Why we need a proper debate about the 50p tax rate
Fraser Nelson 9:11am
As every Hitchhikers fan knows, the answer to life, the universe and everything is 42. The question about the new tax on the super-rich is framed in a similar way. Will it raise £2.4bn as the Treasury claims? Or will it lose about £800m as the IFS model suggests? All of this – the future of Britain’s status as a low tax economy - depends on the gradient of the Laffer curve. And if the debate is had properly, and had now, then we may be able to stop David Cameron making a dreadful mistake.
CoffeeHousers will know the idea behind the Laffer curve, but perhaps not the story. In 1976 Prof Art Laffer, from the University of Chicago, was explaining the basics of tax collection to Donald Rumsfeld in the Hotel Washington over dinner. A journalist from the Wall St Journal was there too. It’s basic, Laffer said: tax nothing, you raise nothing. Tax 100% and no one will bother earning. To maximize your revenues, you have to find a optimal point. To illustrate this, he drew a graph on a cocktail napkin along the below lines. The journalist later wrote this all up, and the Laffer Curve was immortalised.
But it was not 1970s idea. Adam Smith explained it in the Wealth of Nations. Even Keynes said that taxation can grow so high as to defeat its purpose. Since then, economists have managed to hone their understanding on this. Different income groups respond in different ways. The poor, for example, are seldom in a position to expand or contract their hours – or to hire accountants. The very rich, by contrast, can decide whteher to take on another project. In his Hollywood days, Reagan would speak about the point where an actor stopped working: when his income reached a certain level, it wasn’t worth it. Accountants, too, will tell you that the rich will pay top dollar to avoid a 50 percent tax – but not a 40 percent tax. My point: you can measure how likely people are to avoid tax. We now have decades of tax data to make the decision. So to ask if the new 50p tax will raise any revenue, we just look at the evidence.
Or, in the Treasury’s case, you cook the books. This is what it has done with the Budget. The IFS (bless them) drew out of the Treasury the assumptions used when it was deciding what the 45 percent tax would draw from the very rich. It turns out the Treasury had its own Laffer curve but the elasticity ratio – i.e. the lengths to which the rich would go to avoid paying this tax – was put down at 0.35. The IFS own reports gives it a more responsive ratio of 0.46. If there was no avoidance at all, there would not be a ratio but a straight line. Put these three together, as the IFS kindly did, and this is what it looks like:
Now, the Treasury’s 0.36 suggests that the Laffer peak is (gulp) around 55 percent for earmings over £150,000. How did it arrive at that figure? It won’t say – and in the academic studies I have read on this (irritatingly, not online) the figure of 0.36 is a bit lower than you would get for the country as a whole. What the Treasury have done is to deploy the elasticity ratio for the average British worker and apply it to those on £150,000 a year. They try to justify it, saying the rich would normally have a 0.4 elasticity ratio, but they have downgraded this to 0.35 because they reckon they’ve snookered the rich by abolishing personal allowance. This is a con, a fake forecast, right up there with their fiction of a trampoline recovery of 3.5 percent growth in 2010.
The IFS curve suggests that the peak yielding tax rate is about 42.5% and that, on this model, the 55% tax would actually lose £800m to the Exchequer. A crucial point: the IFS don’t like to say so in terms, all the time stressing how much uncertainty there is. But if their 0.46 figure is correct, then the 50p tax would lose serious money - thereby increasing the tax burden on 99 percent of us.
But is the IFS being realistic? Its assumptions (detailed here) are compiled “using information on how the income share of the richest 1% of adults changed during the 1980s, the last time marginal tax rates for the very rich were altered”. So, this is a graph that tells us how the rich would have behaved when Simple Minds, the Bangles and Jason Donovan were at number one. What it doesn’t do is tell us what will happen come April 2010, when the 50 tax will be introduced.
Will Britain have changed by then? You bet. Since then, we have had globalisation – the ‘world is flat’ era where business can relocate anywhere and transfer cash at the click of a mouse. The ultra-mobility of labour and of capital amongst the super-rich suggests that the responsiveness will be way higher than 0.46. And we don’t have to guess. There are several academic studies which suggest it is 1.0 or even 2.0. If these figures are halfway right, then the 50p tax would blow a massive hole in government finances – to the tune of £5bn or more. It would be the equivalent to Brown’s pension raid.
And what would a Cameron government get in return for the £5bn loss in revenue? A little piece of political posturing saying: “You can’t call us the Gordon Gekko party, because look we’re whacking the rich too.” This is why I do believe the debate about a 50p tax is worth having. As I say in today's cover story, there is a reason why Brown only wants to introduce this in the final four weeks of his 13-year time in Downing Street. The trap is not that Cameron would reject it, but that Cameron would embrace it.
I can hear Danny Finkelstein saying: “Hang on, Cameron has not embraced it. He has just said that he won’t make it his problem to abolish it. It’s Brown’s tax, not his.” I disagree. Cameron can’t help the deficit and debt he inherits. But from the moment he kisses hands with the Queen he will be absolutely responsible for how the government raises tax during a recession. I believe that, grimly, tax will have to rise: but let Cameron talk calmly and honestly about how to do that. Does he believe the 50p tax will raise revenue? If so, let him say so. Let him explain why the IFS and subsequent literature are wrong. If not, and if it survives his first budget, then he will be guilty of precisely the same as Stephen Byers accused the government of yesterday: cynical political posturing.
CoffeeHousers may say here that I am walking into Gordon Brown’s trap. Yet I believe this argument is too important not to have. If it could cost billions – and the economic models suggest it very easily could – then it would be madness to implement it. To break the 21-year truce with the high paid would, I believe, lead to a substantial drop in revenue from those above £150,000 which means the tax system becomes more regressive as the rest have to pay more. As I never tire of saying here, at the time of the 1988 Budget the top 1 percent paid 14 percent of all income tax – by 1997 this rose to 21 percent. And why? Because the top rate was cut from 60 percent to 40 percent.
Ask yourselves, CoffeeHousers, why should the reverse not be true? Should this issue not be examined because it’s regarded a trap by Brown? What we need now is a long, exhaustive debate on the effect of that 50p tax. On what the evidence from the globalised world says about the mobility of the super-rich. If this is going to blow a £5bn hole in the national accounts, Cameron needs to be told quickly.
Previous
Marbury
April 30th, 2009 9:36am Report this commentI think Fraser is right about Cameron. Does he want to play Brown's game, or his own? Does he want to begin his government with a dishonesty?
Nicholas
April 30th, 2009 9:36am Report this commentI'm waiting to read Dirty Euro's pearls of wisdom about the graph.
Brown, meanwhile, and all his works are a waste of space. He needs to go.
Sandra
April 30th, 2009 9:44am Report this commentcombined with the changes in tax relief on pensions I think it raises 6bn?
Tommy Judd
April 30th, 2009 9:49am Report this commentFraser, I happen to agree with you on the principle but - as a former Labour Party member (1983-2004) - let me pass on the advice of my ex-MP, the late great Tony Banks. In the run-up to 1997, he said Labour supporters had spent so much time losing elections that they would now be prepared to "eat shit" to win. Tories need to learn the same lesson. Cameron and Osborne are dead right to treat this 50p rate as the crude elephant trap it is, and to dismiss its revenue-raising importance as a drop in the ocean they will inherit. Most high-earners will dodge it. Cutting the top rate can come but it's in a queue. I only wish Hague would treat the Lisbon Treaty the same way.
Stephen
April 30th, 2009 9:49am Report this commentA question: Is the removal of tax allowance on those earning over £100,000 increasing the higher rate well above 40% for these individuals as well? In practice will we not have a potentially counter-productive tax regime for those who earn more than £100,000?
There is also a debate to be had on the injustice of a system in which two households can have the same earnings but are taxed differently because one of the them includes a non-earner who say, cares for children or an elderly relative.
David Bouvier
April 30th, 2009 9:51am Report this commentPart of the problem is that it is very difficult to have sensible debate about these issues, when journalists and others always want to characterize it as being about people "leaving the country", rather than about more subtle shifts in behaviour and investment strategy.
Another important point would be to look at the non-tax impact; even if it is not raising money, it is likely to have negative effects on the rest of the economy; any medium to long term economic strategy ought to be based on a level of taxation significantly below the peak of the curve. At the peak people are making capital-destroying investments for the tax breaks, etc.
I think disapproval in principle, but not writing the next budget yet is the right line. Should they actually be planning to abolish it on the grounds that it will cost money and hurt the economy - oh yes. But I think the experience of Brown actually introducing it will give some people a reminder of why they shouldn't get into bed with the Labour party for a long time to come.
oldtimer
April 30th, 2009 10:12am Report this commentI have commented before that the 50% tax rate is a stupid tax, imposed for crude, party political reasons.
The question for the Conservatives is not whether to get rid of it, but when and how. Brown has raised it as a single, populist issue. Cameron has declined to fight it that way. If he is sensible, he will change the issue and revert to 40% as part of a wider issue - the reform of the income tax code. If this includes raising the threshold at which income tax starts to be paid and eliminates the marginal nonsenses that afflict the lower paid as well (to which you have also referred) then he should be able to do this on a his ground, not Brown`s.
Publius
April 30th, 2009 10:18am Report this commentThough the new tax is dressed up as an economic matter, it is in fact a moral matter in (some) Labour minds, and also, as you say, a trap for Cameron.
And I agree with Labour to this extent: that the analysis of all political questions should begin on the level of what is good and just. What is merely economic is secondary.
I mean, if you could demonstrate that more revenue would be raised by exempting the mobile super-rich from tax altogether, would you advocate it?
I think, in the popular mind, it is thought that rich people pay less. Whereas, in truth, even if we had flat tax, rich people would still be paying more tax.
In other words, it is on the level of fairness and justice that this debate belongs.
Tim Carpenter (LPUK)
April 30th, 2009 10:21am Report this commentWhy do we need a long debate? The rate is nuts. The personal tax allowance theft from £100k is nuts. It is envy politics. Junk it and boil down the horse it rode in on for glue.
We should be aiming to make the entire UK a tax haven. We want capital to flow in. We want talent and wealth creators to remain and more to come.
Euro co-operation and "security"? What do you think would happen if we had to go cap in hand to the EUrozone? Further loss of sovereignty, further theft of the wealth of innocent bystanders.
Cameron should just call Gordon's bluff on this and laugh in his face when he tries to respond. He should do it now, when Brown is so very weak. Get it over with.
Ray
April 30th, 2009 10:26am Report this commentThank you, Fraser. Now remind Messr Cameron and Osbourne that if levying a 50% top rate actually raises significantly less money than levying a 40% top rate, then implementing it sucks!
The Conservative leadership really must stop cowering in fear of the 'Tory toff' jibe and credit the electorate with enough brains to be able to work out the Laffer curve for themselves.
Alan Crowe
April 30th, 2009 10:26am Report this commentNotce that 25% VAT raises the price of an 80p chocolate bar by a quarter (25%) making the gross price one pound. The government gets twenty pennce of that, twenty pence in the pound. You can do the conversion the other way, 50p = x% yourself.
Two other debates necessary debates would ask why we use the pence-in-the-pound parameterization for income tax but the percentage-rate parameterization for VAT and whether we need to be stricter about not confusing the two.
See http://www.cawtech.freeserve.co.uk/tax-rates.2.html
We cannot hope to exercise good judgement about taxes when we vague on what the numbers mean.
Martyn Rowe
April 30th, 2009 10:35am Report this commentI'm sure David Cameron and his economic team agree with you. I'm sure that many forward-thinking Labour front benchers agree with you. But this isn't about rational economics, it's crude electioneering and political posturing.
If the Conservatives issue a commitment to remove this tax, they know, as well as everyone else knows, it will be splashed across the media as "tax cuts for the rich"..
The media would make huge mischief out of it, ignoring the rationalities. They love the bloodsport (as do we all). It would provide great rich versus poor headlines.
Inveitable questions such as "why not tax cuts for the working classes, who need it more" would arise, and the Conservatives would be backed into a corner of unaffordability and would wish they'd kept their mouths shut.
As much as I disagree with the 50% rate, I can understand the reluctance of the Conservatives to position themselves against it. Why rock the boat at this delicate stage?
They need to get power first, then being dismantling the sclerotic socialist state Brown has sneakily built.
Aloicius
April 30th, 2009 10:40am Report this commentAn outstanding piece by Fraser! But Cameron's problem is explaining it in words of one syllable to the masses - difficult to do ahead of the election with the risk of Brown and his - debilitated but still active spin machine - twisting the facts and muddying the water even more. He is wary of entering the debate at a time of economic crisis. So the question is: can we trust DC to come in and repeal the 50p tax right away and explain it then from a position of strenghth.
Johnathan Pearce
April 30th, 2009 10:45am Report this commentGreat article, very well argued. I pray that Cameron and his colleagues have the stones to understand its implications.
William
April 30th, 2009 10:48am Report this commentGod help us...
http://rudezone.net/images/notThisShitAgain.gif
Hawkeye
April 30th, 2009 10:48am Report this commentOf course, even the 40p rate is over 50% on salary thanks to NI.
On the 50p issue, Cameron just has to keep his mouth shut and say no more than he has - that avoids the labour trap. After he is elected, he can abolish the 50p rate on day one and Labour can yell and scream all they like because, after their defeat, no one will listen to anything they say for a few months.
The No. 1 job for Cameron is to get elected and the best way to do that is to avoid giving Labour targets to shoot at.
Let them get on with their internal self-destruction. There is nothing more important than that.
CS
April 30th, 2009 11:08am Report this commentI suspect, Marbury, that he wants to get elected first. Which may be why he looks at his party's policies and image in the 1997, 2001 and 2005 general elections and the results of those elections and comes to the conclusion that pandering to his party base doesn't get his party elected.
Because of the Tory party's 25 year blithe disregard for its image in the country (let them hate us so long as they elect us), it's particularly susceptible to the mud sticking over the slightest suggestion that it doesn't care about the poor or public services, that it's out to destroy the NHS, that it's bigoted against blacks and gays, that it wants to pull out of the EU, etc.
Unfair accusations maybe but it's the party's own fault. If the same people who are now screaming for bold statements against 50p taxes and in favour of swingeing cuts hadn't been happy for the Tory party to descend to the depths of public contempt that it reached in 1997, maybe Cameron could afford to make some brave stand on the principle that the rich should be taxed less than the poor. But so many of you helped make the bed of public opinion that the current Tory leadership is forced to lie in.
And, if you truly believe that the correct level at which to tax the wealthy is 42%, why not argue in favour of closing down all the tax avoidance loopholes so that they truly do pay 42%? If you did that, I might be convinced that your opposition to a 50p top tax rate has anything to do with revenue yields for the Treasury.
If we also believe that a 50p tax rate drives away wealth creators, why can't we be genuinely innovative and introduce a sliding scale of top tax rates? If you earn over £150K as a result of investing in a business that ends up employing people then you pay a lower rate of tax on your income because you're a genuine wealth creator. But if you earn over £150K because you're merely a highly paid actor or political pundit or accountant, then you pay a higher rate of tax because you don't create wealth. And think of the added benefit to the social health of the nation if all the pundits and accountants were driven abroad.
Bob.India
April 30th, 2009 11:18am Report this commentI would think that Cameron could persuasively move the argument away from "looking after his millionaire mates by scrapping the 50p tax" and towards "saving £5bn and not increasing the tax burden on 99 percent of (the rest of) us.
Unless it was all coincidence, Cameron's handling of yesterday's Gurkha division, by encouraging the Lib Dems to propose the motion, thus making it far more likely that disaffected NuLab back-benchers would vote against the government than would have been the case with a Tory originated motion, demonstrates a laudable adroitness unmatched by any present government minister I can think of (except Mandelson).
Such revealed subtleness can surely be directed towards this equally important issue?
Publius
April 30th, 2009 11:25am Report this commentWell said, Hawkeye.
David
April 30th, 2009 11:50am Report this commentYou seem very wedded to 40p, Fraser. Why? The IFS asssumtions, which mean you'd get more at 42p seem reasonable.
Peter Buss
April 30th, 2009 12:07pm Report this commentI would be far rather go with reducing busines taxes than worry about the 50% rate. By no means is everyone on £150,000 a wealth creator, far from it. By concentrating on reducing business costs then we really would be helping the engines of growth.
OK - the 50% rate is a bad tax but then so are many many more. Cameron is quite right not to single out the richest people in this Country for protection from this recession whilst expecting the rest of us to grin and bear it.
Ian C
April 30th, 2009 12:15pm Report this commentThe debate needs to be had, as you say Fraser and it should not be regarded as a trap but an opportunity.
Most posters here agree the higher rate tax measures are madness. They are both immoral AND stupid. On what basis does the state have the right to impose a tax on the majority of any slice of any of its citizens’ earnings? I am not a ‘human rights’ fan but this is surely one that can be made. Why would anyone bother to work for a minority of the prospective rewards? So there is a coherent case that these crisis times, in general and the antics of a socialist government in particular, present us with a real opportunity to put such ideas away for good. But better to make it once the fervour of inaccurate analysis and blame, that premises Brown's and media thinking on the causes of the current troubles, has been replaced with a more credible government with a carefully thought out strategy.
But Cameron can make into a trap if he charges at the subject before the rest of the Tory agenda is fully ready for presentation. Should it be an item that is unrolled in detail before the election or, for example, in the first Tory Budget? Not sure.
Our task, as 'right bloggers' is to convince him that the matter is both as important as you say above and a real opportunity to drive a stake through the heart of the old socialism that this stupidity represents.
Andrew
April 30th, 2009 12:38pm Report this commentJust one question - if the government takes in less tax than it expects, why does that mean we have to pay more?
Can it just, you know, spend less?
mac
April 30th, 2009 12:43pm Report this commentEntirely with Hawkeye.
It would have taken one of Alistair's SpAds in HMT no more than a minute to draw the elasticity curve on the 2 axes positioned to meet his master's political imperatives for a 50% rate and to back project the (fictitious) rate itself. 5 minutes more to write a spurious rationale on the back of a handy expense claim form and, hey presto! a rock solid statistical model for clockwork Cooper to gabble about on assorted BBC radio programmes. But Sun readers, Labour voters and droves of LibDems want the "rich" to be caned, so arguments employing Laffer curves, graphs and even the plain unvarnished truth won't resonate this side of the GE.
Cameron's playing it right.
Publius
April 30th, 2009 1:07pm Report this commentWell this will probably throw the cat among the pigeons, but in principle I do think it is obscene that anyone should, or should want to, earn many millions of pounds a year. There is a point, a lowish point, where earnings or "earnings" cease to be about living well, and become about power and a proxy for who's got the biggest dick.
Bails
April 30th, 2009 1:16pm Report this commentGood piece. I agree with another poster who asked why Fraser is wedded to 40%. If the elasticity ratio is 1.0 or 2.0 then doesn't that mean the apex of the laffer curve would be at some point lower than 35%?
On a wider point about economic modelling: if you put junk assumptions into these models you get junk out. Can we really model the economy that well given the sheer number of variables? And hasn't the recent credit crunch shown that over-reliance on models rather than common-sense leads to mistakes being made?
I agree that there is a point at which taxation gets punitive. Whether this is 50% or 40%, though, I don't know...
Forlornehope
April 30th, 2009 1:19pm Report this commentOne thought on all of this debate; there is nothing so powerful as proof by experiment. It might well be worth a year's loss of revenue to make the case that the higher rate of tax has actually reduced the tax paid by top earners. It would be too much to hope that that would end the debate but it would be a very powerful argument and would provide a solid basis for removing it.
Tiberius
April 30th, 2009 1:22pm Report this commentI think, Fraser, we have had the debate about 45% and 50% tax on CH, over a number of weeks.
The two views are; a) do the politics in Opposition and the policy in Government, and b) do the policy in Opposition.
There are disadvantages with either route (Brown hasn't tried to set the bear trap just for fun), and it is a matter of judgement which option will ultimately serve the Tories and the country best.
I still hold the view that the Opposition should not leap before it has looked, and history shows that Margaret Thatcher and Tony Blair both took this decision in certain areas. With the Tories not under MSM pressure over 50% with their current policy, I still think the choice they have made is the better one of what are two evils.
Fraser Nelson
April 30th, 2009 1:36pm Report this commentDavid, I wouldn't have a problem with 42p if that was the point that maximised revenue. Im not against tax rises to close the deficit, im just against tax rises that widen the deficit. There is a broader point about leaving the upper tax bracket alone: if you do 42p some may think "what next - 50p?" so you have to factor that in.
Hoolio
April 30th, 2009 1:39pm Report this commentTories should never be afraid of the truth (as best this may be devined), whether about the Laffer curve or global warming.
To me, "fixing our broken politics" means rejecting the smear and spin peddled by the Labour Party and the BBC, and seeking and if found embracing the best possible evidence on everything from Laffer to climate change.
And then finding the words to express whatever consensus is found, such as, if we fix the top rate of tax at e.g. 42 per cent. above earnings of £60,000 (or whatever), this will give us the most revenue which will minimize the tax burden on everyone earning between £20,000 and £59,999.
Didn't Tony Blair sum it up as "what's best is what actually works" (or words to that effect)?
And I think David Cameron has said, "stop treating us like fools".
Vote Laffer!
wonderfulforhisage
April 30th, 2009 1:50pm Report this commentHawkeye 10:48
"The No. 1 job for Cameron is to get elected and the best way to do that is to avoid giving Labour targets to shoot at."
Ah, so ends do justify means after all.
Fraser Nelson
April 30th, 2009 1:56pm Report this commentHawkeye, Cameron has said it will have to "form its place in the queue" - which you can translate as saying it will survive his first budget. So his words, so far, are incompatible with the course of action you outline. But I have enough faith in Cameron that if he sees the evidence to suggest it would blow a substantial hole in the accounts, he would abolish it in his first budget.
Martyn Rowe, why rock the boat? Because if Cameron implements this it could blow a hole £5bn or more in his budget. And people who are planning to emigrate or incorporate themselves are doing so because of what they think Cameron will do. What he says now matters to his being able to balance his budget.
Mac, you simply can't do an academic study justifying elasticity rates less than 0.4 for the super-rich. As Darling admitted yesterday, there's no science to this.
Balls, an elasticity ratio of 1.0 or 2.0 would indicate an apex even lower - between 20% and 30%. But remember, each salary group has its own elasticity dynamics. Brown/Balls profited so much out of non doms because they effectively paid tax at 20% - so many of them flocked here to do it that they were human fruit machines. Russia has found a 13% tax is the optimal rate for squeezing the oligrachs - revenue went up 25% when they introduced it. I argued at the time that the Tory tax on non doms would, mean less money for the Exchequer.
But even if it were proved that elasticity was 2.0 and the apex 25% I would not propose a 25% tax for the rich and 40% for the not so rich. A tax system does need to be seen to be fair. 40% is fair. 51.5% (the de facto rate) is not - there's something about taking more than half of a man's earnings that is, for be, beyond the pale. I suspect the maximum tax yield would come from a flat tax.
Tiberius, there's a difference between us lot having a debate and proper economic analysis of the 50% rate. I'm calling for the latter: we need study after study after study. Right now, even Cameron may be tempted to believe the 50p rate could raise some money. He knows people like me don't like it. What he doesn't know is that it could cost him the equivalent of two Afghan wars each year, for no gain at all.
Tim Calvert
April 30th, 2009 2:32pm Report this comment"at the time of the 1988 Budget the top 1 percent paid 14 percent of all income tax – by 1997 this rose to 21 percent. And why? Because the top rate was cut from 60 percent to 40 percent."
I agree with your sentiments, but the statistic above does not prove or disprove your point about the Laffer curve.
The cut to 40% was said, at the time, to be the worst thing that ever happened to junior staff in partnerships. It made it worhwhile for seniors to pay themselves more at the expense of juniors.
The left can perfectly reasonably argue that the cut merely increased income inequality.
So pls keep the argument rigorous.
Tiberius
April 30th, 2009 3:34pm Report this commentFraser, I don't believe that either Cameron or Osborne think that a 50% tax rate is a revenue raiser. I also believe they are fully aware of the arguments about brain-drain.
But right now, the politics is taking precedent.
George Laird
April 30th, 2009 3:46pm Report this commentDear All
Do we all remember the 10 pence tax rate?
I undertsand that one of the reasons put forward for abolishment was that there were too many tax bands and it needed to be simplified.
If that is the case can someone tell me what has changed in Government that justifies this additional tax rate?
I see this rate as proof that the New Labour Government will do anything and say anything for short term political gain.
In other words, the Labour Govrenment of the UK are just a bunch of liars.
These people really are pathetic.
Yours sincerely
George Laird
The Campaign for Human Rights at Glasgow University
LL
April 30th, 2009 6:20pm Report this commentWhat is lacking from this piece is the lack of morals of taking 40% of someone and that an immoral majority votes to take out things from a minority.
TGF UKIP
April 30th, 2009 10:02pm Report this commentFraser, of course you're right on the principle but I can think of a very good reason, from Dave's point of view, why the 50p rate "will have to take its turn in the queue."
Just think for a moment who does the implementation and presentation of taxation policy - not the Party Leader/PM but the Chancellor and who has zero credibility with and zero acceptance from the Great British Public but Dave's right hand (and your principal client) Gideon George Osborne.
There lies the crunch, for given this absence of creibility and acceptance, Osborne could never be entrusted to persuade the public of the acceptability of anything other than bread and circuses.
If Dave's Shadow Chancellor/Chancellor were a credible heavyweight with a record (DD, Redwood or even the Mouth & Ego) an argument could be and I think would be made -none of those three would for a minute countenance a Dave veto on it especially given the financial damage a 50p rate will cause.
Once again I'm afraid, Fraser, the role occupied by Osborne must be highlighted for the damage it is doing to your Party's cause. A Shadow Chancellor/Chancellor who neither looks nor sounds the part, whose poll ratings are consistently abysmal, who has no business nor even previously relevant political experience and who owes his vital and crucial position to nowt more than his place in The Clique is Gordon's ace in the hole.
Dave, and indeed the rest of you Tories, must be desperately hoping that Boy George will attain in office the credibility he has so manifestly been unable to attain in opposition. Until that most unlikely scenario comes to pass, expect nowt bold or owt else that requires "selling" on the economic front.
TGF UKIP
May 1st, 2009 12:02am Report this commentNow 11.58 pm and latest post on this piece timed at 6.20pm.
No posts for 5hrs 38mins on this piece? Pull the other one! What is, or more accurately isn't, going on with the Coffee House?
Presently, what is the point in Coffee Housers troubling themselves to post on any subject?
Aless Bieri
May 1st, 2009 12:05am Report this commentThe 'Inconvenient Truth' for socialists is that the way to raise the most money from income tax is by lowering the marginal rates for higher incomes.
They would probably be best off charging 40% up to 100k and then lowering this to 30% for income above this mark. Let's face it, even a very committed capitalist like myself knows that people don't 'need' an income over £100k, and they are just not going to have the same desire to increase their salaries from £100k to £110k as they would to increase it from £30k to £40k.
I fear that the danger isn't so much that rich people will go abroad and hire accountants, it's that they won't do the same amount of work. As you say, richer people are generally more able to pick and chose their work and their income, and it would be a shame if high tax made people think it wasn't worth putting in the effort
Pete Hoskin
May 1st, 2009 12:12am Report this commentTGF: Apologies. I've been out at dinner, and my phone battery died, so I could approve comments.
Am back at a computer now, and am working through the backlog as quickly as possible.
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