Give moar to the rich! It’ll trickle down! Honest!

This is just another example of the discredited theory of ‘trickle down economics’.

I heard one of the signatories on the Today Programme the other day and he could not produce any evidence to support his claims at all–just assertion.

I would urge everybody to write to their MP to defend this tax level as we can certainly win.

Even some Conservatives are very nervous about eliminating it:

David Willetts, the education minister: (The Observer 28 August 2011)

“That is why we have kept it so far. Because if you are expecting sacrifices from people with modest earnings it’s right that that can apply to high incomes aswell”

The solution is simple – get rid of the 50% rate and force these ‘economists’ to personally make up any revenue deficit it creates, as there apparently won’t be one they’ll have no problems ceding to such a scheme.

I suspect many of these same economists would also say that the deficit, concerns about the public finances, are also a drag on growth. So if they want to solve that problem you need to either cut spending (a drag on growth) or raise taxes (a drag on growth). So it’s a matter of choosing the least bad, not looking at one in isolation and pronouncing it a drag on growth. That is to say, even if you do think higher taxes on the high paid damage the economy, the argument is not yet won.

Presumably they all want to reduce the deficit, they need to explain why 50% tax on high earnings does more harm to the economy than either raising the same quantity of revenue by taxing elsewhere, cutting government spending by said amount, or just leaving the deficit said amount larger than otherwise.

DoTW

looking at that list, I’d have thought few of those economists get anywhere near £150,000. I think salaries for professors at most universities are in £50-£80k range, not sure about big shots at LSE or those who are consultants rather than academics. You can bet your house Leicester isn’t paying academics triple figures.

@5 – Broadly correct, yes. Professors earning more are either VERY senior (40+ years), or involved in university spin-off companies. Renown, ironically, has very little to do with salary.

To reduce the 50p tax rate it should pass three tests. Reducing the rate should:

a) increase revenues
b) increase inward investment
c) stimulate growth
And it should be the best way of achieving those things. Otherwise, it stays as it is. Oh, and there should be evidence it *will* achieve these things before we cut it. Not just guessing – or bumping into people in the BBC green room.

My main worry is that the Treasury report will strain the evidence to breaking point to make Osborne’s case.

@5

I’ll settle for indentured servitude.

@5. Luis Enrique: “You can bet your house Leicester isn’t paying academics triple figures.”

Professors are typically paid unpublished salaries that are higher than the published academic scale. My guess is that the range is £60-90K. Clinical academics get paid at NHS rates, and before the massive inflation of VC salaries it was common that the highest paid university employee was a medic.

University of Leicester VC, Bob Burgess, announced a “new blood” scheme six or so years ago to attract academic teams, with a promise of departmental funding and greater independence. The economics department is one that has grown with “new blood” so it is possible that some salaries are approaching three figures, still miles away from the 50p marginal tax band.

Alison @7

To reduce the 50p tax rate it should pass three tests. Reducing the rate should:

a) increase revenues
b) increase inward investment
c) stimulate growth

Nope. It should just pass test 1.
The rest is bunce.

That should have been: Test (a)

Trickle down works very well if your business is in gold taps and Ferraris.

Flowerpower: I’d argue it should meet at minimum any *one* of the three criteria before being considered. I’d argue it would have to meet all three for scrapping it to be a good idea, which is more or less impossible.

This is just playing to the client base for the tory party. They are not well placed to just come out and do it because of wider public opinion – but encouraging their friends to make the case for them helps soften the ground and re-emphasise to their clientelle that it was not them who made taxes so high.

I agree – incredibly the right wing and various entrepreneurs have rather predictably suggested that the answer to our economic ills, also allows them to make a few quid. But what is just as depressing is the fact that Labour still aren’t making any coherent argument about the economy. Ed Miliband’s decision not to take Cameron to task over the economy on Wednesday was woeful.
If Labour aren’t careful, they will allow the next election to be fought on Brown’s competence prior to 2010, rather than Osborne’s post 2010.
I expand on that ….
http://www.allthatsleft.co.uk/2011/09/miliband-balls-wake-up/