The 50p tax rate is popular according to the polls. Most people like the idea as they think it means the rich few will pay more so they will pay less. Unfortunately, the opposite is the truth. A 50p tax rate will raise less revenue from the rich, so those on lower incomes will have to pay more.
The evidence from the period of 50p tax rates in the UK is quite clear. Self assessment Income Tax fell from £21.7bn in 2009-10 (after the crisis) to £20.6bn last year. It is forecast to surge to £27.4bn in 2014-15 with the lower 45p rate. The Treasury figure of £100m extra revenue is not confirmed in anyway by the pattern of past tax collection. Numerous high earners left the country to avoid the 50p tax rate when it came in, meaning lower income taxpayers have to pay more.
The Sunday Times provides other figures which show a surge in tax revenue at the lower 45% rate, from £41 bn under the 50p rate to £49bn now. There has also been a sharp increase in the number of people earning more than £1m now in the UK, from 13,000 at 50p to 18,000 at 45p. That’s a large increase in tax revenue from the rich.