Sunday, 31 July 2011
The poor overtaxed rich
Lord Lamont, Chancellor when Britain came out of the Exchange Rate Mechanism in September 1992, is reported to be campaigning for the 50% tax rate to be scrapped. The old argument about inhibiting growth & stifling initiative is being trotted out as an unchallengeable truth. But it is NOT true. Quite the reverse. I have met hundreds of businessmen running small start ups over the last ten yrs or so and not one has cited income tax as a disincentive simply because very few actually get anywhere near the £150000 a year needed for the 50% to kick in. To quote just one example two founder directors of a manufacturing company that is successful and created some ten jobs took a cut in salary of at least 50% each in order to follow the dream. The current MD doesn't even get half of the £150k. If he went back from whence he came - into finance - then he would be paying 50p in the pound. Far from cutting the tax there should be another level of 85% on all income, however defined, ( I won't call it earnings because in a lot of cases it is not actually earned - especially in financial services) in excess of half a million a year. The second false claim is that such a move would drive out talent. What talent? The talent for wrecking the economy? The talent for smart financial manipulation that causes massive grief for elderly, infirm, learning difficulty people? We can surely do without such talent.