The sickness in our society could not be better illustrated by two contrasting headlines. From the Mail:
George Osborne confirms intent to end 50p tax because it is 'uncompetitive'
Ministers plan removal of rioters' benefits
There is no evidence that the 50p tax rate is uncompetitive: companies are coming to the UK, no one seems to be leaving - as I've pointed out, often.
More than that - without sufficient tax data as yet to decide what the yield from the tax is any decision is clearly premature. Which means that there is no economic basis whatsoever for abolishing this important tax rate.
But there is enormous symbolism to it: it says the rich matter, a lot. Especially to this government. Even though the evidence is that it is many of the rich - and the businesses that have made them rich - that are the cause of a considerable part of our economic malaise. Banking, the promotion of excess consumption, the privatisation of social services: all these things are breaking down essential trust in society and making a tiny number very rich indeed - and Osborne wants to reward them for the harm they do.
I have no problem with those who have committed criminal acts being punished. But the other headline makes clear that those who looted - who believed what they are told that they are what they consume, even when they're being denied any chance to take pat in that currently (and wrongly) accepted definition of society - have no worth. In fact, what dignity they had as human beings is now to be denied to them. They are condemned.
I have to say that a government that can create such headlines on the same day is corrupt at its very core. But they cannot see that, I'm sure.
I'd presumed that humanity had advanced beyond this pre-Dickensian view of right and wrong as rich = right = good and poor = wrong = bad. I'd thought that One Nation Tories' legacy was strong enough to ensure we'd never have a party offering such views again.
But I was wrong.
And yes, I am depressed by them. Quite physically so. And I'm frightened of its consequences. Because all hard right agendas require the creation of 'an other' group to hate. The Tories seem intent on creating such a grouping - and have begun the process of separating them from society. The risk inherent in this is terrifyingly high. And what's really scary is I think they know that, and are doing it anyway.
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Don’t let it get you down. We need you to keep at it!
Interesting that you immediately link the 50% tax rate with being rich, which of course isn’t necessarily so.
Why don’t you find another way to attack the rich – this is a cheap shot and does exactly to society what you claim to detest,
Oh who is it aimed at then?
If you think those on £150k plus a year is not being rich you’re – as Danny Alexander said – in cloud cuckoo
This is where you come unstuck – people can be earning 150K or more but may have substantial debts (and commitments), like paying for qualifications. It is possible that they have no savings.
Earning 150K doesn’t mean you are rich, it simply means you are well paid. Now if someone earned 150K return on investment, now that is rich.
With the greatest of respect, get real
Open your eyes
Stop being offensive
“companies are coming to the UK, no one seems to be leaving — as I’ve pointed out, often.”
But plenty of individuals are leaving. Check out the waiting lists to get into any of the British schools in Hong Kong or Singapore. They’re overwhelmed with ex-pat Brits.
Three university contemporaries of mine have moved out there this year alone to do banking or law. That’s getting on for a few 100 thousands lost in income tax.
a) You live in a rarified society, clearly
b) Such moves are commonplace, and have always been in that society
c) As many come as go – that’s what happens in some sectors
d) In other words – you quote selectively, I think
e) If only we did not have the domicile laws we’d collect a lot more from those coming
a)True, however it is still anecdotal evidence that your statement “no-one seems to be leaving” is an exaggeration.
b)Also true, however it is at least worth checking whether the 50p tax rate exacerbates this.
c)Not proven, and this is the key question isn’t it? Some businesses/people are still moving to the UK despite the 50p tax rate. Would there be more if it was lower? Would any increase in the inward flow exceed the loss per head due to reducing it?
d)I agree that we can’t extrapolate based on the three individuals cited, but as a rebuttal of the assertion that “no-one” is leaving, it is fair comment.
e)Probably true for those that come here despite the rules, but how many would leave?
I am a long way from being affected by any change in the 50p tax rate, and I think that it would annoy a lot of people if it was reduced because it would benefit people who are already less affected by the downturn. However, the key thing is surely to set the rates to whatever level will bring in the most revenue for the country as a whole. What the optimal rate is for this will depend on the rates in other countries where businesses/people are considering a move. This doesn’t mean we need to have the lowest rate, as other factors will affect the decision, but we cannot pretend that it has no effect.
Oh God, the Laffer curve
It’s never existed
we can charge what we like
Because all the talent we need is here
And it’s only the sad ones who leave
Who we can do without
So sure a 50% rate has an effect – it drives out the scroungers and those who refuse to play a part in society
Listening to him this morning you’d expect Cameron to be all for it
High rate tax payers tend to be in a rarified society. But they are leaving the UK.
Evidence?
No one has found any
And also evidence any resulting harm – because I reckon we’d win
1) I went to Cambridge 25 years ago and half my contemporaries are lawyers, bankers or accountants. But by definition the 50p tax band only applies to those of a rarefied income. I admit that I am quoting anecdote. But what you seem to fail to grasp is that, for instance, Blackrock Inv Management doesn’t leave the UK but it posts all its fund managers in London who cover Asia out to HK. Whole companies don’t have to leave, just certain desks or divisions. Ditto with law firms that sent their staff who cover HSBC out to HK rather than cover them from London.
2) Commonplace, yes, but getting more so. Hence the fact that all the International schools in HK have doubled in size in the last five years and are all full and turning people away.
3) “As many come as go”. But you have no evidence to back this claim up. My experience of finance and legal industries is that more are going. Other industries may be seeing an opposite trend but I suspect finance and law covers the majority of 150k jobs.
4) Agree with you about the domicile law. My personal hobby horse is avoiding stamp duty by buying UK property through an offshore company. Surely best to deal with that (5% on all those Russian oligarchs buying £60m houses) first before moving onto Mansion Tax.
I wonder if we are moving towards a fascist state. The One Nation Tories have not existed for a long time and the tragedy is that they just do not seem about people less fortunate than themselves. Unfortunately their right wing press allies prefer to feed on the media frenzy of the looting rather than discuss the economic turmoil and where the responsibilty for this lies. I hope that Ed Miliband makes a measured and thoughtful speech this morning. He knows from the experience of his Jewish parents what the end result of the creation of ‘the other group’ might be. We should remember the comments of the Birmingham muslim father who behaved with such dignity after the death of his beloved son. David Cameron should have met him on his visit to the West Midlands because his comments did much to prevent further unrest in Birmingham.
I should have added this to my previous comment – shame on the Liberal Democrats for propping up this government.
Horrifically true.
We move backwards to Roman times when the the Romans were citizens and all others were slaves with no rights at all of any kind. That’s the societal model re-emerging here, with the bankers and their very rich chums as the new Romans. A fifth reich, perhaps.
BB
Anyone remember the case of the premiership footballer, it was revealed during his divorce that he payed almost no income tax on his substantial earnings while playing for a top 3 club.
I assume that the removal of benefits applies only to those who have been sentenced to a spell in prison and that they can re-apply following their release. Returning to society without any support is a recipe for disaster both for the offender and their family, if any.
In a fair society it must be recognised that there will be a proportion who cannot or will not work and make a contribution and they must be provided with an adequate basic income in order to keep their heads above water. Almost all these benefits wil simly be spent back into the local economy and taxation system so the overall cost is minimal – compared with driving these people to rioting and prison. It is often pointed out that a stay in prison costs more than a room in a 5 star Mayfair hotel.
Those countries with a fair and stable society seem to have managed to master this fact. Even the very wealthy in these societies can walk to their favourite restaurants at night without clambering over people settling for the night in the streets and they can return home without finding their homes ransacked. Everyone wins if these basic rules are followed.
No, they’re set to lose it of they go to prison or not http://www.telegraph.co.uk/news/uknews/crime/8701617/UK-riots-rioters-could-lose-benefits-Iain-Duncan-Smith-says.html
Curiously, or rather typically, IDS doesn’t dwell on how these people are supposed to live when they’re released from prison. Perhaps he imagines employers will be lining up to employ them the same way they are to employ the long-term severely disabled currently being forced off sick benefits into the workplace by the ATOS ‘testing’ scam.
BB
Thanks, Bill – I did not imagine that IDS could take this viewpoint without thinking of the consequences. Churchill once said that this country runs best with a population of 35 million. What do we do with the rest – starve them or ship them off to Australia? In reality, I suspect that they wil have to rethink this idea.
Churchill said many times when he was a Liberal that you should tax land but nobody seems to want to remember that. I really don’t know what special economic wisdom he had about optimum population but perhaps if we did have aproper tax on land we might have access to the vast acres (70%) owned by the 1% and then we wouldn’t feel quite so crowded.
70% of the land BY AREA is owned by 1% of the population.
If you look at the value of land it is much more evenly distributed.
A Welsh hill farmer might well own 400 acres but probably makes an income of £15,000 per year from it.
40 acres of central London though and you’d be as rich as the Duke of Westminster.
You can buy thousands of acres in Scotland for the price of a nice London flat.
Carol, those who study economic geography will tell us that there is an optimum population density in relation to climate, relief, soil etc but that depends upon a fairly equal distribution.
I am told by my legal friends that much of our land has not been registered properly and may be owned by trusts, nominee companies etc, thus clouding the issue of ownership. Recently, after a long, difficult and expensive search, we discovered that a parcel of farmland in Devon was owned by the Church Commisioners.
It will be a brave politician who introduces such a tax and demands proper registration of land. I think we can guess who the others are who make up this 1%, after allowing for BRB.
“George Osborne confirms intent to end 50p tax because it is ‘uncompetitive’
Told you! What’s ‘uncompetitive’ about it though, is unexplained. Perhaps it is ‘uncompetitive’ because the rich are paying more tax!
And, heavens above……that will never do!! 🙂
“The rich will leave”
Time to start looking at the double taxation agreements (they are renegotiated every few years) – you earn money here, you pay tax here.
Isn’t that largely the case already.
Roman Abromavitch lives in London but “earns” his money in Siberia.
If he were charged income tax and capital gains on his Siberian mineral wealth he’d leave London.
Now that may or may not be a good thing but he certainly spends lots of money in the UK which employs people.
Please don’t talk nonsense
Those earnings belong to companies, not him personally, so your comment makes no sense
Roman Abromavitch “lives” in the UK (certainly long enough to be included in Sunday Times UK Rich List).
He’s a non-dom and pays no income tax or cgt in the UK. Apart from Chelsea, which is loss-making, I don’t believe he has any other UK business interests.
Unless he is living off capital with no income generation (no salary, dividends from his mineral wealth or investment income) which seems unlikely then he evidently has a large annual income.
If he were made to pay UK income tax on this (which was the original point I was responding to) I’m sure he would leave.
As I said that may or may not be a good thing for the UK economy/society.
Then we differ
If he left his absence would be enormously appreciated – not last by all who have no love for his impact on football, which has been unfortunate at best
the same can also be said for his contribution to divisions in Uk society
I’m no fan of Abramovitch. But he does employ many people in the UK and keeps the yacht chandlers of Mayfair in business.
Hence the loss of non-doms does have a cost to offset against the benefits in terms of greater social cohesion.
I think we can agree that a fairer property tax goes some way to making the wealthy more obviously pay a fairer share.
I suspect he does none of the things you claim – certainly not enough to have any serious impact on the economy to offset the gross social injustice our domicile rule allows – and which creates divisions in society
I’m more than willing to pay for social cohesion
I thought most people would be right now
I think Nick should know that it was not Abramovitch providing those jobs at Chelesa Football club Ltd but the founders of that club 100 years ago.
Chelsea were employing staff long before a Russian Oligarch (where did that money come from?) bought the club.
If we had a sensible property tax Abramovitch would be paying a bit more than the £2.100 Council Tax for his London home.
Agreed
I support that in the Courageous State
Rather than poor hill farmers, let’s take the example of the MP for South Dorset who owns a vast estate near Tolpuddle, enclosed by the longest brick wall in the UK. He gets nearly £0.5K CAP subsidy for that. It’s been in the family for hundreds of years. Source of the family fortune: slavery. It’s a very nice part of the country and a small part of it could provide much needed housing but it will never go onto the market because he pays not a penny for the benefit of exclusive use of part of our common wealth – the land. No one needs to own that much land.
I know the wall well. I have friends in the next village to Tolpuddle.
There aren’t many estates like that left these days. Death duties, incompetence, inflation, weak agricultural prices and changes to freehold/leasehold law means that the old landing owning classes have lost most of their land.
I grew up in Cambridgeshire. Some very big family-owned 5,000 acre properties but all built up in the last 100 years. And largely purchased from effete and bankrupt aristocrats.
Most land in England (Scotland seems a little different) is now owned by big pension and insurance funds or farming co-operatives/combines or individual farmers.
I agree that the CAP seems to be poorly run.
That the Drax family have managed to hold onto their house since Elizabethan times I actually think is a nice thing. Are they bad landlords ? Seeing as he is the local MP he seems popular enough.
Is there a shortage of housing in that part of Dorset ? Landowners normally get given a hard time for selling out to a housing developer or out-of-town supermarket and destroying 500 acres of farmland and wildlife.
Just up the road there’s that other toff landowner Prince Charles building houses to his heart’s content.
Nick, I suggest you read Who Owns Britain (Kevin Cahill) before making remarks like that. Dorset, where I live, has many such estates, and Dorset is not alone. Gerald Grosvenor owns half of Mayfair and Belgravia, apart from huge agricultural estates. And as for C. Windsor’s very limited housebuilding (where he retains ownership of the land), you should speak to the locals. It’s a pity he doesn’t help the situation in Cornwall, where he is the biggest landowner and where the locals are being priced out of the market by wealthy second home owners.
Landowners ‘get given hard time’ (oh, poor dears) for selling for development because they get a huge windfall for doing absolutely nothing. If we extracted the full rental value of land for public benefit, the selling price of any land would tend to zero. Think what benefit that would be for young people trying to buy their first home.
Oh, and Drax is not the local MP, Letwin is.
I confirm C Wales’ appalling record as a landlord
He’s profoundly unpopular
Correction £0.5K CAP => £500K CAP!
Warren Buffet completely disagrees with Osborne it looks:
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?src=me&ref=general
RM – if the laffer curve dosent exist (and i admit im not overly convinced) then why dont we set the rate at 60 or 70% or why not go back to 98%?
There is clearly a tipping point on the higher rate tax, but im not sure what it is. It will be interesting to see the results of the review – i think its highly likely that the top rate is not making much revenue, so the question then is, is it doing more harm than good.
i wonder whether they will compare the income tax generated with 50pc compared with 40%?
the fact of the matter is, with NI, the effective tax rate is more than 50%, and I think mentally when you are giving more money to the government than you are keeping yourself out of ever £1 earned it is likely to act as some sort of disincentive (even if its only a minor one).
I anticipate you will disagree as you are quite clearly taking the position that you think the rate should remain/be increased.
As for the premiership footballer mentioned – you shouldnt believe everything you read in the press. UK source income is taxed. Non-dom players will likely have their champions league earnings kept offshore, but everything else will be taxed in the UK. To say he payed no tax is clearly incorrect and sensationalist (assume it was the Daily Mail)
and i agree with the other comments “no-one seems to be leaving” – im not sure what evidence you are using and its been debated before, but there are clearly people leaving (and companies redomiciling as well). Maybe other people are arriving so the net number leaving is low, but if the people arriving are not higher rate payers then there is a loss to the exchequer.
Actually – I don;t wholeheartedly disagree
BUT there are reasons. First, of course there must be occasions when tax can be a disincentive. It would be absurd to argue otherwise, but I do not think that that happens within the trange of tax rates in the UK at present, and academic evidence supports that opinion
Second, if there is a lack of tax collected at £150,000 plus then that is due to the excessive use of tax allowances and reliefs, and the problem is with those, and not with the tax rate. We should be cutting access to those beliefs.
Thirdly, whilst NIC is an issue, remember that a lot of people with income over £150,000 a year also have a considerable investment income on which no NIC is paid at all, and they will also have very low rates of NIC on their employment income, so this is a diversion.
And I do happen to think 50:50 is at least OK, and up to 60 for very high income. Above that I begin to doubt too. But it’s pure gut to say that
Actually the top rate of tax is not 50%. Ask anyone who has a true profit sharing bonus, and they will tell you that they pay for the employers NI out of their profit share, so effectively pay the 13.8% tax on the profit share and then 52% on the remaining amount. So the actual top rate of tax works out to 58.6%. Calling it employers NI is just making it a stealth tax, it is still reducing what the employee takes home out of what it cost the company to employ them, so it is still a tax.
Personally I don’t believe tax should ever be over 50% of what you earn, there are far more ways in which the rich aren’t paying tax that could be used to keep taxes under 50%, like property taxes on foreign property owners and removing the non-dom rules that are exploited.
I am not sure about people leaving becasue of 50% tax, but I do know someone who shut down thier business because of the 50% tax. His view was that for over 50%, he would rather spend time with his family. It was especially bad as most of the income came from overseas but staff were all based here, so the tax revenues were totally lost to the UK. And it probably paid around £100m in tax annually (corporate and employee).
Your story makes no sense
People sell businesses that pay £100m in tax – unless of course they’re loss making. They don’t shut them down to avoid tax
So please stop talking absolute rubbish
Really?
If Wayne Rooney decided to retire tomorrow, how exactly would he sell his ‘business’?
The guy who ran the business was the intellectual property and brand name. The moment he left, so would every single one of his clients.
There is no need to be rude.
I don’t believe you
IP can always be sold
None of what you say makes sense
That’s not being rude
You don’t seem to get it, he was the entire business, none of the customers cared whether any of the other employees stayed or went, they all only cared if he was there. When he decided he wouldn’t work anymore, that was the end of the business and there was nothing the minority partners could do. To blindly believe that the tax rate can be any level and people will still keep working is like believing that there is no need for a minimum wage because people will always work for anything above 0.
And respectfully, I don’t believe you
Not with the numbers you’ve quoted
Nick,
what you don’t seem able to get into your head is that we understand how much damage the City of London has done to the UK & we want, yes WANT, you all to pack your Guccis & Ferraris & D&G shopping bags & just F+++ off out of it !!!
We, the ordinary decent working people of the UK, don’t want you, the City Financiers, here anymore. So sling your hook !
Will we be worse off ? I doubt it, but even if we were worse off in financial terms we would have gained enormously in every other respect.So, in the words of Gloria
” Go, get out the door, don’t turn around now, you’re not welcome anymore”
It makes me laugh (or would do if I didn’t feel like crying) that Gideon said, a year ago, that public sector spending was squeezing out real private sector growth. If we curtailed govt spending then the private sector would provide the investment the economy needed.
Now he says the UK is a good place for people to hold their money safely. We’re like a higher-taxed Switzerland without the scenery. Excuse me, George, where is the massive reinvestment ? Not happening because as Richard told you & as Martin Wolf told you & as all the others did, why would anyone pour investment into a failing economy ? I mean, I’d buy shares in a pawnbrokers but there isn’t much else out there !
William. You are cutting your nose off to spite your face. Just look at the tax contribution of the fs industry compared to other industries. If we lose these tax revenues it will impact the whole country
Would be interested in rm’s thoughts
Big banker bonuses (I’m not defending them, they are a fact of life) generate tax revenue. Over 50pc of their bonus goes to hmrc
The fs industry brought us to our knees
Please do not be crass
What you’ve got at Canary Wharf and in The City are an international gang of crooks and thieves who’ve found a cosy little hole-in-the-wall where the local sheriff lets them reside in peace and quiet in return for a nice piece of their ill-gotten gains. The problem there is they swindled those ill-gotten gains not just from the international community but us as well! If the banks are doing great and the rest of the economy is tanking it’s because they’re thieving it from the rest of us! Get rid of the private banks, put a public one in every high street to distribute what’s our money in the first place and always has been, and the rest of the economy will grow again.
BB
whats the answer then richard – im assuming you arent denying the large contribution that the FS industry makes to the exchequer (as i said before, im not out to defend them but we do need to recognise the size of their contribution to the overall tax take) – sending our FS industry abroad surely cannot be the answer to our problems (however much we would like to get rid of them). more stringent and policed regulation has to be the answer surely?
Read my forthcoming book – the Courageous State
I” write it rather than bother to answer now
whens the book out out of interest?
Should be last week September….still on target
2nd edit now under way