How to tax the rich?

As if to prove he’s still a left-winger, Frank Field today gives a lecture calling for an extra 10% tax on earnings over £150k that could be completely offset by charitable donations. In other words, “if you don’t give this to charity, we’ll tax you” – Field believes people spend their own money more wisely than bureaucrats. 

I agree in principle, but also believe that taxing high income removes the incentives to earn it and the net result is that less money is produced. (Darling’s disastrous tax on non-doms, for example, will result in a net loss to the Exchequer.) So why not adopt Field’s policy for a fifth on income tax already collected? That would help “roll forward society” as David Cameron puts it. One for the Tory policy board?

All this reminds me of Friedman’s “four ways to spend money” and how the least efficient is when someone spends somebody else’s money on somebody else.