Gordon Brown introduced the 50% top tax rate in the UK close to the end of his term as Prime Minister. It cuts in at an income of £150,000, and the excuse was to help the public finances, the real reason was to tap the envy and class hatred of his voting base - the people who hate success, who wish they could earn that sort of money, or rather be given it. The Daily Mail reported that the Institute of Fiscal Studies has said the 50p tax rate may not have raised any extra money because of the incentive it created to rearrange income sources and investment to avoid it.
There are plenty of good reasons to scrap it, primarily because it is one of the highest top tax rates in Europe. The UK already has the highest corporate tax rate in Europe. The main problem it creates is being a disincentive to entrepreneurs staying in the UK and investing here. What great incentive is there to taking risks in the UK if you face losing more than half of your income (including "National Insurance", which is another income tax) to the state?
Of course as Harry Phibbs at the Daily Mail says:
There will be plenty who will shout about fat cats and bashing the rich. The merchants of envy will always have a crude populist appeal.
It sends a message that Britain isn't a friendly place for making a lot of money. Yet it is obvious that there is only one reason why it likely wont happen - the class envy that somehow people on higher incomes "aren't paying their fair share".
Allister Heath of City AM points out some real facts to show that, unlike the distorted image spread by the Labour Party, trade unions and leftist media, the truth is that the British government is dependent on the "Atlas" of high earners. The idea that the "rich" have never had it so good, is proven as nonsense.
1% of income tax payers reach into the 50% tax rate, in that they earn over £150,000 a year. Many of them are not paying more on most of their income (as the tax rate is marginal), but together than 1% pay 27.7% of the income tax in the UK. The equivalent top 1% of taxpayers in 1982 paid only 11% of all income tax, by 2000 they were paying 21.3% - so much for the Tories being the party of the "rich".
14,000 people in the UK earn more than £1 million a year. They together pay £14.2 billion in income tax. They pay almost as much income tax as the 13.9 million people who earn less than £20,000 a year.
In other words 14,000 pay as much in income tax alone to pay the entire Home Office budget, which covers Police, prisons and the entire criminal justice system.
The top 1% of earners together pay enough income tax and national insurance to cover half of the NHS budget, but the legions of worshippers of that religion (the UK's largest) are hardly grateful for that.
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.
Indeed, the disgusting lie that somehow everyone on higher incomes is some banker who made a lot of money out of bankrupting the economy should be confronted. I heard it again this morning on the BBC. The UK's budget deficit (heaven help those who don't know their deficits from their debts) is NOT caused by "bailing out the bankers" because not a penny has been spent on bailing on banks this year, and the proportion of public debt attributable to that is less than 10%.
The long term goal of UK fiscal policy should be to reduce the overall tax burden. The 50p rate should go, but concurrent with that, in part to placate the envious, but also to contribute to the reduction in tax, the first £10,000 everyone earns should be income tax free. I mean everyone, not clawed back from higher income earners by lowering thresholds, but make so everyone knows that the first £10k a year is their own money. Workers, students, employers, entrepreneurs, the retired, everyone.
The only moral argument ever put for the 50p rate is to claim the "rich" should "pay their share", yet with 1% of taxpayers paying over a quarter of all income tax, means they do far far more than that.
Yes some have high earnings because of luck and inheritance, but many more do so because of the career path they chose, the businesses they set up, the investments they made and besides all of that, it is their money. If you haven't stolen or defrauded people, then you are morally entitled to the fruit of your efforts.
" Rather than harass such people, we should give them a medal for public service, in pointing out just how stupid our tax laws are... It's time to make tax simple and certain. And to ensure that our tax officials are public servants, not public inquisitors."
Part of that is to lower taxes across the board, whilst abolishing complicated rebates and exemptions, whilst putting a serious effort into cutting spending. Nothing else will give the British economy a chance to be more than anaemic whilst the Eurozone looks to become the world's biggest welfare state economy, and the US remains addicted to borrowing from China to spend its way to depression.