I've looked at the letter in the Telegraph demanding abolition of the 50p tax rate for those earning more than £150,000 a year because that will, the 537 who signed it say, increase entrepreneurialism in the UK and so jobs.
I've scanned down the list. I've looked at their company names. Over 90% are from limited companies.
Most limited companies pay tax at 20% in the UK. The effective tax rate of those who supposedly pay the large company rate is little above 20%.
The UK has its entrepreneurial tax break: it's the justification given for providing such low rates of tax to these companies. So all these people have all the tax breaks they need to preserve and reinvest their profits in their businesses. The 50p tax rate has nothing whatsoever to do with that issue therefore. And there is a second tax break for entrepreneurs - millions of capital gains allowed to them at a tax rate of just 10% when they sell their enterprises. The tax system could not be more generous to job creation.
In that case this letter is all about something else: let's call it greed. As I've argued here.
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One of the more unsavoury aspects of the 2010 UK General Election campaign was the way in which the nature of the economic debate around the parties’ manifestoes seemed to be unduly influenced by a few dozen corporate oligarchs writing to the Telegraph, Times or FT attacking, for example, Labour’s so-called “jobs tax” proposed increase in National Insurance contributions (despite the fact that the estimated employment effects of tax hikes in most of the empirical literature are tiny). And ever since then we’ve seen the same tactic at work at regular intervals – every few months one of the main broadsheets publishes a letter saying “scrap the 50p rate”, signed by the same businessmen. And the Telegraph is also now arguing that corporations should have the vote: presumably they would allow a few hundred oligarchs to dictate economic policy, introducing what amounts to a corporate fascist state.
In response to this kind of sounding off by “the 1%”, it would be good if the TUC could organise a letter saying “keep the 50p rate” or indeed “introduce a 60p rate”, signed by (say) five million trade unionists. It would have to be delivered to the newspaper offices in a freight container to fit all the signatures on it (although an electronic version would certainly be more environmentally friendly!) . That should give you some idea of the relative strength of the argument in terms of the numbers of people backing each position. Certainly opinion polling at the moment shows strong public support for the 50p tax rate.
Excellent! Go for 60% top tax rate.
Good buy TINA hallo TAA!
Another anti-50p letter in the Telegraph?
[…] good friend Howard Reed has written this on the blog this morning: One of the more unsavoury aspects of the 2010 UK General […]
Isn’t the strongest & simplest argument that the economy would be better served if the marginal income were left alone to be spent/invested/banked rather than taxed? To help growth, innit.
But that isn’t what would happen to the marginal income at this level. So it won’t help growth. Innit.
Just so you know the “as i have argued here” link is a 404
sorry = haven’t got time to change now – it was a blog on 50p tax last night – see links to the right hand side of this page
Sorry to throw a spanner in the works, but I’m just wondering – Shouldn’t people be pushing for the 50% tax rate to be imposed also on corporations? Considering that most of the top 1% have ‘incorporated’ and therefore are not paying 50% but less than 30% anyway, they are effectively getting away with it. I think you mentioned in an earlier post that only 40000 or so are affected by the 50%. Should corporations and major companies have this advantage over wage and salary earners?
I argue that the income of small companies should be taxed on their owners
What about corporations and large companies? Should their tax rates be different to salary/wage earners?
not radically – no.
But there is always going to be a compromise in a progressive tax system
I think the rate should be higher than the basic rate and lower than higher rates but with, of course, additional tax due on receipt from the company at higher rate
We actually had a very good corporate tax system in the 70s o wards and when controlled foreign company rules were really in operation they were fairly robust
The EU mantra of free movement of capital has undermined it