The 50p tax rate has become another coalition cause célèbre for the Lib Dem left: "Look, look what we can stop those nasty Tories doing". Party President Tim Farron said that scrapping the rate for those that earn over £100K would be "phenomenally immoral", and even Danny Alexander said anyone who wanted to scrap it at the moment was "living in cloud cuckoo land."
While I don't doubt that some of the Lib Dem desire to keep the 50p rate is genuine, it is also thoroughly misguided. To my mind, the 50p rate of tax is anti-success, anti-meritocratic, and anti-entrepreneurial. Ultimately, it is illiberal. Liberals have a proud history of advocating self-advancement, and we should be encouraging personal success, not punishing it.
Furthermore, I believe much of the opposition is posturing, to the point that no amount of evidence showing the financial problems the 50p rates causes would shift opinion. There is a strong case that the 50p tax doesn't even generate significant income for the Treasury, and possibly even has a negative economic effect. For example, the letter in the FT referred to in the previous link points out that “The UK has already slipped from second to fourth place as a destination for inward investment”. That is before you start considering the mobility of those that have to pay it. They are people who are able to spend their money elsewhere. Hardly a way to generate growth…
Want to drive success out of Britain? Keep the 50p tax rate. Want to stop people starting a business in Britain? Keep the 50p tax rate. Want to maintain a culture where success is looked down on? Keep the 50p tax rate.
That said, I would not advocate reducing the top rate of tax until the level at which one starts paying income tax is increased to £10k. This is an excellent Lib Dem policy that helps both the economy and social mobility. It is right and proper that our policies should help the least well off first, and increase the spending power of as many people in society as possible at these difficult economic times. However, I do think we should join our coalition partners in declaring Labour's punitive tax temporary.
Over the next few days, at our conference, the Lib Dems will make a lot of noises about defining ourselves. Many of the policies that will emerge from our democratic debates will have a positive effect on the government and the country. Unfortunately though, this is one thing I don't think the conference will get behind.
Comments
Jon / September 14 2011 11:41am
"Maintain a culture where success is looked down upon"
this what Tories ACTUALLY BELIEVE
Adam Corlett / September 14 2011 1:53pm
How about everyone shuts up about the 50p tax rate until HMRC finishes its investigation into how much money it actually generates?
David Austin / September 15 2011 2:09pm
Sure you're not a secret Tory?
Why is the 50p tax rate "anti success, anti meritocratic and anti entrepreneurial'? What evidence do you have that it actually stops people from wanting to make money? Can we not better encourage people to get on and make something of themselves by instead bringing back the 10p tax rate, or lowering corporation tax?
It strikes me as perverse that we should be putting how much you earn on a pedestal above job satisfication, and more widely life satisfaction. The object of an entrepreneur is not to accumulate wealth for its own sake, it is to build a business from the ground up. You don't build a business by paying yourself over £100,000 per year from the balance sheet of your company.
What twisted logic makes you think a budding entrepeneur is going to see the 50p tax rate and say 'on second thoughts, no I'm not going to bother, because one day in 30 years when I maybe have built a business succesful enough that I can pay myself that kind of salary, I might have to pay a bit more tax'.
I am not a socialist. I do not believe in taking from the wealthy as a matter of course. I do however believe in a fair tax system. A system that limits the tax HMRC can take from an individual at 40 per cent no matter how ridiculously high their income rises, is not a fair one.
Linden Parker / September 15 2011 2:20pm
Success shouldn't be measured by how muchone earns.
But we certainly shouldn't think about easing taxes on the richest until we really have tackled poverty and the income of the poor. While there's still people working full time and only just getting by on abysmal minimum wage.
The top of the pile will only ever be accessible by a select few at the bottom; that is to say that not everyone can become rich, no matter how hard they try.We have to make working worthwhile at the bottom with higher minimum (living) wages.
Scrapping the 50% tax will not only be the wrong message, but also the a move in the wrong move for the country.
Jack Williams / October 03 2011 4:13pm
We would be stupid to throw away such a powerful bargaining tool without getting anything in exchange for it.
The Tories are dying to scrap the 50p rate and one day they will, whether we agree or not. So let's exchange the 50p rate now for the tax changes we really want: higher taxes on mansions and capital; lower taxes on low salaries.
Richard Williams / January 08 2012 5:49pm
As Churchill said of the Liberal party "they intend to tax their way back to prosperity"