Thursday, 1 March 2012

A turkey doesn't ask for Christmas...

Five hundred and thirty seven business leaders have written to the Daily Torygraph to request that the Chancellor reverses the 50p highest tax rate.  

For those who don't wish to visit the website here is the full letter:

"SIR – Given the state of the British economy, we urge George Osborne, the Chancellor, to consider scrapping the top rate of tax in his forthcoming Budget. The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position.

We believe the richest should help the poorest in society. One per cent of taxpayers are already responsible for 24 per cent of income taxes. But penalising high earners through an unfair, politically motivated tax puts populist politics before sound economics.

The 50p tax is set to reduce government income, and damages the economy, the public services and charitable giving.

As business people, we want to see our industries, our economy and the Third Sector thrive. Repealing the 50p tax would demonstrate the Chancellor’s wish to celebrate British entrepreneurialism, stimulate industry and contribute to the Government’s growth agenda.

The sooner the top rate of tax is repealed, the better."

In case you glossed over all that then the rough translation is "we are worse off because of this so would rather you changed it back".  

There have been some reports that this is actually revenue neutral due to an increase in avoidance and people moving abroad, the simple solution to that is to crack down on avoidance.  The Government would be foolish to remove this as irrespective of the effects it would be a smack in the face of the "all in this together" line that they like to keep throwing out.  

Lets think about this logically anyway.  Whilst some people may move their affairs abroad this isn't easy to do in practice without physically moving and most people bury roots deep within their living place.  As for damaging the economy, surely if the rewards are lower that doesn't mean people wouldn't take the risks necessary, perhaps it would encourage them to work harder to boost the economy and get themselves into the position they would have been if this rate wasn't introduced.  

Basically though, I just think this letter shows how detached from reality some people at the top really are.  I say some people because both Sir Stuart Rose and Warren Buffett have over the last year said/implied that the rich don't contribute enough - it's a shame more 'wealth creators' don't think like them.

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