IFS: Past performance suggests that a 40p top rate would generate more revenue than a 45p one

Forlornehope

Sun Tzu says never to allow your opponent to choose the field of conflict. Looks like an apt response to this. Osborne should be coming up with his own proposals that put Labour on the spot, not reacting to their's.

JohnOfEnfield

Blair knew he had to keep the aspirational classes sweet.

Brown is rapidly becoming a victim of his own dividing lines.

TomTom

The way things are the Basic Rate will soon be 40% to pay the Tax Credits Bonanza

TrevorsDen

Correct James-- 100%

The other point is - why should the conservatives commit themselves to anything based on fraudulent treasury projections?

They must wait until they can see the books - and then hit labour with both barrels. They must mince no words about the scale of the crisis they find and the corollary to that is they must react accordingly and get britain on track sooner rather than later,
This really is why the country desperately needs a new government. the present one is constantly trying to cover its tracks and hide its culpability for it to take the measures it needs.

Tiberius

100% with you on this, James.

Ben Elford

I don't have a personal interest as this is way above my income level. I'm in two minds about this.

Pragmatically, such a tactic may be necessary, but I very much hope it won't turn into a long-term policy.

Looking ahead, would a Conservative chancellor be in the position of having to revoke an economically damaging income tax rate, and suffer at that point all the outrage from the fiscally illiterate: 'You are just a party for the rich, etc.'?

Christopher Bowring

I remember than when Nigel Lawson cut the top rate of income tax to 40%, tax revenue from the top band increased.

Hysteria

agreed

Victor, NW Kent

Allow Brown and Darling to make this tax decision. Simply comment that it may prove counter-productive.
When economic times permit then gratitude is to be earned by reducing it again.
But firstly - the far more necessary step to remove from taxation altogether all who earn only the minimum wage.
Secondly - reform, with a view to scrapping, the unworkable tax credits system.
This is not a fight to get into right now - the 45P matter - not even if we could win.

oldtimer

I agree it would be unwise to get bogged down in this issue. Instead the Conservatives need to change the issue - to one of wholesale reform of taxes on income, investemnt and spending. That way they will have a better chance of not getting trapped in mickey mouse, marginal changes to, and tinkering with, the over-complex tax code we now have. If they are bold, they could set the stage for major, and needed, tax reform.

cuffleyburgers

Correct, and I like the NI one too.

Wily Trout

I agree with Victor, NW Kent that the most important thing is to make working more beneficial than benefits and taking minimum wage earners out of tax altogether.

George Laird

Dear James

I would like to reminded the board what I previously said about Osbourne; he is a loser.

In Osbourne Labour have an asset who will bury himself by his own mouth and cost the Tories seats.

You stated;

"But 45p is not the right fight to pick".

My concern is that people are now coming round to my way of thinking however rather slowly.

The rate should remain at 40 pence in the pound and Osbourne if he is capable should be looking at raising allowances to take more people out of tax.

I am making an easy recommendation because Osbourne doesn't have it upstairs.

Yours sincerely

George Laird
The Campaign for Human Rights at Glasgow University

Donna

why not both? Surely a comprehensive and sensible program would not be beyond reason. It would also prove that Osbourne isn't the lightweight that Labour would like to make him out to be.

Dog Snob

Explain how this works please somebody.

And if it does, why don't we go down to 35p and raise even more?

Hysteria

Snob - depends if you use a static or dynamic tax model - sadly it appears the Treasury uses a static model (every pound reduced in tax rate means a pound less to the Treasury) - whereas there is plenty of evident that it is dynamic - eg reduce taxes and the revenue stream goes UP due to the incentive to work and keep more for yourself.

So directionally you have it right - "we" should be reducing tax on income.

No doubt there are some professionals in this field posting here who can couch this in the proper language...

Major Plonquer

I think that introducing a 45p tax range would be great for the economy. Unfortunately it would be great for the Australian economy, not the British. Just because it has a silly name doesn't mean the Laffer Curve is a joke. Over the median point tax more get less. Duuh. I thought even Labour could figure this out.

I've already moved my company from the UK to Oz largely because I was being taxed to death in England and my pips squeeked. Its only a small company (150 employees) but these are 150 jobs that won't go to British people.

So if you are a business owner, c'mon down. Australia is a GREAT place. They play cricket, damn near speak English and keep in mind that Britons and Australians are both descended from the same criminals.