Clegg echoes Obama's message
Jonathan Jones 12:02pm
Nick Clegg, this morning, advocating closing loopholes for the rich to pay for raising
the income tax threshold:
Oh, all right, that wasn't Clegg. That was Barack Obama, in his State of the Union address on Tuesday night. But it's remarkably similar to what Clegg just said in his speech at the Resolution Foundation this morning. On his account, the government ought to be ‘calling time on our out-of-whack tax system,’ as well as the ‘scandal of a hedge fund manager paying less on their shares than their cleaner paid on their wages’.‘Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.’
That both Clegg and Obama are aiming to lower the tax burden on ‘ordinary families’ by raising it on the rich is hardly surprising. What's striking is how similar their attempts to sell that policy are. Neither talks about ‘soaking the rich,’ or squeezing them ‘until the pips squeak’. In fact, both men's speeches contain explicit rejections of that sort of envy politics. Obama said, ‘We don’t begrudge financial success in this country. We admire it.’ Clegg today emphasised his ‘profound commitment to the value of paid work,’ and said he believes in the ‘universal principle’ that you should keep as much of your earnings as possible.
Instead, they use the language of ‘fair shares’ and ‘shared responsibility’. The twin message, on both sides of the pond, is clear: ‘We don't hate you rich people. We just want to help you do the right thing.’ Whether rich people will see it that way is another matter altogether.
Previous
DavidDP
January 26th, 2012 12:53pm Report this commentIt's slightly more plausible for Obama than Clegg, considering the top income rate is in the 30s in the US compared to 50% here.
I appreciate it's more about loopholes enabling far lower rates though.
Brian A
January 26th, 2012 12:55pm Report this commentI note with dismay that Clegg, like Obama, subscribes to an 'eat the rich, then starve' philosophy. The reasoning behind the rate of tax on capital gains was made clear by Allister Heath in his City AM editorial yesterday since it is a tax on top of other taxes already paid eg, corporation and dividend taxes.
Taxes should be lowered for all and the size of governement correspondingly reduced. Why are no coalition ministers advocating a smaller government able to live within its means, even as an aspiration?
Mr. Green
January 26th, 2012 1:01pm Report this commentBut as we all know, any policy introduced which is aimed at tax-avoidance will be targetted purely at the middle-classes.
it is much easier to nab a plumber doing a bit of "cash-in-hand" than go after a millionaire with a questionable company based off-shore. It's easier to go after an IT contractor working abroad for a little while, not declaring the income, than a millionaire pretending to employ half his family.
It's the middle classes who will be suffocated by this, not the rich and powerful.
Casual Observer
January 26th, 2012 1:54pm Report this commentIf a hedge fund manager is paying less tax than their cleaner, they are either a very bad hedge fund manager, or vastly over-paying their cleaner. If he means that the effective rate of CGT is lower than that for income tax, he's right, but that's not a loophole - it's a policy designed to reward entrepreneurship - not something young Nick would know much about as a career politician, of course.
ROJ
January 26th, 2012 1:56pm Report this commentOf course it's smart politics for Cleggy to ramble on about loopholes and shelters, and everyone nods and thinks about overpaid bankers, but once, just once, could this tribune of the people mention specifically one, just one, loophole or shelter that he proposes to get rid of and tell us how much that will raise?
Publius
January 26th, 2012 2:05pm Report this commentWhile you're on your "fairness" riff, perhaps we can also set off capital *losses* against one's tax? What do you think?
After all, if you invest, your investment can go down as well as up, no?
WIlliam Blakes Ghost
January 26th, 2012 2:07pm Report this commentClegg and Obama. So the two biggest disappointments in 21st Century politics so far both want to stitch up the rich do they?
Not envy politics. Give us a break. The manipulation of class envy of the left in the US and UK is their predominant characteristic.
Screwing the rich will not fix a decade of Whitehall and Washington's mismanagement of their respective economies. This is just posturing and as a result Clegg and Obama should be made to be as disappointed with the outcome of such hopes as people are with them!
DavidDP
January 26th, 2012 2:19pm Report this comment"Screwing the rich will not fix a decade of Whitehall and Washington's mismanagement of their respective economies"
Depends if part of the mismanagement is a sclerotic tax system full of loopholes and the like. Arguably it is, particularly thanks to Labour's tax credit madness.
Asking the rich to pay 30 or 40% instead of 15% isn't "screwing the rich." Either we have a deficit problem or we don't.If we do, then the solution isn't just doing things which impact solely on the poor and middle class. Those with money have to shoulder a bit of the pain as well by perhaps contributing more than the already large 25% of revenues or so that they currently account for.
Hexhamgeezer
January 26th, 2012 2:36pm Report this commentClegg is the epitome of an ignorant, disconnected political class, divorced from the experience of the nation he claims to represent. Indeed, he holds it in so little regard that he wants it subsumed into a continent with a recent history of war and dictatorship.
When an overgrown student like him comes out with phrases like 'profound commitment to the value of paid work' you wonder WTF does that REALLY mean?
Theres a Poltytechnic sociology department badly missing an admissions clerk somewhere.
Nicholas
January 26th, 2012 2:54pm Report this comment"Why are no coalition ministers advocating a smaller government able to live within its means, even as an aspiration?"
Because they are a class of professional politicians whose lucrative incomes depend on the racket of taxation and interfering more and more in our lives. Turkeys don't vote for Christmas. This latest "tax the rich" wheeze is a gift for parasites like Clegg to divert attention from the reality of bloated government, waste and incompetence which are the real evils that need to be tackled.
MichaelE
January 26th, 2012 2:57pm Report this commentRefreshing stuff from Clegg. We need to be pragmatic, not dogmatic on tax. With stagnant wages and growing financial pressure on the middle classes and lower earners, such a move would stimulate the economy far more than even the biggest infrastructure projects. The tax on tax argument for low capital gains tax is a canard. We have had 30 years of productivity gains going to capital rather than labour. This was a necessary and good thing at the fag end of the 70s but over three decades has driven successive asset bubbles as people have sought income from assets or capital gains as it has been easier to make money which is also then taxed at a lower rate this way than through employment, where wages have struggled to keep up with inflation. Right now gains need to go to labour over capital
Sir Everard Digby
January 26th, 2012 2:57pm Report this commentDavidDP The rich do not have to share the pain. Vast wealth always offers a way out not available to us plebs.If it did not,what would be the point in having the said wealth in the first place?
They will simply up sticks and go elsewhere.Once the cash cow has emigrated, the Cleggwit will redefine the term 'rich' and set his sights lower. Obviously the per capita return will be less,so Cleggwit will have to charge a higher marginal rate.
Cue the riots.
As the Cleggwit is famous for not making any decision in less than a decade,we are in no danger.
Baron
January 26th, 2012 3:33pm Report this commentDavidDP, your take on tax feels good, warms the heart’s cockles, no doubt about it, not unlike communism though, it doesn’t work, someone earning £100mn, asked to pay £40mn in tax for the political gnomes to fritter away on their vote securing hobby horses would be either stupid or mad, hard to assume someone who earns that sort of money to be either, instead, hiring a bunch of competent lawyers will save him most of the £40mn for a fee of a couple of million. No man is required to arrange his affairs so as to pay the largest possible amount of tax, remember?
You have a look what happened after the new tax regime was brought in for the non-domiciled.
When Boris Yeltsin ran Russia he, too, tried to get the rich to share a ‘fairer’ tax burden with abysmal results, the Treasury didn’t have enough to pay pensions, the civil servants’ salaries, Putin brought in a flat 15% rate paid at source and, would you believe it, the tax revenues by far exceeded the highest expectations, what do you make of this, then?
Brian A
January 26th, 2012 3:57pm Report this commentNicholas is, of course, right in answering my question about the lack of ministerial support for smaller government in terms of the self-interest and greed of our ruling classes. However, the culpability extends further into society as a significant proportion of the population has become overly dependent on government spending on services and entitlements, believing that only more government spending can solve the country's problems. Politicians have tapped into this sentiment seeking votes with spending promises and are unlikely to risk electoral oblivian with meaningful rather than cosmetic cuts in spending, even if they are in the long term interest of the country.
J H Holloway
January 26th, 2012 5:29pm Report this commentDo I detect a huge guilt trip?
Consider this....
A stay-at-home yummy mummy whose banker husband earns £150k+ will be in the 50 percent tax band.
Mrs and Mrs Clegg of Putney can earn £149k each - a household income of £298k - and still be in the 40 percent tax band.
This iis an old metropolitan trick. UK tax policy has been bent over to suit liberal metros with two well-paid jobs, that's why they go so off-piste if any kind of married tax allowance is considered.
Mind you, Clegg is quite right about the £10k policy: so lets pay for it by plugging the gap of 40 percent tax at 42k and 50 percent at 150k by bringing in a 45 percent rate at £90k.
That'd catch all those over-paid GPs, lawyers and senior media people who are always parading their social-democratic pretensions....
Baron
January 26th, 2012 7:28pm Report this commentNicholas @ 2.54, Brian A @ 3.57, so superbly put except for this, the culture of entitlements that suits both the political gnomes and a growing number of the hoi polloi ain’t sustainable, sooner or later it has to implode as those who fund it will either revolt, begin to cheat big, move to countries with more sensible tax regimes.
christopher brown
January 26th, 2012 8:48pm Report this commentoh nick you poor soul havnt you worked out yet your new mates do not want to upset their rich buddies or stop their banker friends big bonuses You need to get out the mess you are in and ditch your ultra right wing tory bully boys because they are screwing you like they screwing us
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