The 50p tax rate

I had to smile when I heard George Osborne say the 50p tax rate damages the economy and raises next to nothing.

If it is raising "next to nothing" how can it possibly be damaging the economy?

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23 comments:

Anonymous said...

I am a Plaid member and all that. However I DO believe that the taxes in this country are too high.

So for as long as the analysis of Osbourne is correct. The 50p tax rate is damaging as people won't work as much, they may go off shore. Therefore a lower tax rate would remove this (see: laffer curve). I don't though, think that 45 is low enough. Although politically unpopular - I would welcome tax rates of being no more than 35%. And yes, I am a socialist.

Anonymous said...

I'm a nationalist (not a socialist) and I didn't see much wrong with the budget apart from the 7.2% beer duty. Attack Labour, they're our real enemy.

Anonymous said...

Your point is valid. If the 50p rate raises next to nothing how can it be bad for business, if it is so easy to avoid paying it?

Osborne then claims that hitting them for £5bn is ok.. how isn't that bad for business then?

Something doesn't smell quite right, or stinks, it seems.

Interesting to see the LibDems trying to stand on their heads and falling over. The increase in personal allowances (from April 2013) will only save taxpayers up to £180 a year - £15 a month. Of course, those whose incomes are already below the allowance level will gain nothing at all. Millions of pensioners over 65 will lose by the freezing of age related allowances, and ending them altogether for those who will reach 65 in coming years.

That's what you get when you vote Tory or LibDem - screwed!

MH said...

According to Stephanie Flanders, the main reason for the 50p tax rate bring in less than expected was because many people had shifted the taxable burden to an earlier year to take advantage of the lower rate before. In other words it can be done once to reduce your tax bill, but in the long term, there would be nothing to be gained by doing it again.

Therefore if the 50p rate were kept, it would raise a lot more money this year and in future years than it did last year. It was just sleight of hand done for the same old reason of making the rich richer. That's what Tories do.

-

I can't imagine there are too many people who call themselves a "socialist" and who also want to cut taxes for the rich, 13:48.

And yes, I guess there must be a few Tories who call themselves a "nationalist" and who just want to concentrate on attacking Labour. But 14:27's "our" is a very small group, and I'm definitely not part of it. The Tories and LibDems are just as much my political opponents as Labour are.

Keep trolling.

Anonymous said...

Maybe the better option is to tax land value and rather than labour.

Have people seen this film:

http://www.youtube.com/watch?v=wLoB1eCJ93k

Anonymous said...

Anyone can pretend to be a nationalist anonymously online and voice support for dubious policies in order to sow division or discredit nationalism. What is more important is the political expression of these views. Are there any right-wing nationalists in any elected positions, anywhere in Wales? Do they represent anyone?

Owen said...

I don't want to digress, but I'll stick my head above the parapet and say that, in principle, a government saying they are going to tax 50% of anyones income, in straight income tax, is taking the mickey. I'd personally cap income tax at 45% and boost NI rates for the wealthy (which are often ignored as part of the tax equation) and look at closing as many existing loopholes as possible.

I don't like income tax being a simple black and white case of "lower and upper" band. Why not reintroduce a 10% rate for the lowest paid, and a 30% band for middle-to-upper incomes?

I'd much rather see a lower tax allowance, combined with a wider spread of tax bands than what we have currently. The wealthy should indeed pay more, but spreading the burden more evenly and fairly is progressive taxation in its truest form.

As an aside, it's ridiculous for politicians of all colours to say people have been "taken out of tax" when everybody pays tax in some form, be it VAT or levies/duties on things like tobacco and alcohol. Every single person in the UK is a taxpayer, even the "scroungers".

I ryddid neu i’r bedd! said...

I'd imagine there are thousands of centre-right Welsh nationalists who want to put their nation first. Unfortunately Plaid has been infiltrated by the looney left who would prefer a nice write-up in The Guardian to a powerful and successful Welsh nation.

The Labour party is destroying the fabric of our nation. Our addiction to welfare has transformed us into a lazy people who lack self-respect. I want a Wales full of super-rich Welshmen, not victimhood.

Anonymous said...

"I'd imagine there are thousands of centre-right Welsh nationalists who want to put their nation first."

Where are they though? What politicians has that community produced?

I ryddid neu i’r bedd! said...

"Where are they though?"

Farmers, small-business owners, the Welsh-identifying middle-class along the M4 corridor, aspirational young families with children in Welsh medium schools, even the odd wealthy English immigrant who wants to keep the Brummie/Scouse riffraff out!

Old Wales is dying off. Plaid needs to move with the times!

Anonymous said...

"the Welsh-identifying middle-class along the M4 corridor"

Yet many of these people vote for the Labour party. They are not "centre-right nationalists". These people are not necessarily "middle-class" but we know how public opinion lies, it is against the health bill and other right-wing policies. There is greater Welsh identity among the Plaid and Labour votes.

Plaid does need to move with the times but the times are not "centre-right".

Small business owners are not really in favour of austerity they want confidence and incomes to be protected. Small business needs local loyalty to survive and flourish, not wage cuts. Even the FSB is against regional pay.

I support Plaid Cymru and the SNP's response to this unfair budget.

John Swinney critique here- http://www.youtube.com/watch?v=JWoRSiyid5w&feature=youtu.be

I ryddid neu i'r bedd! said...

"Yet many of these people vote for the Labour party. They are not "centre-right nationalists". These people are not necessarily "middle-class" but we know how public opinion lies, it is against the health bill and other right-wing policies. There is greater Welsh identity among the Plaid and Labour votes."

I don't doubt that but people want something new. Constituencies such as Pontypridd are not full of left-wingers anymore. Most people are moderate and centrist, they might agree with the Tories' policies on a lot of issues but won't vote for them due to a combination of the Conservative party's inherent poshness/Englishness and family history.

There are plenty of people who might live in a nice detached house near Church Village, Pencoed or Llantrisant but their parents/grandparents were miners from Tonypandy so they can't bring themselves to vote for the toxic Tory brand. These are the people to target, people are sick of Labour.

Anonymous said...

"If it is raising "next to nothing" how can it possibly be damaging the economy?"

When you make cheap statements like this I wonder how much of your other economic analysis I can take seriously. If the 50% raises little and also deters outward investment into the UK, then it is clearly damaging the economy. You can continue to live inside your own fantasy socialist bubble but I won't cut off my nose to spite my face.

Anonymous said...

You are not that wrong, but people generally don't see themselves as "left-wing" anymore than they see themselves as "centrist" or "centre-right". You are barking at the wrong tree. It is about policies. You are right that these are the people to target but you are over-stating the degree to which these people agree with Tory policies. There is simply no evidence that M4 constituencies are clamouring for austerity measures. I'm sure M4 voters (hope not being too prescriptive here but using your format) will support tax cuts (as would everyone) but tax cuts don't really help the economy as much as investment does.

People are not really sick of Labour. This is a problem in your mindset. Labour is doing well and in Wales Carwyn is doing better than Miliband. This is a problem for the left too. There is not a disllusioned Labour vote at the moment, and in Wales Labour is stronger than ever. The Tories are also holding up with their particular voters. Plaid is staying about the same from the last elections. The only party really falling back is the Lib Dems. The reasons they are falling back is because of the Tory policies they are aligned to. Does this make any sense?

Also you are wrong to say there is one type of person to target, there must be a message for everyone.

It isn't about left-wing or centre-right it is about effective policies and in Wales we do lean to the left not the right. The problem of welfare addiction is a symptom of lack of jobs, not a cause.

Anonymous said...

I ryddid neu i’r bedd!

"I want a Wales full of super-rich Welshmen, not victimhood."

I think that all the parties represented in the Assembly would like to see a prosperous Wales. The trouble is that three of them support the Westminster system which has impoverished Wales down the generations.

I think the day will come, and before too long, when the people of Wales will throw the unionist approach aside, as had happened in Scotland. Wales does have a future in the Union - a miserable one, if the past is anything to go by, which is all we have to go by.

In one sense we are responsible for the mess our country is in. We have believed the propaganda thrown at us from every direction, the press, the media, the BBC - the tool of unionist governments, that we're too small, too weak, too poor, and even too stupid to sort ourselves out. That is the Big Lie which has bedevilled Wales. It has even tainted some in the national movement and in Plaid. They think that it will take decades to get Wales ready for independence. They believe in the 'gradualist approach' of pressing the unionists for this little crumb or that. "Could we please have devolution of policing? - We're willing to grovel for it.

The truth is that we are as ready as we ever will be. Most of the former British and European colonies, now independent states, had far less in terms of national institutions, a democratic system, educated people, than Wales has right now.

We'll wait forever, like Oliver in the workhouse, until we decide to take matters into our own hands.

Leanne has set up a Commission under Adam Price, to examine the issues on an on-going basis. We'll have to fight hard electorally if we are to get anywhere. Being Labour's lapdog will get us nowhere and take forever. Wales' fight for independence started last Thursday.

I ryddid neu i'r bedd! said...

Even Labour's real leader in Wales, Peter Hain has realised that these M4 voters are the key to the future success of the Labour Party.

"New private housing developments have sprung up everywhere, and they feel more like the places I knew when I was living in England than the Neath I first encountered. People living in them view their lives differently from where they were brought up, sometimes just half a mile away.

I witnessed similar trends corrode away the Labour vote in working class areas of South West London where I lived in the 1970s and 1980s, turning traditional Labour strongholds into Tory held marginals. But that did not mean Labour values were less popular, or Labour policies less relevant. It meant recognising as we did in the 1990s that we had lost touch with aspirational working and middle class voters; that we needed to respond to their concerns; and that Labour had to change to win back these seats like Battersea as we did in 1997 and Labour will have to change to regain our high ground in Wales too."

Anonymous said...

Are you telling me then MH that for the rich, you would take an endless amount - 70, 80 even 90%? Is that what a true socialist is?

No. In the modern day a socialist wants to gain the most tax, to help those poorer off. Having a super tax rate will not do this as a) people won't bother working (why work if 1/2 is going to the state) b) take their money off shore.

So we seriously need to figure out which figure is the optimum point at. It certainly isn't at 50%, but is it 36%, 38% 35%?? Once we find this out, we will gain more taxes (even though we tax the rich less).... which can then be used to help the poor.

Sometimes it's better to take off the political hat and put an economic one when dealing with money.
________________________________
On black beer - it is scandalous; I believe it'll add £2 extra per bottle. I wanted something different to happen. I wanted the Chancellor to have some sort of 'special' tax for small cottage industries like cider companies so they can compete with the main stream. But no, I guess it's not going to happen.
________________________________
On regional pay - I am against it and we should fight against it.

HOWEVER I agree that there should be a 'living allowance'. So if it costs an extra £2k to live in London, every receptionist in the UK will get say £19k, but the Londoners given £2k living allowance, and Manch's given £500 say.

This should be a fixed amount on each pay scale, and decided by an independent body. Surely this is ok and fair??

MH said...

Who's saying I want to take an "endless amount" from the rich, 19:33? That's just your fantasy.

I think the 50p top rate is modest and reasonable, and that it would bring in more money if allowed to bed down for a longer period.

I believe in progressive taxation, but I am am opposed to what I have called the fetish of continually cutting the basic rate of income tax while increasing indirect taxes like VAT because it disadvantages the less well off. The UK is in dire financial straits, and it is better for those still in work to pay more tax than it is to cut services.

There's nothing so wrong with raising the tax threshold (although I think the starter rate of 10p was a better solution) but it should be balanced by increasing the basic rate of income tax so that the overall take is the same rather than by giving every single basic rate taxpayer more money.

This budget leaves the rich with very much more money than they had before, and leaves those still in work with a little more money ... but everyone who uses public services—whether in work or not, whether rich or poor—is worse off because of the cuts to those services.

Anonymous said...

I don't like the idea of the government taking half of someone's income. 45% seems about right to me.

There are other, more effective and fairer way of taxing the very rich and that's by taxing land value as the Four Horsemen film linked to above discusses.

Welsh Ramblings said...

"I don't like the idea of the government taking half of someone's income. 45% seems about right to me."

Economic policy has to be based on looking around at Europe at what works, rather than what "seems about right". Netherlands, Finland, Denmark and Sweden all have higher top rates than the UK (even higher as of today). They are quite simply better economies and better societies than the UK on just about every level. Netherlands is under a conservative government so it is not just about socialism as people on this thread have been arguing. For 9 years Thatcher had the top rate at 60% because she simply needed the money to change society. It wasn't until 1988 that Thatcher cut it to 40%!

Let's get away from labels (although they are sometimes useful) and debate policies.

I'm not saying an independent Wales would be able to do the same thing with taxes as Sweden, but the UK definitely needs to at this present time, along with other measures.

People on this thread saying this is a good budget just because they want to oppose the Labour party are going into a cul de sac and are also letting Labour off the hook because today's budget is on balance simply economically wrong. Unless we all decide to agree that 9% Welsh unemployment is just fine and should continue.

Anonymous said...

MH - the other you quote also have higher levels of land value tax which brings in money and also, more importantly may be, directs money into more productive use economically as well as being more difficult to avoid paying. LVT also delivers better services and less inequality. I think we're in danger of looking at the wrong tax rather than what actually works, brings in money and creates a better economy.

An independent Wales would not be able to have a personal taxation policy much different to England. I have only to think of all my school peers who now work in England because the wage is better there. Were our taxation rates to be much higher it would be even more so.

The 50% tax is a red herring, Labour didn't introduce it when they were in government, which says something.

We should be looking to tax land rather than labour.

Anonymous said...

Good points from Anon 08:47. Mark Drakeford recently made points aout introducing a land tax. Land is immobile. The scottish socialist party put forward a bill before the a land tax in Scotland that was widely supported by the other parties but in the end it couldn't be introduced.

When saying 'We should be looking to tax land rather than labour' we do have to realise that all countries tax labour and have income tax. Wales independently or as part of UK will always have to have an income tax.

Nationalists need to champion the economy. Constitution is not interesting or relevant. Economic levers are relevant. UK-held levers are also relevant. We have to understand now that there is a prolonged crisis in the markets and a shift of capitalism to the east. It doesn't mean the end of capitalism as some have predicted but it means that austerity and low tax environments don't work in the same way as they used to. The problem in Wales isn't tax being too high its skills and education being dire and infrastructure being sub standard. Wales does need investment and a borrow-and-spend spree. The market will simply not function here otherwise in the way it would in better connected, healthier countries.

MH said...

Land Value Tax has been raised a few times before, for example in the comments here and here. I see the merits of such a tax in some circumstances (for example to encourage development of brownfield sites) but also think it has major problems in that it encourages the development of all land, even land that we would prefer not to see commercially developed.

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