Thursday, 8 September 2011

A few thoughts on 50p

Given that there is quite a bit of commentary about the top rate of tax knocking about, I thought I would pitch in my own random thoughts.

1. I realise that I have lost any emotional attachment to high rates of tax for high earners for their own sake. There was a time when even if I heard a convincing argument for cutting top rate tax my emotional reaction would kick in and ensure I either didn't think about it too much (and thus might need to change my view) or give me a spur to find a counter argument. For whatever reason, and I'm geniunely not sure why, I don't have that reaction now. I could be convinced to cut taxes at the top end.

2. But I don't find the arguments advanced so far for cutting the top rate convincing. I don't believe current rates act as a major disincentive, nor do I think therefore they impede growth. What's more, in common with others, I find the attention focused on the 'burden' on the 'wealth creators' rather irritating. It sends out the messages that a nation of 60 odd million is hugely dependent on the magical talent of a few thousand.

3. Unfortunately, however, the current system does mean that we raise a lot of a relatively small number, and if a fair chunk did decide to emigrate it would leave a hole. It's a big if, given the failure of a threatened tax exodus* to materialise on numerous occasions, but we should consider the possibility. But then doesn't that actually suggest we might want to try a combo of a lower rate but kicking in lower? Just a thought.

4. If the new top rate doesn't raise much, isn't that more an argument for closing down loopholes than anything else? If my tax rate was put up I would simply end up paying it, I've never really understood how/why it us that people earning a lot more than me are able to avoid this.

5. Let's be honest - there was a huge dollop of politics in introducing the 50p rate in the first place. It is already proving it's value in that respect, as the Tories give the impression of genuinely not knowing what to do. It's a bit enjoyable to watch, but not really how we should decide tax policy.

* movement of ok yah people

1 comment:

Robert said...

Getting older, it happens, go back twenty years and I would be banging my hand on a table to strike about pensions, now of course being disabled, not working, not paying into a tax pot, I really do not give a shitte