TUC says 40 means 40

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The Times (amongst many other papers) has reported that:

Trade unions will this week call for higher taxes on high earners and curbs on the City as part of a campaign against the super-rich.

At this week's TUC annual meeting in Brighton, union leaders will release a pamphlet arguing there is a greater gap between the poor and the wealthy elite than in Victorian times, and that the rise of the super-rich has harmed society.

The TUC wants higher minimum tax rates for those earning more than £100,000 a year, a tougher line on offshore tax havens, the treatment of capital gains as income and a tightening of nondomicile tax status.

Of course, they have this wrong. There is no campaign against the super rich: there is a campaign that they justify their pay and make their appropriate contribution to society, which is something quite different.

The TUC campaign is backed by a new publication, "Do the Super Rich Matter?" written by Stewart Lansley. The core tax ask is a development of one I made in my TUC pamphlet published earlier this year, entitled "The Missing Billions" and is a demand for a minimum rate of tax for those earning over £100,000 a year. The suggested minimum rates are 32% at £100,000, rising to 37% at £150,000 and 40% above £200,000.

What this would in effect mean is simple: those earnings £100,000 would pay a minimum of £32,000 whatever tax reliefs or allowances they wished to claim. Those earning £200,000 would pay a minimum tax of £80,000. In other words 40% would mean 40%. Those enjoying this level of earnings would, bar a personal allowance, which I think they should keep, have no tax reliefs given for any reason, whether they pay into pensions, contribute to charities, VCTs, or anything else. They would simply pay tax on their gross income.

The logic is simple: tax relief is equivalent to government expenditure. It should only be given to those who need it. By withdrawing the reliefs as income increases the benefit of tax incentives for saving, for example, are given to those who need them and not to those who already enjoy sufficient income to save and provide for their pension without any incentive being needed.

It's exceptionally hard to see how realistic objection can be raised to this proposal. It's about tax simplification for those on high earnings; it's about making best use of government resources; it's about tackling tax abuse; it's about reducing the wealth gap; it's about creating a more efficient tax system at lower cost and it's about not increasing tax rates whilst ensuring the tax system is genuinely progressive.

If you can see a good objection, let me know. But I'll take a lot of persuading. So, I think, will a great many people.

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