Duncan’s Economic Blog

That 50% tax rate…

Posted in Uncategorized by duncanseconomicblog on April 22, 2009

The new ‘super’ rate seems to be taking up most of the headlines.

As I said earlier, I think it is just that higher earners pay their share and I think, politically, it is the type of issue I want to fight on.

Doubtlessly the research from the IFS saying it won’t raise much cash will feature prominently from Tories over the next few days.

Working out the likely behaviourial effect from proposed tax changes is a very hard task. Obviously a higher tax will lead to more people trying to evade it.

So, we need to focus on improving tax collection and make evasion harder.

As to the issue that ‘high earners will simply leave the country’… Will they really? Obviously the ultra rich (Philip Green, the Barclay Twins, etc) already have (Monaco mainly). But those earning £150-300k? That mainly work in finance in London? Where will they go?

I know people that earn that much, and they don’t vote Labour!, and I can’t imagine most of them uprooting their lives, moving their kids to a new school and heading off to Zurich or Singapore. I might be wrong. How many people will actually leave? As opposed to just threatening to leave? Seriously.

I will say, for the third time in recent days, we can’t pay back all of this debt by ‘taxing the rich’. But the rich should pay their fair share.

We’ve got a year until this tax comes in. Let’s beef up HMRC’s evasion teams. I imagine there are a fair few unemployed accountants and lawyers we can hire.


4 Responses

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  1. Mr. Mxyzptlk said, on April 22, 2009 at 3:59 pm

    I think this tax raise is definitely the way to go in fact even higher…
    then when super clever brilliant wonders in the city of london.
    realise they can fiddle the arse out of the tax system better as
    self employed Directors.(or entrepreneurs)

    they will all leave the city with their massive brains and cleverlyness
    Ignoring the sound of bow bells….And then start up their own
    company’s employing lots of people making loads of money
    well for everbody.

    and Britain will be great once again

    but they do need a push…so tax tax and tax them again
    they will thank labour in the end

  2. newmania said, on April 22, 2009 at 4:18 pm

    Doubtlessly the research from the IFS saying it won’t raise much cash will feature prominently from Tories over the next few days.

    Yes thats a consistent conclusion born out by endless research by a universally respected organisation are you such a thing ? Nope .Even if it were not true , its a token tax designed to mislead up to the election as you made clear in the excellent summary on Hop`s blog .. The IFS actually concluded the 45p rate would lose money so this ,I take it ,will lose more .But thats just Brown doing his thangf ,my main worry is loon growth forecast on which this silly budget was based
    According to the IMF, we are going to have our economy shrink by 4.1% this year, and 0.4% in 2010. , Ruth Lea said the fall in UK GDP of 3.5 per cent for 2009 looks reasonable but, for the economy to achieve growth of 1.75 per cent in 2010 it would require an extraordinarily vigorous bounce back, which is simply not credible. Why? Because the reasons for much of the growth leading up to the financial crisis, buoyant public spending and a rapid increase in consumer indebtedness, cannot be replicated ……end of ?

    Considering your ownership of a blow up Gordon Brown Doll I take your slight concern as an admission that darling was talking arse on growth .

    IMF here we come ,

    • duncanseconomicblog said, on April 22, 2009 at 4:28 pm

      Yes, I do think the grow estimates are wrong.

      You’ve tempted me into one more post today…

  3. […] A Budget Pick’n’Mix By captainjako Duncan has a piece on the 50% tax rate on his much-admired economics blog. […]

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