The 50p tax rate

Yesterday morning interviews with the IFS, Mr Balls and Mr Alexander on the Today programme failed to do justice to the argument over the 50p tax rate. The IFS and the BBC sat on the fence, and ignored the substantial evidence that the UK has experienced a serious shortfall of Income Tax receipts from high earners since the introduction of the 50p rate.

The IFS and the BBC were strangely silent on the fact that in 2009-10 there were 16,000 people declaring incomes in excess of £1million in the UK for tax, and that this fell to just 6000 people with such incomes after the introduction of the 50p rate. Many left the country, or worked less hard, or found legal ways of declaring less income.

Evan Davies did succeed in reminding the audience that a 50p tax rate brought in to “share the burden” of the Crunch was not brought in by Labour in 2008 or 2009, during or immediately after the Crunch it was meant to help pay for. Instead they brought it in a few days before the election. This should lead people to ask whether it was a political trap rather than sound policy designed to help pay for the problems. If you really thought it was going to bring in say £3bn why not introduce it immediately in 2008 as you saw the surge in the deficit and the banks collapsing? Why not bring it in in 2009 as things started to settle down again? He also extracted from Mr Balls the wise statement that he favours lower tax rates at all income levels, rather than a pledge to restore the 50p tax rate.

Let me be unpopular. I think Mr Brown as Chancellor was right to keep the top rate of Income Tax at 40% throughout his period in office. I assume he did so not out of love of the rich, but because he realised that a higher rate would drive some high earners out of the country and lead some companies with large numbers of high paid people to locate elsewhere. Mr Brown was both a good socialist and a pragmatist. He knew that to run a successful enterprise economy he needed to do deals with the rich and with powerful international companies, even if he did not like them.

I have consistently recommended returning the top rate to 40%, both in the closing days in opposition and now to the Coalition government. I think that lower rate would bring in more tax from the rich.

The government has estimated that they have lost £7bn of top end income tax as a result of the 50p rate. They have identified a large number of people on very large incomes who have left the country. The loss of these people also means less revenue from the higher rates of CGT, Stamp Duty and luxury taxes they have imposed. It is a great pity the UK establishment will not allow an honest examination of the causes of the large reduction in top end income tax. It is too much of a coincidence to deny that the 50p rate has done damage to revenues, though of course there are other factors as well depressing some higher incomes post Crunch. The fact that there were still so many people declaring £1m incomes post Crunch prior to the 50p rate shows it is not a simple matter of the damage done by the recession. A medium sized open economy cannot get away with substantially higher rates of tax than competitor countries.

I expect neither Labour nor the Lib Dems will pledge to raise the top rate of Income Tax in their next Manifesto.


  1. Andyvan
    April 7, 2013

    The Today interview made me think of two muggers sitting in a cafe discussing whether or not to leave their victims the cab fare home after the crime.
    I suppose us tax slaves should be grateful they don’t just take the lot.

    1. lifelogic
      April 7, 2013

      Indeed it does not often pay (people who want subsidies-ed) to (overtax-ed) the host that (helps-ed) them.

      1. lifelogic
        April 7, 2013

        Not quite as pithy with all the edits!

  2. Mike Stallard
    April 7, 2013

    You are – as so often – quite right! The rich, in fact, pay as much tax as they see fit. If they think we are taking the mick, then they can deal with it.
    But why did the BBC concentrate on the taxes for the rich? Why was Mr Balls interviewed in front of a Labour poster giving the impression that this was a Tory swindle by the rich toffs on the poor?
    I thought that the people under about £10,000 p.a. were going to get an equal break too? Why wasn’t that stressed?
    In the middle lots of people are now going to pay a lot more tax too, but that was sort of slurred over. The middle people do not quite often have the attitude of the rich: they are just lining up to be milked.
    (PS Me – I am under the radar!)

    1. lifelogic
      April 7, 2013

      Indeed reform of the BBC is half the battle but unlikely with Lord Patten (and now Barron Tony Hall of Birkenhead) places there by Cameron. With a non lefty, non quack green, non pro EU BBC we would perhaps not have to suffer three tax borrow and waste political parties, in the four main parties.

  3. lifelogic
    April 7, 2013

    Well BBC debates almost never address the real argument, in any sensible way do they? The 50% rate was always going to raise less tax, push more people overseas and destroy jobs and growth. So why did Osborne and Clegg stick with it? Just to appear to be attacking the rich it seems. Surely it is highly “morally repugnant” to damage jobs and the economy for bogus & superficial reasons of “political fairness”.

    You say “I expect neither Labour nor the Lib Dems will pledge to raise the top rate of Income Tax in their next Manifesto”. Well no one expects political parties to do what they say in Manifestos anyway do they? As we have seen with Osborne’s failure to keep his £1MIHT promise which would also have helped confidence, growth and jobs but he did not do it (one assumes for similar superficial reasons of “political fairness”).

    UK taxes combined and inflation can easily tax 80% of you capital off you in perhaps 15 years why would you bring or keep capital in the UK – unless you are nondom, or have very good tax lawyers, forget it.

    Reply The Conseravtives did not win a majority and the Lib Dems block any reduction in capital taxes

    1. lifelogic
      April 7, 2013

      Indeed he did not win a majority due to Cameron’s earlier ratting on the cast iron EU referendum guarantee, his daft quack energy, man made warming agenda, his gift of equal TV billing to Clegg and his general soft left, big state, agenda.

      Even so Cameron should have insisted on 40% (not 45 or 50) and the IHT move and the constituency boundary changes, giving the Libdems a graduate tax and voting referendum perhaps as a quid pro quo. The current university loan system in not very different in effect anyway. Many of the loans will never be repaid anyway so are in effect grants, particularly those taken by EU students.

      If he cannot win the last one against Brown what chance has he at the next?

      1. APL
        April 7, 2013

        lifelogic: “his daft quack energy, man made warming agenda,.. ”

        His snuggling up to the eco fanatic and deluded AGM believer, Zac .

        His characterization of the Tory party in one by – election campaign as “David Cameron’s Tory Party”.

        In fact his mimicry of Anthony Blair in all the wrong ways. Cameron has been singularly inept as a leader and it was probably just as well for the agency he worked for that he didn’t peruse his career as an advertising executive.

  4. Ben Kelly
    April 7, 2013

    Re Mr Brown was right to keep 40% rate as he realised high earners would leave.

    This was in the global good times when there were multitudinous opportunities for even the highly skilled folk buying overpriced derivatives.

    Now there are fewer opportunities and they are less likely to leave. Also unlike your assertion yesterday banking these days is about computer trading and networking rather than economic insight ahead of the game. These highly paid people are going nowhere in the main and your party has scored a huge political own goal being seen to give high earners a tax cut at the same time as lowering the higher rate band, removing universal child benefit, reducing housing benefit and other in work benefits yet continuing to subsidise cheap immigrant labour.

    If we are all in it together then the 50% rate should have stayed. The small extra your party believes it will raise is small beer compared to the political fallout and is roughly equivalent to the total uturns after the last budget happily entered into to deflect attention from this measure. The country would be a more equitable place if 50% was reintroduced for a while.

    Reply As the figures I have supplied show, this has been a disastrous policy which just means the rest of us have to pay more as the ultra rich leave

    1. Ben Kelly
      April 7, 2013

      I should add that I am in favour of totally removing CGT for gains on newly issued shares or new insfrastructure projects so that genuine wealth creators are still rewarded.

      1. oldtimer
        April 7, 2013

        I am curious to know if you have ever invested your own money in risk bearing ordinary shares. If you have, you wil know that the mere fact of that investment decision does not create wealth. It is how wisely and effectively it is invested that counts. That decision, as Adam Smith, said a long time ago is best left to the market place. Governments seeking to pick winners, by fiddling around with CGT rates, will not produce wealth merely distort the market. We see this with its ill-conceived regimes for energy generation. They do not generate wealth; they merely reduce effective capacity and put up costs for consumers and businesses alike.

        1. uanime5
          April 7, 2013

          I can’t recall Adam Smith ever saying that. Though he did recommend spending money to improve a business his examples of bad investments included going to the opera or having a butler because both of these cost money but do not make money.

        2. Ben Kelly
          April 7, 2013

          Lower/no CGT on newly issued shares and projects will encourage investment. Those with enough funds to invest will likely have the nouse to choose the right opportunities.

          Expansion of commercial opportunity is a reasonable way to generate wealth.

          Guaranteed bonuses and executive excess are less likely to create opportunities for all.

          1. oldtimer
            April 7, 2013

            The government has gone out of its way to “guarantee” returns for investment in certain green projects, eg wind farms. These are effectively subsidies to persuade investors to make decisions they would not make in a free market. These are not “opportunities for all” but for the few. The rest of us are paying for these non-commercial investments through our energy bills for many years ahead. They are a very bad idea.

            It is possible, today, to invest in EIS and VCT schemes under a more favourable tax regime. These meet your criterion of new investment. But they are risky; typically about 10-20% do very well, 60-80% bumble along not producing much of a return, and the remaining 10-20% go bust. It is arguable whether the imbalance between this tax regime and the swingeing taxes applied to established businesses is actually sensible for the economy overall. I think it is well out of balance.

      2. Denis Cooper
        April 7, 2013

        Well, in the past I’ve made gains on newly issued shares without creating any additional wealth, instead merely taking wealth from others and adding it to my personal wealth.

        The government invited me to buy shares at a discount, so I did, but as I didn’t want to keep them I immediately sold them on to buyers who were prepared to pay a higher price, hence the small transfer of wealth from them to me.

        On one occasion, it was Sid who told me about it.

        1. Ben Kelly
          April 7, 2013

          Yes but those opportunities are not prevalent are they?

          1. Denis Cooper
            April 7, 2013

            Not with the reassurance of a discount from the government, but it’s not uncommon for the original investors in an IPO to sell the shares on for a quick gain. Of course sometimes they come unstuck when they try that.

    2. Ben Kelly
      April 7, 2013

      Reply to reply

      Next year’s figures will make interesting reading then Mr Redwood, although as ever (last year’s budget aside) the politically shrewd Chancellor has left wriggle room for debate by not reducing the figure to 40% which he would have done had he truly believed the “leaving” rhetoric.

    3. John Wood
      April 7, 2013

      Just across the water, the tax rate in Ireland is 41%. The difference between 45% and 41% is less than half the difference between 50% and 41%.

    4. lifelogic
      April 9, 2013

      Not just the ultra rich (say over over £50m net assets) that are leaving – I am certainly very glad that I left, a few years back. I would much rather pay my taxes at sensible proportions, and to a relatively efficient government (or to one of the few honest and well run charities), rather than to Cameron’s tax borrow and waste government.

  5. Monty
    April 7, 2013

    There are other negative effects of the 50p tax rate, and I would dearly like to see a full cost-benefit analysis. I saw this in a BBC reference to an HMRC report:

    “The HMRC thinks that the total declared taxable income of those earning more than £150,000 a year slumped from £116bn in 2009-10, to £87bn in 2010-11.”

    But some portion of that comes from high earners who simply decide to stop striving, have a sabbatical or close down their activities altogether, because they can live off their reserves. Many of the individuals in this band, are freelance, independant, they include consultants in the financial sector, all branches of engineering, designers in a wide range of fields, management consultants, recruitment specialists, and it is very easy for them to simply go dormant. They just close down their little office, make their few staff redundant, and stop bidding for contracts. They don’t even have the inertia of large multinational companies.
    But they are key personnel, and without their expertise and participation, it becomes less likely that their erstwhile customers will persevere with new projects and initiatives. Development risk becomes just too high. So there is a significant consequential loss when these people throw in the towel. It isn’t just millionaire earners and multinational companies.

    1. uanime5
      April 7, 2013

      Some portion of this also comes from these high earners not being able to pay themselves huge bonuses anymore.

      Also just because some companies stop trading doesn’t mean that other companies won’t undertake the work these companies used to perform. Companies won’t turn down profitable contracts.

      1. lifelogic
        April 9, 2013

        “Companies won’t turn down profitable contracts.”

        Perhaps not, but the state just makes them unprofitable.

  6. margaret brandreth-j
    April 7, 2013

    Every Sunday morning after reading your article and then beginning to comment , my computer decides to reconfigure and I lose half of my words. Then I lose the enthusiasm to be as particular .
    Are you sure that people are leaving the country due to the 50 p tax rate .? Might there be other reasons , such as areas where new growth is in abundance or where the workforce is cheap? Are you suggesting that the institute of fiscal studies have researched these things and know something that the general public don’t?
    We have to let business flourish though, however if they spend all the profit between shareholders and give large bonuses, then only the few will benefit and overall spending in the UK will not produce growth. A few rich do not constitute to a good level of growth.
    I am listening to the Sunday morning service and ‘Doubting Thomas’ is being discussed. I doubt in all things of survival , financial or otherwise.
    I am glad that you recognised Browns’ attempt to put things right and perhaps avoid a disaster on a grander scale.

  7. Andy Baxter
    April 7, 2013

    Perhaps a better title would be ‘Taxation’ per se.

    45p 50p 40p it’s all semantics. The real truth is that taxation in general direct and indirect is way too high to foster enterprise and growth and combine this with ‘Governments’ insatiable desire to take take take and spend spend spend on vanity projects, and wasteful largesse (in which we ‘plebs’ have no say!) without so much as a ‘please’ or ‘thank you’ and then and I mean ONLY then do you get to the root of the problem.

    Let’s look at a small business owner as an example you know the stock ‘yeoman’ type who through their thrift, enterprise, hard work, long hours and sacrifice provide the lion’s share of revenue for all the nonsense government wants to take and spend from;
    Typically they might work 50, 60 sometimes 70 hour weeks, they sacrifice time and quality of life with family and friends, all to provide a quality of life for their family and to better themselves.

    So having put in the hours and made the sacrifices just what is expected from them?
    Let’s assume for the last tax year he/she’s made a profit of £200,000, employed 5 people so helping to provide for their families also, because without this small employer that’s five more people on the dole claiming benefits funded from the profits of just such a business owner.

    Now what does this business owner have to pay in shall we say just DIRECT taxation for a start:

    Well they might think they get to enjoy the first £8,105 of their profits, except they don’t because the GOVERNMENT takes £1 of every £2 they earn in profits above £100,000 from this allowance so in fact they get taxed on ALL their profits.

    So what happens then? Well they then have to pay 20% on everything up to £34,371 (oh don’t forget to add in the £8,105 so that’s £42,476 @ 20% = £8,495 (I’ll drop the chump change of 20p)

    They then have to pay 40% tax on profits between £34,371 to £150,000 (£115,629 @40% = £46,251)

    Then its 50% on the next £50,000 (easy calculation to give £25,000)

    So far that’s just income tax totalling £8,495+£46,251+£25,000 = £79,746

    Now let’s add in National Insurance I won’t bore readers with the calculations (I’ll leave that to politicians) but trust me he/she then needs to find another £6,428

    So from profit of £200,000 they have to pay a total of £86,174 that’s equal to an effective tax rate on profits of 43%

    Let’s then consider the other taxes that affect profitability:

    Employer National Insurance on employees salary’s, let’s assume they have a wage bill annually of £125,000 (I’m being generous) they then have to pay at source another 13.8% which is £17,250 of direct taxation that can’t be taken as profits. Add in the cost of other benefits they may need to provide to attract and retain staff e.g. pension, death in service, transport subsidy, etc.

    Factor in VAT (some can be reclaimed but some cannot) and the draconian administration red tape of VAT, taxation record keeping, employment legislation and perhaps trade/professional legislation that needs to be complied with which are all COSTS to a business not PROFIT, then add in Fuel duty that is crippling transport based businesses OH and don’t forget the VAT on top of the fuel duty (a tax on top of a tax, great one that is!) and is it any wonder SME’s find it so difficult to survive let alone thrive?

    And what has this Government, come to think of it any government ever done for SME’s? All we see is more red tape (most of it Brussels originating) and more taxation and complication of such while arguing over semantics of 45p v 50p v 40p headline rates!

    You might as well have a discussion on how many angels fit on the head of a needle for all the good that does!

    The Laffer Curve is real world economics not semantic politics.

    And you lot in the Westminster bubble had better start listening too….

    1. P O Pensioner
      April 7, 2013

      reply to Andy Baxter
      The businessman making £200,000 profit and paying 43% tax needs to find a tax consultant. If he/she is trading as a limited company then they can take the profit as dividend with the company paying the corporation tax which I think would be around 22% or £44,000 and no NI to pay either on the dividends. I think the rate is lower than that for this current financial year. The shareholder director/s would take a nominal salary on which tax and NI would be paid. No one running a small business needs to pay 43% tax if they have a good accountant.
      By the way I’m not an accountant just the 50% shareholder & MD of a business employing people.

      1. lifelogic
        April 9, 2013

        The dividend saves some NI but they will still pay tax at about 40% on £200K unless they leave it stuck in the company.

  8. alan jutson
    April 7, 2013

    Browns 50 pence tax rate was simply a political stunt, designed to be politically used by Labour when the next non Labour government was elected, and that is exactly what they are doing.

    Brown knew the 50p rate would not actually work and would do harm, that is why he never introduced it during his 13 years, but by that time he was aware that his chances of remaining Prime Minister were numbered.

    Brown also set many other traps for the future, PFI spending, a growing deficit, a more state dependent workforce (with the introduction of tax credits), etc etc.

    The wonder was that he was not even defeated by a single Party, just goes to show how far you can go when bribing some of the electorate with other voters money.
    It very nearly worked !

    The sad fact is having not won the election, the Conservatives then lost out again in their negotiation with the Lib Dems, who quite honestly were far better at negotiations than Camerons team, and punched well above their weight.

    Thus the above is the reason we are still in a mess.

  9. Acorn
    April 7, 2013

    JR, I am assuming you will have read the HMRC document that showed how they calculated the “Taxable Income Elasticities” and the “Marginal Retention Rate” for the last Labour budget? I don’t think HMRC has updated it from this version:”The Exchequer effect of the 50 per cent additional rate of income tax March 2012″. .

    It is a fascinating read (for number crunchers at least) on how peoples’ behavior changes if they are pre-warned of tax changes and if they think the change is only temporary. That is, sit off-shore and wait it out, or bring it back before the change kicks in.

  10. oldtimer
    April 7, 2013

    I am not surprised that the BBC did not draw out or refer to the convincing arguments you make about the absurdity of the 50% top rate. They conflict with the prevailing BBC group think, therefore they will not get a hearing.

    There is an alarming examples of the power of group think described by Matt Briggs, the statistician, in his lecture Statistical Follies and Epidemiology. He had been called in to review the statistical methods used in a study into dust particles. He pointed out their obvious defects, which invalidated the conclusions, but was advised by the authority concerned that they would publish the conclusions anyway because they agreed with what everyone else said. This lecture was addressed to members of the US medical profession and is accessible via YouTube.

    1. lifelogic
      April 8, 2013

      Indeed the approach is to choose the “experts” who agree with the governments particular religion at the time, and the line that suits their tax raising and political agenda. The green religion in particular I note.

  11. Julie Innis
    April 7, 2013

    Brown’s raising the higer tax rate to 50p days before the election was done out of spite to set a trap for the incoming Government just like most things Brown ever did. Labour couldn’t give a stuff about what’s right or wrong in their nasty little world, it’s all about opportunism and politics of spite and envy and attacking the Conservatives who they hate with a vengeance. Trouble is Cameron and Co. are rubbish at attacking back.

    Having never earned more than £20,000 in my life, I can still see the merits of lowering the higher rate of tax. What incentive have the job creators and entrepreneurs got if they have to hand back over half their earnings to the Treasury?

    My only complaint is that pensioners have been picked on to help pay for it. Cameron keeps bragging that every tax payer has gained and no-one has lost out when this is clearly untrue. By freezing the age related allowance, pensioners will now be paying more tax not less. This allowance helped pensioners on low incomes, mostly those on fixed private pensions who had no prospect of improving their income. It didn’t benefit wealthier pensioners and it didn’t benefit pensioners on benefits who pay no tax. Now a chunk of any modest rise in the state pension will have to be handed straight back to the Treasury. Osborne and Cameron with their £100K+ pensions to look forward to not to mention their inheritance haven’t got a clue how pensioners on low incomes and not on benefits ‘who’ve done the right thing’ and have seen their private pension pots diminish through no fault of their own are struggling. This was a spiteful act by Osborne which even Labour didn’t attempt and proves along with the £75K plus care homes bill (for England’s elderly only of course) that the Tories care nothing about the elderly in this country.

  12. Leslie Singleton
    April 7, 2013

    It is beyond my belief that the Government didn’t immediately lower the rate back all the way to 40% ( I take it this was the usual dopey influence of the Liberals) and that the BBC simply reported the drop to 45% without, on any of the broadcasts I saw, giving any background whatsoever and in particular that everybody, including Labour, had been happy with 40% for a very long time.

  13. A.Sedgwick
    April 7, 2013

    The inescapable question is why didn’t Osborne reverse the 50% rate in his first budget if as the vast majority of us know, him included, the higher rate would result in less tax collected.

    The answer of course is he is a member of a Libdem Government.

    1. lifelogic
      April 7, 2013

      One assumes just for a superficial political appearance of “fairness” and “we are all in it together” who cares if it destroy jobs, the recovery, pushes people overseas and reduces tax receipts.

      Mind you it has not done much for political popularity either. He might remember the IHT £1M promise did when Brown bottled his early election. I do not think the ratting on it did much politically either!

    2. sjb
      April 7, 2013

      @A. Sedgwick
      Are there any peer-reviewed authoritative papers that prove a 50% or 60% rate raises less tax revenue than say a 40% or 45% rate?

      The reason I ask is because if this has been known for decades then why did the Thatcher government, elected in 1979, wait until 1988 before reducing rates from 60% to 40%?

      Reply Then as now there were many who argued the opposite. When they were brave enough to do it, the revenue from the rich rose in cash terms, and as a proportion of total Income Tax raised, so it becomes an important part of the evidence. Peer reviewed papers are often just reviewed by people who share the same prejudices.

      1. livelogic
        April 8, 2013

        All the sensible people who look at it seem to come to the conclusion that over about 40% you start to reduce the actual tax take for income tax and for other taxes too, it also kills growth and jobs as it logically would. Of course we should not even be aiming for maximum tax take anyway. They should be aiming for the best system for the population at large. That is probably at about 20% of GDP, and to be spent by the state only on the very few things they can do better. Mainly defense and law and order – not the nearly 50% as now.

  14. Denis Cooper
    April 7, 2013

    Human society can only function because people are prepared to give as well as take, but each of us has a personal limit to our altruism depending on temperament and circumstances.

    From time to time it emerges that a politician and other public figure who has been urging the rest of us to greater altruism is grossly egotistical in his own conduct, in his demands on the public purse or in his private life.

    You would think that such hypocrites would readily understand that for each of us there comes a point when we will start to buck against paying more and more tax in one way or another supposedly for the public good, and then we will look for ways to counter that imposition.

    But apparently that is not the case; while taking as much as they can themselves, they assume that others can be forced to give more and more without provoking any reaction.

    I’m a bit sceptical about the idea that 10,000 people may have left the country to avoid paying a 50% income tax, but obviously they have been provoked to do something to avoid it.

    Which will also happen at lower income levels; beyond a certain point each of us will start to actively look for ways, legal or illegal, to reduce what we have come to see as being an unjustified tax burden.

    Reply You are right to say we do not know if they personally left the country or rearranged their tax affairs, maybe with investment leaving the country.

  15. John B
    April 7, 2013

    But isn’t everyone paying more than 45% once NIC is factored in… that is 12% employee plus 13.8% employer NIC or do people still have that quaint notion that employer NIC comes out of the employer’s hide and not the worker’s? That the employer could pay that 13.8% to the employer and it would make no difference to the payroll expense?

    And why does not NIC truly reflect the cost of the things it is supposed to? (Remember Bevan, ‘The great secret about the National Insurance Fund is their ain’t no fund’?)

    Could that be because if the full NIC were charged, people would riot when they saw how much their ‘free’ World Class NHS and ‘the poor’ were actually costing each of them?

    And why have two taxes not one? Oh…. tax rates starting around 40% cor everybody are not election winners.

    So when are MPs going to come clean?

    Over to you Mr Redwood.

  16. Edward2
    April 7, 2013

    It is plain to most who have experience of running a business that setting tax rates in today’s global economy has to be done with care to maximise revenues.
    Rather like setting prices it has to be done pragmatically rather than through misplaced envy politics.
    The top rate is an example how billions of pounds of tax revenues have been lost by first increasing the rate from 40% to 50% and then telling everyone in advance that the rate is falling to 45%.
    I’m also very bored with the slogan shout of “tax cuts for millionaires” from the hard left whenever this subject is debated, because it is innacurate on two grounds.
    Firstly, it is possible to be classed as a millionaire because of owning a property or if you are lucky enough to have an inheritence, but your actual income could be very low.
    Secondly, it is a marginal tax cut for anyone earning over £150,000 per year and there are many in the public sector and in quango land who earn more than this figure who are certainly not “millionaires”
    Remember that the top 1% of earners are already paying nearly 30% of all the income tax raised.

    1. BarryS
      April 8, 2013

      Should the government really be aiming to maximise revenues on our behalf? Surely it is possible to spend enough to satisfy an agreed level of need without continuing to take beyond that level to reach the maximum. There is always the option, rarely explored, of spending less.

      Reply Yes, of course. But we are starting from a position where the state is massively overspendings, so for the time being we need to maximise revenue whilst spending is brought under control.

  17. nTropywins
    April 7, 2013

    I seem to recall that Alistair Darling was interviewed about his time as chancellor and he wanted to introduce lower income tax rates in the knowledge that they would bring in more revenue but he was prevented by political dogma from doing so . This is how our country is run. I will let others add the expletives to describe these people.

    And don’t forget the elephant in the parlour, John, the other income tax that is not called income tax but which is a tax on income and which also is a disincentive to work and an enormous burden on business.

    What about a cross-party committee to come up with a system that is designed to generate the most revenue at the least cost? You know putting the interests of the citizens ahead of the interests of the politicians. Could that ever work?

  18. Bazman
    April 7, 2013

    I wonder if the same people who are so against tax rises as they cost revenue are against benefit cuts if they cost more money in other ways and I suppose they will be delighted that an African airline is charging the passengers by their personal weight instead of this absurd equality of pay for a seat when everyone knows that it is not the number of seats, but the gross weight of the passengers that determines costs? I hope they have a large display of the passengers weight at the check in desk and different coloured boarding cards to ensure optimum weight distribution of the passenger load. This is all very sensible do you not agree?

    1. Electro-Kevin
      April 7, 2013

      *Gross* weight being the operative, Bazman.

  19. uanime5
    April 7, 2013

    The IFS and the BBC sat on the fence, and ignored the substantial evidence that the UK has experienced a serious shortfall of Income Tax receipts from high earners since the introduction of the 50p rate.

    This could also be due to the economy declining and public opposition to executives paying themselves large bonuses.

    The IFS and the BBC were strangely silent on the fact that in 2009-10 there were 16,000 people declaring incomes in excess of £1million in the UK for tax, and that this fell to just 6000 people with such incomes after the introduction of the 50p rate.

    According to Table 5.12 of the “Social Trends 40 – Income and wealth” from the ONS website only 11,000 taxpayers had an income in excess of £1 million in 2009/10. So John what exactly is your source for the 16,000 figure?

    This table also shows that 9.93 million people (33.9% of the people in work) earned less than £15,000 a year. I don’t think it’s good for the economy when so many people are earning close to the minimum wage.

    According to Table 7 of the “Social Trends 41 – Income and wealth data” from the ONS website from the ONS website there were 13,000 taxpayers that had an income in excess of £1 million in 2010/11. So John what exactly is your source for the 6,000 figure and which year are you talking about?

    This table also shows that 9.999 million people (32.8% of the people in work) earned less than £15,000 a year. While this is better than the previous years I still don’t think it’s good for the economy when so many more people are earning close to the minimum wage.

    The government has estimated that they have lost £7bn of top end income tax as a result of the 50p rate.

    How exactly did they calculate this? Did they compare the amount of tax they got to the amount of tax they expected to get if the economy was growing at 2-3%?

    The fact that there were still so many people declaring £1m incomes post Crunch prior to the 50p rate shows it is not a simple matter of the damage done by the recession.

    According to the figures I presented from the ONS more people were declaring incomes over £1 million after this tax was introduced. So if anyone did leave more people either arrived or the existing people paid themselves higher salaries.

    A medium sized open economy cannot get away with substantially higher rates of tax than competitor countries.

    Many Scandinavian countries and Germany have higher tax rates and are doing better than the UK. So it’s unlikely that the UK’s problems are caused by taxes being too high.

    Reply The source for the big drop in million pound plus incomes is HMRC, the people who receive the tax returns and levy the tax!

    1. uanime5
      April 7, 2013

      Also for all the people praising the Government for reducing the number of people claiming disability benefit by 800,000 apparently 600,000 were put onto a different benefit.

      1. Edward2
        April 7, 2013

        So we are now in agreement that over 800,000 stopped claiming to be “disabled” when told they faced a check.
        In recent posts Uni, you had been arguing this was a fantasy.

        1. sjb
          April 7, 2013

          I don’t think they have stopped claiming to be “disabled”, Edward2. My understanding is they transfer from one benefit (Incapacity Benefit) to another (Employment and Support Allowance).

    2. Jon
      April 7, 2013

      You do realise your views and that of the Labour leadership mean the poor would be poorer, the gap between rich and poor would be rising at the same high rate as under labour and that there would be less money for social spending.

      You do realise that don’t you? You are one of the left elitists who believe that if you improve the lives of the poor you risk not being elected into office. That is why you follow this stuff that because you would just be gullible and stupid otherwise.

      1. Denis Cooper
        April 7, 2013

        “You are one of the left elitists who believe that if you improve the lives of the poor you risk not being elected into office.”

        Funny you should say that, as earlier today I posted elsewhere as follows:

        We’ve been taught that “the poor will always be with us”, and arguably that’s true because if there’s ever any prospect of it changing then:

        a) the definition of “poor” can be adjusted, and/or

        b) we can import more of the poor from abroad.

        What would be the point of a political party which presented itself primarily as the great defender of the poor, if there were no longer any poor?

        Obviously such a party has a strong incentive to do whatever is necessary to perpetuate the existence of the poor as an identifiable class, or it would lose the point of its own existence.

    3. uanime5
      April 8, 2013

      John according to the HMRC’s “Personal Incomes Statistics 2009-10” Annex A, table 3.3 there were 16,000 people earning over 1 million in 2009/10 before taxes but only 8,000 after taxes. So this indicates that about half of the people earning £1 million or more were not earning a significant amount over £1 million and that even a small reduction in income would knock them to a lower income level.

      The 16,000 figure is also confirmed in table 3.11. Here are the number of people earning various incomes in the 50% tax rate and the two income bands below them for comparison.

      70,000-99,999: 621,000
      100,000-149,999: 324,000
      150,000-199,999: 118,000
      200,000-299,999: 88,000
      300,000-499,999: 52,000
      500,000-999,999: 31,000
      1,000,000+: 16,000

      But in the HMRC’s “Personal Incomes Statistics 2010-11” Annex A, table 3.11 shows that in 2010/11 there were 10,000 people earning 0ver £1 million. So I’ll ask again when did the number of people declaring earnings of £1 million fall to 6,000?

      Also here are the number of people earning various incomes in the 50% tax rate and the two income bands below them for comparison.

      70,000-99,999: 651,000
      100,000-149,999: 319,000
      150,000-199,999: 116,000
      200,000-299,999: 77,000
      300,000-499,999: 43,000
      500,000-999,999: 23,000
      1,000,000+: 10,000

      So while the number of people in the 50% tax rate has fallen by 36,000 the number of people in the 100,000-149,999 income group has also fallen by 6,000, even though it’s not effected by the 50% tax rate. As the 70,000-99,999 income group has increased by 30,000 it’s more likely that due to the economic problems executives have had to pay themselves lower salaries or lower bonuses, rather than some sort of exodus that also includes people who don’t pay the 50% tax rate.

      As I have been unable to find table 3.3 I cannot determine how many people earned over 1 million after taxes. Though it is possible that this table hasn’t been published yet.

  20. Bill
    April 7, 2013

    The BBC, which is unionised, is surely in hoc to the unions and so takes a collectivist position. It is presumably expecting a Labour win (or a Lab-Lib Coalition) in 2015. The only minor benefit that I can see from driving away the very rich is that London house prices are slightly lower than they would otherwise have been. For the country as a whole, the lower tax-take simply ensures that the middle class and those with savings are penalised for the errors of Blair’s third term and Brown’s first and only term.

    1. John Wood
      April 7, 2013

      The BBC charter is up for renewal in 2016 – you can bet your last £$€ that they want Labour to be in power.

  21. Martin
    April 7, 2013

    What is often ignored is the problem of paying old age pensions and their associated benefits (NHS).

    It is easy to say that China etc. can make things cheaper but we need to sort the tax system out so that home manufacturers are not penalised. This will mean a move on taxation from the jobs tax (NI) to sales taxes (VAT, stamp duty etc).

    Even the hated APD would be acceptable to me if UK airlines were not saddled with NI as well. Passengers leaving the UK on Middle East Airlines are subject to APD but the airline pays no NI to the UK Treasury.

    1. behindthefrogs
      April 7, 2013

      You have highlighted the critical issue. In almost all cases where UK companies are losing out to foriegn ones one of the items that affects our inability to compete is employers NI. the government needs to take serious acton to reverse the imbalance that employers NI creates. This means that it must be replaced by taxes that apply equally to foreign companies.

      This means not just APD, VAT, stamp duty etc. but also corporation tax. Corporation tax is being reduced on the understanding that low levels attract foriegn companies and investors. Reducing costs by reducing employers NI should be equally attractive and at the same time would create other incentives, These would include higher employment rates, improved cash flow particularly for small companies, lower retail prices etc. These incentives are of course in competition with each other, but if the company simply fed them into profits then they would result in higher corporation tax returns particularly if the rate is not reduced.

      If we are going to reduce companies tax rates it must be done in a way that improves the countries economy rather than just increasing profits most of which are taken abroad to avoid further taxation.

  22. Electro-Kevin
    April 7, 2013

    No. It can’t be a coincidence that revenues are lower under a higher rate of tax.

    Not only that it was predicted.

    1. Electro-Kevin
      April 7, 2013

      Also my shop owning friends say that the higher rate of VAT has hit them hard.

      On top of this the local council has decided to increase the rates for local cafes and bars to put their chairs out on the pedestrian areas – overlooking the harbour -seven fold.

      So about the only reason for going into town – to enjoy a glass of wine and watch the sunset – is to be denied the public. The Poundland and the charity shops are great but not enough on their own to keep us coming.

      Truly this country is run for the political class and not the people.

      1. Chris S
        April 7, 2013

        Charity shops infest the High Street because landlords often allow them to use vacant shops for free : this is because of the ludicrous rule that landlords have to pay thousands in business rates on shops that they can’t find paying tenants for.

        Charity shops, on the other hand, are exempt from paying business rates.

      2. behindthefrogs
        April 7, 2013

        VAT is what it says on the tin, a tax on value added. It is often a double taxation and so rather than calling for a reduction in VAT we need to reduce the other taxes that are double taxed. That is reduce employers NI, business rates and the other marginal taxes that increase the prices to which VAT is applied.

  23. Barbara
    April 7, 2013

    We will never get complete agreement over taxes, some pay some don’t. Those that do often know how to avoid it specially those at the top. Tax avoidance is a problem and its going on whether we like it or not. Its getting governments to act and do something about it. As we’ve seen with some celebraties they avoid it, like the BBC employees they’ve avoided it skillfully. The person who pays at source as no choice he pays directly. That is the crux of agreement, seeing those who can afford to pay and should, but don’t.
    They only pay once they are exposed. Osbourne said it was repugnant, well I think its a crime against the state not to pay taxes you should pay. How often were those who did not pay the hated Poll tax get summons, paltry sums but summons they were. We all know they should have paid but may be they didn’t have any money to pay with, as was often the case. I did the CAB at the time and saw with my own eyes the misery that tax caused with families, the poverty, and the choice people had. Shoes for kids or pay the poll tax, that was the reality. Life is not always cut and dried as people depict, and those who are well off should reflect on what they say about the poor on our socieity. We are becoming conditioned to abusing our own and those who often cannot fight back.

    1. Monty
      April 7, 2013

      “Tax avoidance is a problem and its going on whether we like it or not. Its getting governments to act and do something about it.”

      Do you have an ISA Barbara? That is tax avoidance, which is the minimising of ones tax through legal means. It is tax evasion which is illegal. The Treasury can put an end to any practice they deem dishonest, by getting their legislation right. Which is what they are paid for, after all.

  24. Jon
    April 7, 2013

    I caught the first 10 minutes of the show that follows Andrew Marr, a discussion program. It started with the is it right to take from the poor to give to the rich. Preceding that moral question the host informed the viewer that the government had lowered the 50p tax to 45p and had cut benefits.

    I had a bit of an issue with that as he had neglected to say that the tax threshold rise would benefit all basic rate taxpayers (limited benefit for higher rate with the freeze). No one also mentioned that it cost £7bn in revenue in raising that rate. Instead the host said where are we going to find the £1bn that the tax cut to wealthy costs? We know that it won’t cost a billion as we may start to get some of the revenues that were lost.

    Part of this is perhaps down to the £7bn cost not being mentioned enough in the media, I know it has but it needed to be drummed in. I do have an issue though with the framing of that debate on TV. I was suprises that the person from teh Tax Payers Alliance didn’t even mention it.

  25. Bert Young
    April 7, 2013

    Direct taxation – in all forms , is a disincentive and should be replaced by indirect taxation ; when you spend you pay tax , if you don’t spend you don’t . The cost of administering direct taxation is beyond comprehension ; perhaps , someone would quantify for me just how much it costs to collect £1 of tax . Having participated in one investigation ( in the 50’s ) , it was calculated as high as 25% . There are armies of accountants employed purely to deal with our tax regime ; each year it becomes more and more of a quagmire .

  26. David Langley
    April 7, 2013

    I think the black economy starts to boom when direct and indirect taxes flourish. Many hard working people are now as a previous poster replied “under the radar” as far as taxes are concerned. Cash is king and the reality is that many services can be bought for cash avoiding VAT and income tax. The Countries suffering under the EU yoke are not totally starving and there is no reports now of crowds massing to overthrow the government. The majority of their peoples have reverted to living by barter and the black economy. Back pocket dealing will starve the government of cash while the people start to take the taxation fraudster government out of their equation. Paying what is strictly necessary to remain in the system but no more.

  27. James Reade
    April 7, 2013

    The IFS sits on the fence because it takes an impartial look at all the evidence?

    Whereas instead we should believe the biased John Redwood and the government’s own biased estimates?

    Funnily enough, I’m with the imperial IFS.

    Reply What part of the £7bn decline in top Income tax receipts do you not understand?

    1. Edward2
      April 7, 2013

      The figures from HRMC are not Government figures
      Come off it James

    2. frank salmon
      April 7, 2013

      How can anyone read the above and not realise that pure logic tells us that as taxes rise at the top rates, the revenue from them falls. Lefties always seem to think some anecdotal evidence about other countries, or individual people, will rescue them from the fact of having to face the truth….

      1. uanime5
        April 8, 2013

        Other countries, such as Sweden and Denmark, have shown that you can raise taxes and get high tax revenues so this debunks you claim that higher taxes always equals less tax revenues.

        1. Edward2
          April 8, 2013

          You are having to place great emphasis on the word “always” Uni.
          Yes there are examples in world history where tax rises bring in greater revenues.
          But the income tax rises on top rates in the UK recently have resulted in less revenue.
          Its a fact.
          Setting the percentage rate correctly means the rich will pay more.
          Something I think you would be in favour of.

          1. James Reade
            April 14, 2013

            OK, what you’re referring to here Edward2 is a coincidence.

            The top tax band went up to 50%, and tax receipts fell.

            Two distinct events which need not be linked.

            If the top tax band stayed the same, tax receipts would have fallen between 2008 and 2012 since the economy is producing less and a number of people must have become poorer as a result, hence paying less tax.

            So what you refer to is a coincidence, or a correlation. No causation can necessarily be attached until all these other factors, most notably the economy, have been factored in.

      2. James Reade
        April 14, 2013

        Hi frank, first off I’m not a lefty. I assume you didn’t check back through my comments on, say, road privatisation.

        Second, pure logic does not tell us that raising taxes on top earners leads to lower tax receipts. Of course it does if your logic is, say, heavily biased by your political leanings.

        If tax rates were below the point at which all rich people moved abroad and/or tax dodge, and a government raised them to another level still below the point at which they all move abroad and/or tax dodge, then in all likelihood, tax receipts will increase – people have to pay more in tax, and hence they do.

    3. Electro-Kevin
      April 7, 2013

      Politicians aren’t meant to be impartial, Mr Reade.

      Is ‘impartial’ another word for ‘centre ground’ ?

      1. Electro-Kevin
        April 7, 2013

        James Read – The 50p tax rate was a Nu Lab trap anyway. Delivered late in the day along with the “There’s no money left” (Haw haw !) note to hobble the incoming Tories and stuff the country.

        (Stuff the country. Did you get that ?)

        You, Uanime5, Bazman and the politicians you support are (unpleasant and unhelpful to the nation- a toned down version of what was written -ed).

        1. James Reade
          April 14, 2013

          Electro-Kevin, enlighten me, which politicians do I support?

          As with so many on here, you make incredible extrapolations from the fact I criticise John’s lack of economics, and lack of impartiality.

          That does not mean I somehow support all Labour politicians.

          They are just as bad as John as misapplying economics to suit their political beliefs. I’m an economist so I despair at the lot of them.

        2. James Reade
          April 14, 2013

          On your playing politics – you’re spot on, politicians aren’t impartial, and hence I’m going to criticise them, regardless of their party affiliation. I don’t like bad economics full stop.

          On “stuffing the country”, erm no. Do you really believe politicians are as omnipotent as that? That at a brushstroke they simply knacker and entire economy? That a number of rich people paying 10p more in tax on some of the money they earn will somehow screw up the economy entirely?

          If you believe politicians are as omnipotent as that, why then couldn’t the incoming government at the same brushstroke reduce that tax back down and restore the economy to full health?

          Why, given that power, hasn’t the current government corrected all those previous mistakes and returned our economy to growth?

    4. James Reade
      April 14, 2013

      Did nothing else change other than the top tax band from 40p to 50p in that period that receipts fell £7bn?

      In that case, I’ll tell you which part I don’t understand – I don’t understand why you attach 100% of the cause for this to be the increase in the top tax band.

      I don’t understand why you fail to attach even the slightest bit of importance to all the other economic factors which also changed – say a 7% fall in GDP in just over a year, for example.

      You never bother with counterfactuals John – how would things have been different had the policy not been implemented. You just compare pre- and post.

      But have you thought about the fact that if we compare the health outcomes of those that have been hospitalised, they are generally worse than those that haven’t been hospitalised? You’re not making genuine comparisons. The IFS tries to do that in an impartial (blame my phone for imperial) manner – something you don’t. That’s why I take their conclusions over yours.

      Reply GDP fell well before the tax rise came in. Why don’t you try looking at the facts for a change instead of always having be contrarian with little or no evidence.

  28. Acorn
    April 7, 2013 . See if you can find all these million plus guys who left the country; I can’t. See table 2.1 to start with. The drop in the total number of taxpayers was caused by the Con-Dem economic policy.

    I will start checking out the UKIP economic policy, but it doesn’t look good so far.

  29. frank salmon
    April 7, 2013

    How anyone can praise Brown I don’t know. Through fiscal drag he took millions of people into higher tax brackets. Now Osbourne has lowered the 40% level even further. This is obscene.

    1. Electro-Kevin
      April 7, 2013

      Brown kept us out of the Euro.

      1. Chris S
        April 7, 2013

        Keeping us out of the Euro against Blair’s wishes was the ONLY sensible thing he did in 13 years.

        Don’t forget, Brown was responsible for probably the single greatest financial loss ever perpetrated by one man :

        By 2011, his sale of our gold reserves had cost us 13.5 Billion Dollars.
        And the gold price continues to rise !

      2. Bill
        April 7, 2013

        This is hardly a ringing endorsement. Every other Chancellor since the Euro was invented has done the same.

    2. John Wood
      April 7, 2013

      Of course the higher tax bracket only applies for the income above the threshold – everything below is taxed at the normal rate, however the Government has either got to raise taxes or reduce welfare spending as a percentage of GDP to try and reduce the deficit. The fact that the EU is holed badly under the water (Even today Portugal has entered a new crisis and the Greeks are begging for some flexibility) has put a brake on economic growth and slowed down deficit reduction.

      Witness the hue and cry when welfare benefits are only slightly increased and you get the picture of how difficult it is to reduce spending. Until the people accept that this is necessary (and you can guess how long that will be) any move is political suicide.

  30. English Pensioner
    April 7, 2013

    As taxes are increased, more and more of those affected consider whether it is worth doing something to avoid them, be it legal or illegal. The point at which we take action depends on the sums involved and the potential savings, and obviously it varies between individuals.
    In our case, as the estate duty starting point is not being raised in line with inflation, we will be increasing the amount put in trust each year for our grandson within the annual permitted limit for tax-free gifts, even if this means reducing our savings.
    My younger daughter and her husband have recently sought professional advice on minimising their tax liability, which is unusual in that neither have particularly “high-flying” jobs, but feel that “something needs to be done”, if possible.
    Meanwhile, my elder married daughter is taking voluntary redundancy from the civil staff of a police force and has signed up with an agency recruiting temporary staff for, you guessed it, a police force. She intends to keep any earnings in the lower rate tax band and will no longer employ a cleaner or a gardener.
    As a result, the high taxation levels have led to us all taking actions which will probably result in a decrease in tax revenue as well as the loss of two part time jobs.
    Hardly the road to recovery!

  31. Dan M
    April 7, 2013

    Interesting thoughts, but I thought the consensus was that, whilst the 50p tax hasn’t raised as much as predicted, it’s still brought a higher amount that the 40p rate did (£1 billion more)

  32. Chris S
    April 7, 2013

    Your point is well made, and perfectly correct.

    While I’m not in the 50% tax bracket or the multimillionaire club, I do have some investment properties, all bought with mortgages more than 10 years ago.

    Approaching retirement, my plan was to sell some to eliminate mortgages on the remainder, however, the ludicrous increase in CGT and the removal of taper relief has meant that I have kept all of them.

    This has deprived the exchequer of CGT at the previous lower rate, stamp duty payable by the buyers, VAT on the legal fees and finally, income tax on the rent as I continue to have mortgage interest to offset against the rents.

    With the net proceeds of the sales, I might well have bought a new Jaguar and, maybe a british-built boat, both of which would help the economy. Instead I chosen to run on my existing models.

    Therefore this misguided policy has also cost Osborne and Alexander a substantial additional lump of VAT !

    Under the current CHT rules, if I want to realise some cash, I will be much better off increasing a mortgage to release some equity.

    Is this what they want me to do ?

    Reply Current CGT and Stamp Duty rates are clearly putting people off transactions in the property market which might bring more activity and tax revenue.

  33. Richard1
    April 7, 2013

    I do not think it is sustainable to have a marginal rate of income tax of 47%, a CGT rate of 18 / 28%, and a corporation tax rate of 20%. It is an invitation to the expansion of the tax avoidance industry. If we need to have competitive corporation and capital tax rates such as these – and I certainly agree we should have – then we also need to lower the marginal rate of income tax. The £7bn loss on income tax in the absurd 52% tax period is a real lesson. Those who want more tax revenues for public spending should support lower marginal income tax rates.

  34. They Work for Us
    April 7, 2013

    Fundamentally we need to decide what is the purpose of taxation.

    Is it to raise money for the govt. to spend on essential (affordable) services to improve the lot of the public OR is there a secondary goal of raising up and levelling down to achieve the (impractical and unproductive) socialist dream.

    The latter appears to be the policy of the labour party and the liberals. Their champagne socialists believe that all property is theft and is fair game for re-distribution (excepting their own property of course) .

  35. matthu
    April 8, 2013

    The rationale for a 50p tax has become ‘wafer thin’.

  36. Lindsay McDougall
    April 8, 2013

    If you want the 45% top rate brought down to 40% before the election, you need to convince your LibDem Coalition partners. If they were promised one or two more Council tax bands as a form of ‘mansion tax’, they just might agree. It would mean revaluing all existing band H houses.

    Council tax payable on a band I house would be:
    (Existing band H tax) * (current average value of new band I houses) / (current average value of existing band H houses)

  37. peter davies
    April 8, 2013

    Given the sneaky way it was brought it I do not understand for the life of me why the govt didn’t just reduce it in their first budget rather than sit on the fence. The evidence is in the public domain, it worked before and labour are nothing more than opportunists seeking to play politics.

    As you have said before, if it worked ok before why change it?

    Reply One reason was the Lib dems would not vote for a cut to 40p

  38. lojolondon
    April 9, 2013

    John, when you say “Let me be unpopular” you misjudge the people of this country – we know the tax rate was raised as a trap, and Hollande has shown once again the foolishness of punitive taxes. Drop the tax rate, but at the same time stop wasting money. Welfare reform is very, very good. Now time to stop wasting money, on windmills, on foreign aid/bribes. This could all be stopped today, there can be no excuse for delay. After all, how can ANYONE justify borrowing money to give it away?

  39. Matthew Reynolds
    April 9, 2013

    Quite simply if you want more revenues then strip out the exemptions and bring down the rates and end legal aid for judicial reviews,QUANGOS,get a cut in our EU contribution,reform adult education and end the Barnett Formula. That would save £47 billion. By shifting monies from growth sapping client state to the wealth creating private sector then you can provide the resources for job creation by making business investment pay. By cutting income tax you improve disposable incomes and business will invest in new products & services that create jobs if there is the demand.

    I think that having the first £15,000 p/a exempt from tax for everyone regardless of age or income would be good with every subsequent £1 taxed at 15% would be radical pro-growth stuff. Taxing capital gains as income would simplify things and exempting the first £3 million p/a of corporate profits from tax with each extra £1 taxed at 15% would be pro-growth.

    I welcome the cut in the 50% rate & corporate tax heading towards 20% as well as the basic personal tax allowance being £10,000 p/a. But tax is too high &complex and there is still too much wasteful government expenditure- hence the flat-lining economy.

Comments are closed.