I took part in a debate on Radio 4's PM programme yesterday on the 50p tax rate. You can hear it here, 32 minites in.
It was amazing that I was put up against a landlord - a rentier - not even an entrepreneur in this debate.
But that showed the reality of this issue: this is all about wealth preservation and nothing to do with wealth creation.
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In large part I think this is because the term ‘entrepreneur’ has become debased, Richard. This was evident in your opponent’s CiF column, yesterday, where she simply conflated ‘entrepreneur’ with someone who earns a lot of money (a point you’ve picked up on, pretty frequently). I’d also add that another term that’s been equally degraded is ‘innovation’. I frequently see the results of this dumbing down reflected in the work of students (Masters not undergrads). From the discussions of developments that are taking place in their organisations we often see evidence of entrepreneurship and innovation, but also – and too often – incremental or common sense change dressed up as entrepreneurial and/or innovative activity. To be fair to a lot of my students they often recognise this too, but the managerial culture of their organisations is such that no one would dare point this out.
Richard
Did you see waht City Am editor and Taxpayer alliance member said on the 50p thing? According to him the rich pay too much for everything!
see below
THERE are many reasons why the top 50p rate of tax should be axed. It sends a message that the UK doesn’t like successful people; it has made Britain less competitive in the race for talent and capital; and the job losses and reduced economic growth it will cause means that the overall revenue raised by the government will be lower, over time, than had the tax not been introduced.
The 50p tax’s sole purpose is to hurt a few people and fuel class warfare. Even those on low incomes who will never pay the tax will be worse off because of it. It is also a myth to believe that the “rich” do not pay much or enough tax in today’s Britain.
If you don’t believe me, take a look at the facts. There are 29.9m income tax payers (out of a population of 61.8m) who earn at least £7,475. Roughly 727,000 people have an income of at least £100,000 a year. Of these, 369,000 earn £100-150k; 157,000 earn between £150-200k; 158,000 earn £200-500k, 29,000 between £500k-£1m and 14,000 earn a £1m or more.
This implies that 358,000 people earn £150,000 or more; roughly 308,000 of these pay the 50p rate. Some of these will be non-doms, who pay full UK income tax on UK earnings (but also derive earnings from overseas, which are not taxed). These figures do not include capital gains.
A huge share of the tax take and hence of the money used to fund the NHS, schools and welfare is accounted for by a tiny minority on high incomes. The top one per cent of taxpayers (roughly speaking, those on £150k and above) will pay a record 27.7 per cent of the total income tax take in 2011-12, according to HMRC (they earned 12.6 per cent of total income, down from 13.4 per cent five years ago). This has increased from 26.6 per cent the previous year, 21.3 per cent in 1999-2000, 14 per cent in 1986-87 and 11 per cent in 1981-2. History tells us that cuts to the top rate actually increase the share of tax paid for by the rich; there was no need for Gordon Brown’s raid.
Another astonishing statistic is that the 14,000 people on £1m a year or more will pay £14.2bn in income tax this year. They will contribute almost as much to the exchequer as the total paid by the 13.93m people earning up to £20,000 a year, who will fork out £14.9bn. Those on £1m or more now pay 45.5 per cent of their income in income tax, up from 35.7 per cent in 2008-09 (they also pay national insurance).
No wonder many are questioning whether they should stay in the UK, and many global firms are now creating high-paying roles outside of the UK.
The more rich people, the more tax receipts. Paradoxically, of course, that means axing the 50p tax rate. Just as crucially, it must not be replaced by any other tax and certainly not by a wealth tax or mansion tax.
All sections of society already pay far too much tax. A wealth tax would be a moral and economic disaster, double or triple taxing income and making a mockery of property rights. We need growth and jobs, not hate and punitive taxation. It is time to halt the war on wealth.
There is no ware on wealth
But there is a war on the poor
That’s the real issue – and that’s why we need the balance to be corrected
A 50p tax is a small step in that direction
The tackling of tax avoidance a much bigger one
[…] is remarkable slight although these claims are often made. Richard Murphy of Tax Research UK says there is no evidence of people relocating in significant numbers. We had vastly higher marginal […]
Did anyone hear Deanne Julius on R4 ? V embarassing. Asked to justify her position she could only come up with;
1) Historically, in the 70s, high tax rates caused people to leave the UK.
er, those were 98% not 50% & times were, generally, v different
2) She’d met people who said they were leaving
as the interviewer pointed out “so what?”In addition, the person she suggested was leaving was not an entrepreuneur/wealth creator, it was a hedge fund manager.
Couldn’t leave too soon imo.
Indeed: one of the best things about this letter is that it showed they had no idea what they were talking about
[…] of course the rich need to be paid more to incentivise them, while the poor need to be paid less. Richard Murphy demolished the eminent economists’ argument for this tax cut on the Today programme last […]