From the TUC

50p Tax Rate: Is Byers right?

28 Apr 2009, by Guest in Economics

Stephen Byers has attacked the Government for introducing the 50p tax band for those earning over £150,000 as a “cynical, political” move that serves no wider economic or fiscal purpose. 

Another way of looking at it is that the new rate will, according to the Budget, raise £2.94 billion to 2012 which is just about the right amount to cover the costs of the funds being poured into extra help for the unemployed through Jobcentre Plus and into the scheme to provide work for 200,000 unemployed people under 25.  Together these measures will cost £2.87 billion.  It could be argued, this makes the tax a very good progressive measure designed to ensure that mass worklessness amongst the young does not do untold, long term damage to our economy and the public finances.

There’s a side debate about whether the new tax will raise any extra funds (which Byers latches on to) but that is an argument for tough anti-avoidance measures not against the tax per se.

Of course, Byers has form on this having argued for the abolition of inheritance tax (one of the most progressive taxes we have) despite the fact it only affects about 6% of the wealthiest people in the country.

It’s probably time we ditched the view that what is good for the rich is necessarily good for the economy as whole.  Yes, we need entrepreneurs but that group is not identical with the very wealthy nor those motivated entirely by wealth. In fact, there’s a good economic case to be made that we should stop trying to attract the money-hungry beasts of the City culture of the last twenty years and instead concentrate on the innovators, thinkers and doers who are motivated by much more than just the next bonus.  That would probably set us up for the post-recessionary economy far better.

5 Responses to 50p Tax Rate: Is Byers right?

  1. Charlie Marks
    Apr 29th 2009, 12:43 am

    Byers is no doubt influenced in his views by his personal situation. I imagine that like the other former cabinet ministers of his ilk, he’ll have one or two cushy non-jobs on the side with companies looking for political influence – and will actually be paying the new top tax rate.

  2. Robert
    Apr 29th 2009, 7:56 am

    Elections are coming, vote New labour we tax the rich. oops and the poor.

  3. Directors savage higher rate tax: what would they have said to a minimum tax? | ToUChstone blog: A public policy blog from the TUC
    Apr 29th 2009, 12:14 pm

    […] mild increases in tax for the very rich were among the most popular bits of the budget and, as Adam points out, almost exactly pay the costs of providing the job or training guarantee for the young […]

  4. Robert
    Apr 29th 2009, 2:00 pm

    Ah yes the youth training programs in which people in my area go to dead end employers who have no interest except in cheap labour and you train how to cook a burger, yes thats the one’s.

  5. The 50p tax rate refugees: let ‘em leave! | ToUChstone blog: A public policy blog from the TUC
    May 11th 2009, 11:48 pm

    […] I’ve said elsewhere, the era of turbo-charged finance capital is over.  The City will need to radically reinvent […]