Hammond emphasises the Tories' temporary commitment to 50p tax

Yanna

The 50p tax proposal will probably be counter productive. The Conservatives are seeking a way to prove they are not a whitewashed new labour; why can't they be more robust when faced with obvious class spite.

TrevorsDen

Its temporary yanna - get a life.

Assuming a may election and assuming a tory win, it will be in place and pointless to abolish until the next full budget.
I suspect the treasury will be very busy with the emergency budget the chancellor will have to bring in no matter who wins the election.

AAE

We've not only had a destructive government for 12 years, but an utterly incompetent, supine opposition. If they can't explain to the electorate some simple economic realities, of which 50% tax = less tax taken must be the simplest, then they how are they going to sell the complex issues which will arise in the next 6 months? Just for their information, today LBC radio reported that the minimum needed to be a first-time buyer in London with a 90% mortgage, is a salary of £95,000!!!! Please Fraser, don't give up asking this privileged elite, as there is no fiscal sense in taking virtually 60% of certain levels of income, why they have the moral right so to do.
Cameron bangs on about the Broken Society, well if we weren't taxed to support a monolithic socialist state, maybe families could live on one income should they choose. Remember, normal people have to pay for their food, their cleaning, their laundry, their gardening, their transport, their TV subscription, and their mortgage out of their taxed income, and all those goods and services are themselves loaded with tax. The Tories have access to vast airtime. Can they please use it to address realities.

Paul

It'll be kept as a commitment as a political sop during the campaign period, then abandoned in the emergency budget.

DavidDP

Once again, Fraser's assumptions are facts, and other's assumptions merely wrong.

Tiberius

I wish education had as many airings on here as this subject. It is infinitely more important.

The fact is that 50% tax is something on which the Tories are damned if they do and damned if they don't. That is why New Labour made it an issue. Osborne has gone for what he's judges as the lesser of the two evil - the political advantage over the economic argument. It's that simple, and the Tories have said on may occasions that it will go when the time is right.

It so happens Fraser favours the economic argument but others, including James, favour the political advantage.

Of course, I would never suggest that this subject is repeatedly discussed because it impinges personally on people...

C

Time and time again the Spectator obsesses over this. Lots of different people have a view on this. The fact remains that the 50% tax will be inherited by any future Conservative government and their first opportunity to undo it will be in tax year 2011/12. There are many other pressing issues the Spectator staff could press the Conservatives on.

Oor Wullie

Fraser Nelson is not standing for election so he can take these positions of academic purity.
If the Tories want to win the next GE they've got to play as the Captain dictates--"we're all in this together". Chucking the 50% rate out at this stage would be handing the game to Labour. Is that what you want Mr Nelson--another 5 years of Brown? (You would of course would still have your job).

Dirty Euro

So they are liars, who say one thing to one group and one thing to another.
To all those who argue for low taxes on the rich I have two simple points to make.
If low taxes for rich work so well why are we poorer than france and why is the USA poorer than us. Oh but the elites do not want to us this about facts, Lets just accept right wing drivel at face value then. So the middle and working class have to have worse public services. I understand.
Hammond = Stooge of the elites. Mind you he is one of them so no surprise there then.

HK

The Conservatives have (roughly speaking) tied the 50% tax to the public sector pay freeze, and have also said they'll ditch it if (when) it becomes clear it is bringing in less revenue.

So they've given themselves both political and economic justifications for dropping it within a year or two. Once they do, assuming an eventual economic recovery, the revenue brought in by the lower rate will dwarf what the 50% rate generates, and the debate about the Laffer curve will be settled for many years to come.

I assume that the Conservatives understand the Laffer curve already, so I'd prefer that they just ditched the 50% tax asap. But if the result is that more people end up understanding the negative impact of higher taxes, that's not a bad result either.

PSJ

Dirty euro - check your facts:

According to wikipedia, GDP per head 2008

US - $47k
UK - $36k
France - $34k

Charles

Dirty Euro - I shouldn't responsd, but I will.

You are insulting, wrong and most importantly boring. The Tories have not lied - they have been consistent in saying that it is a temporary increase that they will assess.

We are not poorer than France - and the we are poorer than the US. There are certainly issues with income distribution in the US, but this is not solved through higher marginal taxes.

Laffer is better at economics than I am - and than you are. You are entitled to diagree - plenty of economists do - but that doesn't make his work "drivel".

Finally there is no correlation between the state of public services and one specific tax rate. Even if this rate did raise £1.5bn (which I highly doubt) a change in the tax take of this magnitude is not going to effect public services one iota.

Now please go and bother someone else.

Simon Stephenson

AAE : 6.58pm

"If they can't explain to the electorate some simple economic realities, of which 50% tax = less tax taken must be the simplest"

It's not a reality, AAE, it's a forecast based upon a series of assumptions that only some people hold. Also, much of the support for it as an idea is based upon false logic. It's just not right to conclude, because there is a stage at which a higher tax rate raises less tax, that therefore every tax rise is counter-productive in this way.

Much of the furore is special pleading by high earners nearly all of whom have no intention of emigrating, no intention of doing less work, no intention of re-categorising some of their income as capital gains - they just don't want to pay any more tax. But of course arguing on this basis won't get them very far, so they throw up all sorts of spurious suggestions about why paying more tax is not just bad for them, it's bad for everyone else as well.

Frederick James

AAE, the voters whom this tax is meant to please/appease are not interested in optimising the tax take, they are interested in punishing people for being better off than them. It is a political calculation for the Tories to turn a blind eye to it for now, not a fiscal one.

Ian Walker

Cameron even told you himself of the realpolitik behind keeping it - if you abandon it, you get attacked by Labour and the press for being the "party of the rich," whereas if you keep it, and it does indeed prove to lose money, then you've won the argument, and gained a stick with which to beat all future attempts to reintroduce a Super Tax.

General Zod

Dirty Euro, the US is richer than us on just about any measure you could find and France's overall tax rates for middle class families are lower than ours (there are generous allowances for all sorts of things). In addition, the French have excellent state schools, saving the average upper middle class family approximately £100k in pre-tax earnings compared with its UK counterpart.

Try again.

Dom

I see Dirty Euro is frothing again...someone get the medicine....

Fergus Pickering

Chap earns £1,000,000 a year. Could one of you clever chaps (possibly on a million) tell me how much MORE tax he pays with a 5op rate? Round figures will do. Then we can judge whether the poor fellow will really be suffering hardship, have to take his children out of Eton, trade in the fourth motor etc etc.

Thomas Rai

If Hammond thinks the rich aren't leaving already can he explain why City AM had a banner headline a couple of weeks ago asking, "Looking for property in Switzerland"?

General Zod

It's not exactly a difficult calculation. If you are domiciled and tax-resident, you will pay the best part of £100k extra tax. That is £100k less in your pension plan (before about-to-be-abolished tax relief), off your mortgage, donated to charity and other good causes or spent in boosting the economy.

Objecting to the 50p rate isn't about seeking pity for high earners. It's a practical objection for the sake of the economy as a whole.

On a purely personal note, I also object because I would rather use the money myself.

Peter From Maidstone

Why is the Spectator OBSESSED with this one issue and seemingly unable to comprehend the politics of the situation rather than simply the theoretical economics. Are senior people at the Spectator earning so much money that this is their main concern?

General Zod

Notwithstanding my objections to the rate, Peter from Maidstone is correct that the Tories cannot even hint at abolishing it at the moment. To do so would be to fall straight into Gordon's clumsily laid trap.

Heffer bizarrely thinks the opposite, but he'd object to anything Cameron and Osborne proposed unless Cameron were to pull off a Mission Impossible type mask to reveal that he is actually Lady Thatcher in disguise.

oldtimer

Last Saturday, the Daily Telegraph helpfully published an article entitled "How to escape the clutches of the new 50pc income tax" together with a fetching picture of BBC presenters Fiona Bruce and Emily Maitlis. They, together with some 20 other top BBC prsenters, are apparently classing themselves as "freelancers" to cut the amount of tax they pay.

Us lesser mortals should not worry our little heads about the predicament faced by those unfortunates on the iron rations of £150k pa and above. They can and will afford the tedious task of hiring expensive help to circumvent this tax. It is evidence of more waste of skilled resources on tax dodging which could be better deployed elsewhere.

The arguments against such a punitive level of tax is clear - it does not work. All the practical evidence reveals that once high marginal rates drop to more sensible levels, then the urge to dodge is removed and the tax take from high earners goes up. Fraser Nelson has made and illustrated this point on more than one occasion.

The same is true of corporation tax. Many business have already left London, paying their tax revenues elsewhere - many in Ireland. It is yet another example of the stupidity of Brown and Darling.

Amadeus Plonquer

Flat tax, anyone? That would be 'fair' and would not punish hard work.

Dirty Euro

General Zod. Type in UK overtakes GDP per capita of the USA and you will see I am right. It is a lazy out dated fallacy of the media to think the USA is richer than us. They have not been for a few years now. And are getting poorer due to a dollar collapse.
Plus I do not want middle class people to pay higher tax I want rich elites to pay high tax. People who earn 100,000 a year a are not middle class they are in the top 1%. How much of the public are middle class. Middle class people to do not go to private school in general. Middle class people do not drive rolls royces. The media this silly idea that you can yourself middle class if you earn half a million a year went to eton, but as you do not have title in your name you are middle class. Rubbish (DOM).

DavidDP

Flat taxes?

Well, fairish. But the middle classes may balk at having to all pay around 35-40%. The rich and poor will like it though.

DangerDave

Can someone tell me the principle behind taxing people who earn at a higher level at a punitive rate.

I would have thought that it would be a much easier system to have a flat rate tax that made it much easier to get on with one's life, at whatever level of the tax system a person is. this also allows people to progress through life on the basis of ability.

The problem with the UK is that we have such a legacy of stuff that we have to be seen to spend the proceeds of taxation on, that we have to keep tax levels at these high rates.

(i expect much frothing at this comment from the usual suspects)

I know that this will really agita

General Zod

Your class definitions are eccentric and as far out of line with most people's thinking as your politics, Dirty Euro. "Middle class people don't go to private schools"?

The OECD 2009 factobok has figures up to 2007 showing US GDP per capita (even before looking at PPP) $10k higher than the UK's. You clearly choose to believe Oxford Economics' figures which suggest a massive decrease in US GDP per capita from 2007 to 2009 of $6k. I don't

Dirty Euro

General Zod Good point ignore Oxford then I they are just a bunch of commie dummies then, I am sure you know better than all of them.
I also said middle class people do not go to private school in general. You have some sneaky tricks in quoting me.

Fergus Pickering

Perhaps I should have put it another way, How much will this million-a-year chap have LEFT? It will be half a million plus, will it not? I think anyone could struggle on with that sort of money. Or am I missing some subtlety not vouchsafed to the poor? And the £100,000 the government takes will not just disdappear, will it? The Government will spend it and thuis oil the wheels of commerce. Isn't that right? It doesn't matter WHO has it really, does it?