On Monday at the Selsdon Group meeting I set out the case for lower taxes for all. Fewer people facing benefit withdrawal as their income rises should be paying any Income Tax. To make it more worthwhile to work we need a smoother progression at lower income levels. The policy of inceasing TaxThresholds to take more people out of Income Tax altogether has boosted family incomes, and is likely to be extended in future budgets. The Benefits cap also helps to limit high marginal rates of tax and benefit withdrawal at higher income levesl but needs to be allied to tax cuts to assist with living standards.
Making work more worthwhile means less tax allied to realistic levels of benefit support and sensible rates of withdrawal of support as income rises. A combination of tax cuts and benefit reform is desirable to cut the numbers of people who have to pay for their own benefit top up by Income tax, a wasteful money go round employing officials to take the money off people in tax and give it back to them in benefit.
We need to raise more money from taxing the rich to pay for all the public services and bring the deficit down. The way to do this is to impose tax rates the rich will pay, and set internationally competitive rates which means they will come here and stay. The rate of Capital Gains likely to maximise the tax revenue from the tax is under 20%, as studies of past changes to CGT in the UK and US show. The rate of Income Tax should be brought back to Mr Brown’s 40% maximum. As a socialist who liked taxing the rich, you can rest assured Mr Brown would have set the rate higher when Chancellor if he thought it would have raised more revenue.
In discussion people drew attention to the high rates of tax created by the withdrawl of the Personal Allowance for the higher paid, and to the low starting point for the 40% tax rate. These are also issues which need addressing. We want tax cuts for all. That will yield more revenue to pay the state’s bill’s, unleash more jobs and enterprise, and make it more worthwhile to work and set up businesses.