• The post you are reporting:
   
  #95 - Jan. You ignored what I actually said. Higher rate tax starts at only £42,475, paying 42p over that - not the £100,000 because that is where an effective rate of 62p kicks in (dropping back to 42p after £116,210 then up to 47p at £150,000).
  
  People on £43,000 are far from rich.
  
  SWWood:
  There is a mass of evidence to support the FACT that higher tax rates reduce HMRC receipts. You need only look at what happened in the UK when the penal rates once at over 80p were cut back to 50p and then again to 40p plus the impact of when the 50p rate was re-introduced. There is a mass of overseas evidence as well.
  
  Other evidence:
  Gordon Brown knew it too - he only brought in the 50p rate at the end when he was looking defeat in the face as a political trap. He did not do it in the first 12 years of the Blair/Brown government because he knew what it would do.
  
  Additionally there is simple common sense and experience. Why would someone earning £100,000 want to work harder if they were then faced with keeping only 38p out of every £ as a result? Indeed the same calculation is being made regularly at every tax threshold from the 40p one upwards. I do it myself because I am in the process of restructuring my business so I will not pay tax at 42p any more. These high rate tax thresholds not only reduce the HMRC receipts but also damage economic growth. Why take risks and expand a business if you are just going to get clobbered? People make these decisions all the time.
  
  As for the 'political point' you make - It is a far easier way to score points by claiming a tax cut is some kind of bonus to the rich. Labour politicians calculate that this is an easier argument to make that will resound better than the more considered and intelligent one about the damage high tax rates do to the economy. We live in a sound bite world where the lowest common denominator determines political stances.
  
  I have said many times before that the problem with the coalition is that too much policy is for political not economic reasons otherwise the highest rate of tax will be at 37p (including NI) as a step towards a single simple flat rate for everyone.

Report Post

Your Name

Reason