50p tax rate sounds good, but isn’t

Standard

Money 2

 

Yeah tax the fat cats! Let’s get those greedy bastards to pay their share! Why should they get a tax cut and we don’t!

It’s one of those policies that sounds great but all the evidence out here shows that actually it does very little to help anyone and will not raise anything like the money you think it will. Ed Balls is not really doing this for financial reasons, instead it’s a calculated move to make the Labour party look like the party of the working bloke and wifie on the street. With Miliband’s attack on the banks and now this they are slowly positioning themselves  to the left of centre to put lines between themselves and the other two main parties – and it’s working. Labour is in the lead in the polls with just over a year to go until the next general election – the Tories will claw back some ground and the result of this year’s Independence Referendum in Scotland will also have a big effect on next year’s result – but already they are beginning to set out the kind of party they would be in power.

The 50p rate of tax is a great soundbite and when brought in under Brown & Darling it was there to remind voters at the 2010 election that they were still the everyman’s natural choice. The reality was though that the top rate only had an impact on the top 1% of earners in the country. Now you and I don’t live in that world, but I can tell you without much hesitation that anyone earning that much is using the legal loopholes through their accountants or finding ways to ensure that the money that would get taxed at that top rate will be protected elsewhere. And is that a bad thing? If you work to the point you are earning that much then maybe you deserve to only pay 45% – I think a lot of it is based on jealousy.

The only place I think that we do need to tighten up is on bonuses awarded. Many companies get round their employees paying tax at upper rates or on too much of their wages is through paying them in bonuses. That whole area of tax and avoidance is one that the Chancellor will always avoid as it is the one that really hits the top hardest. If Ed Balls was really serious about “balancing the books” and “being in excess by 2020” then this is the area which needs the attention. Business does have too much power on politics and we need to redress the balance more to ensure that if you work hard you are rewarded, but not at the expense of others, communal or national services and employees further down the pecking order.

JD

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