly matter who wins the GE.

  31. BillyB
    Posted February 3, 2010 at 11:31 am | Permalink

    John – please name names – much is said of wasted public money going to quangos – but which would you cut ? Spell it out for us and we can see for ourselves whether we agree with you. I suspect many people have no idea of the extent and cost

    Reply: I have done so, many times, on this site. Start with abolition of the unelected regional quangos.

    • BillyB
      Posted February 3, 2010 at 4:59 pm | Permalink

      Great – look forward to seeing a full list in the Tory manifesto !

  32. Neil Craig
    Posted February 3, 2010 at 11:43 am | Permalink

    If only we could persuade a few quangocrats to migrate to Switzerland. Unfortunately government policy only incentivises the useful to leave.

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    Posted May 1, 2010 at 12:22 am | Permalink

    I liked what you posted here but I must say that it can be improved, although it is good but some more effort can get this blog to the top. And the theme is good.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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