James Forsyth

Taxing issues

Taxing issues
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Today was a reminder of the tax change that would give Tory re-election chances a massive boost, raising the threshold at which the higher rate kicks in. Indeed, electorally dealing with this is far more important than the abolition of the 50p rate and has been made more so by the decision to link the withdrawal of child benefit to the higher rate.

During Gordon Brown’s time at the Treasury, the number of people paying the higher rate almost doubled - principally because of fiscal drag, Brown didn’t link the threshold to earnings. This means there are a whole slew of people paying higher rate tax who are comfortably off but are not members of the super rich by a long stretch.

If George Osborne was, in his pre-election Budget, able to announce that no one who earns under £50,000 a year would pay the higher rate then he would be sending an important signal about aspiration. He would also pose a political problem for Ed Miliband, would he oppose or support? To oppose, would be to put himself — like Neil Kinnock and John Smith in 1992 — not just against those who would benefit from the change but against all who hope they might one day.