Quote:
Originally Posted by Stuart
while seemingly ignoring the measures taken by those at the top end of the pay scale to minimise the amount of tax paid (and I am talking about both individuals and companies). Tax which can amount to 100s of millions of pounds.
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You need to stop eating Labour press releases for breakfast - look at the economics, not the politics. Reducing the 50p tax band was exactly what you are calling for - an attempt at reducing the incentive to individuals to rearrange their tax affairs.
The Treasury was in possession of hard evidence that the 50p rate had not resulted in any significant increase in revenue. This sort of thing occurs in matters of taxation for exactly the same reason it occurs in shops. You put your prices up too far and all you do is provide your customers with an incentive to go looking for savings. The "customers" of the top rate of tax are the very same people who are most able to afford tax advice or even to up sticks and leave the country altogether.
Tax rates exist as part of a global economy and have to be competitive. If they are not, the net result of whacking up the top rate is a long term erosion of the potential tax take from top earners. Considering that our top 10% of earners are earning 25% of the wealth and paying 50% of total income tax receipts, sacrificing that cash cow on the altar of some myopic socialist prejudice is just plain stupid. Which is why even Labour didn't do it when in office, except in the last few weeks of their administration, precisely for the purpose of sabotaging the whole deficit reduction debate. Think very, very carefully before deciding whether these are the people you want running the show after 2015.