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  A lot has been spoken about how the 50p rate damages the amount of tax collected by HMRC. So far the discussion has been about reducing it to a maximum 40p rate.
  
  Remember - the real rate of income tax being paid is higher than this when you take account of National Insurance.
  
  Basic rate taxpayers pay 32p
  Higher rate taxpayers pay 42p
  Additional rate taxpayers 52p (reducing to 47p) over £150,000
  
  Did you know though that if you earn between £100,000 and c. £115,000 you pay an effective rate of 62p?
  
  That if you are a basic rate taxpayer and over 65 you pay 30p on a band between £24,000 and about £29,000?
  
  Such are the complexities of our tax system.
  
  But what is the highest rate of tax you should be expected to pay? In other words if a higher rate taxpayer what is the highest rate of tax you should pay that would maximise the amount collected by HMRC?
  
  After all the tax system should only be about collecting the tax needed to pay for public services and should not be about anything else.
  
  People have made 40p (42p actual) as the 'totem' to get the highest rate down to but will that collect the most money for HMRC?
  
  Well the Centre for Economic and Business Studies have looked into this. CEBS have the best track record of any for their economic predictions so are worth listening to.
  
  This assumes we keep a 'multi-tier' tax system rather than a straight flat tax - there are good arguments that a flat tax will collect more.
  
  The maximum rate they say is best for the economy is 36p - in the present system that would mean reducing the 40p rate to 34p... Do that and the higher paid will pay more tax, not less....

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