Labour planning new 45p top rate of tax

The latest rumour is that Brown will pay for his VAT cut with a delayed 45% rate of tax for those on £175,000 and over. So off the radar has this move been that (unlike a VAT cut) it’s not even in HM Treasury’s ready reckoner. Enough is now know about tax economics at these salary levels to establish that raising the top rate results is a false god – the super-rich don’t hang around to be taxed. That’s why top tax levels have been falling worldwide to compete for the high earners. France has cut its top rate from 48% in 2003 to 40% now. So “tax the rich” is a useful political slogan, but is economically futile – as governments around the world know. As Boris Johnson said at the last Tory conference, we may not like the Masters of the Universe but there are plenty other parts of the universe they can move to.