It’s almost an oxymoron, in that you’re hardly still an entrepreneur if you are already earning over £150k, you’ve made it. If you are still in the really entrepreneurial phase, you’re too busy trying to make it too worry about how much you’ll be taxed if you do. (These are obviously generalizations with some counter-examples).

this might interest some – who are the 1% and what do they do?

http://rortybomb.wordpress.com/2011/10/14/who-are-the-1-and-what-do-they-do-for-a-living/

I guess the UK data would look different (fewer medics)

oh, there was an article on here recently objecting to Bob Diamond giving a speech at BBC.

Martin Wolf’s response to that speech give a good explanation of how banks have to change.

http://www.ft.com/cms/s/0/59d5fc04-0b91-11e1-9a61-00144feabdc0.html#axzz1dOVP57kT

Could not agree more. Trouble is not too many people read the torygraph.

“But the idea that the British economy is suffering because the 50p tax rate to deterring entrepreneurs to Britain is just hogwash”

Is it? How many do you know? How much do you earn a year? To say taking 50% of some ones money is not disincentive is foaming at the mouth territory.According to you the problem with the economy is the lack of demand, meaning its currently hard to achieve success in this environment, something that puts people off on its own, add taking 50% of there money on top and…

“But let the top 1% make the calls: they will only intensify fighting within the government and toxify their brands. It also shows they still live in la-la-land”

You really have a thing for that 1% fad don’t you.

Sunny,

I think you need to examine your insistence on this being a demand problem if lowering taxes won’t help.

After all, the best stimulant for demand is private spending and investment – government spending and investment tends to be less efficient (because it does not have the same flexibility and cover so many areas) and also has extra costs – the tax office is a cost to the economy for example. So surely less tax would lead to more public spending.

@Ross

Entreprenuers largely don’t care about the theoretical tax rate 10 years down the line, its something that is in your blood or not. Luis Enrique posted a link to something earlier this year showing the highest number of start ups occured in Norway – a high tax country.

I would be in favour of reducing the 50% top tax rate, provided that at the same time, Buffett’s rule as implemnented: that no-one has to pay a marginal rate of tax higher than someone earning more money than them. This should remain true whether income is from wages, investments or capital gains. It should also remain true when taking into account withdrawal of benefits or the greater availability of tax avoidance schemes for the rich.

I think I can safely predict that the Tories and Lib Dems would never implement this.

But I also think Labour won’t implement it either. After all they had 13 years in power during which time they didn’t; instead they had the poor paying 100%+ marginal rates while giving £1,162 billion (that’s 19 grand for every one of us) to the bsankers.

So if you want a party that stands up for the 99%, it ain’t Labour.

Here’s one that I am surprised that we have not heard:

“The 50p tax rate should be abolished ‘in the national interest’ ”

The chances of the rate being kept are improved by the fact that Ed Miliband supports it unlike his brother who made no serious defence of it even in the Labour leadership election. And, of course, Alan Johnson has disappeared into the obscurity that he richly deserves. He opposed it.

The BBC at 5.30 this morning on Radio 4:

“And the Taxpayers Alliance says…” That’s something you don’t often hear.

happy to repost – these guys are paying nearly 50% of total income, not just income above £150k

http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socialism.html

Don’t you know that hard work and talent are all you need to get rich! Anyone can start a business! Anyone! If you’re poor/disabled/mentally ill/etc you should just work hard and start a business, and you have a great chance of getting rich…

BUT if you’re ALREADY rich then an extra few percent in tax will make all the difference and destroy EVERYTHING.

That’s the way it works.

They must think we are all extremely dumb…

watchman: I think you need to examine your insistence on this being a demand problem if lowering taxes won’t help.

Lowering taxes at the bottom end – yes. Not at the top end,

These people are clearly living on another planet and they are not as clever and intelligent as they think they are if they believe they require a tax brake on their current rate of obtained money. They clearly greedy and self rightous though.

Sorry, Watchman. Normally your interventions are interesting but not this time. Sunny at 11 is bang on the money here. If you want to increase demand, you reduce taxes at the bottom end or increase benefits.

Whether the effect oof a demand increase will be what you want is another matter. The purpose of increasing demand is to boost UK production and have a multiplier effect whizzing around the UK economy like in a pinball machine. The reality might be that the demand would be for foreign products who then see the benefits. In a globalised economy, we all need to pull together to make that work.

If we’re going to focus on tax cuts as an economic stimulous then we need to examine which taxes we want to abolish. The 1% want the higher rate dropped and inheritance tax scrapped. This is an open goal for us; all we have to do is propose the counter argument; eliminate council tax/raise personal allowance before we even think about touching the top rate.

“who are the 1% and what do they do?

I guess the UK data would look different (fewer medics)”

I would guess you are wrong Luis

http://www.prospects.ac.uk/general_practice_doctor_salary.htm

“BUT if you’re ALREADY rich then an extra few percent in tax will make all the difference and destroy EVERYTHING.

That’s the way it works.

They must think we are all extremely dumb…”

Odd, considering as a nation, our level of wealth and living standards from top to bottom are supreme compared to a large percentage of the world and ” a few percent less spent on us is destroying everything EVERYTHING” is all I have heard constantly barked for quite some time…

Cheers for the link Luis Enrique/Planeshift

Another Tom

good point – although I had in mind that some US medics are insanely well paid (I think that’s why their spending on health as % GDP is so much higher than ours)

(Btw I’ve written about the 50p rate of tax and why I don’t agree with it anyway. I just think the argument from some, and the prioritisation of it above things like cutting VAT is laughable. It simply ISN’T the biggest cause of economic difficulty. It just isn’t.)

http://lefteyerighteye.wordpress.com/2011/09/21/cut-the-50p-tax-rate/

Ross

A few percent less spent on people with nothing is life or death.

A few percent less to people with billion isn’t.

But I don’t believe that talent and hard work is all it takes to get money in the first place. I’m just pointing out that if it was, a 50p rate of tax would hardly stop you.

4
I shouldn’t worry about the disincentive of the 50p tax and the 1%, they have extremely good accountants working for them.
16
This is an argument often used by SMFS, – look how bad it is over there, or in the past, but yet we are told that creativity, progress, ambition are good.
I suppose it depends on what part of the debate is being discussed.

Steve at 12 – I don’t think they want a tax brake although it might be a good idea. They want a tax break!

@14 planeshift: all we have to do is propose the counter argument; eliminate council tax/raise personal allowance before we even think about touching the top rate.

The problem with scrapping council tax is that it is raised locally by each council, and thus gives them a democratic power to vary taxes. So if it was scrapped, it would have to be replaced by something else, such as a land value tax.

“So if it was scrapped, it would have to be replaced by something else, such as a land value tax.”

Well yes, I’d support that. But even if it was entirely replaced with central government funding/central govt just paying everybody’s CT bill as a stimulous, this would still represent a better use of money than cutting top rate of income tax

” For a start, the problem with the economy now is the lack of demand, not lack of investment. ”

Does not make a whole lot of sense. Demand is investment + government expenditure + exports minus imports. Saying the problem is not a lack of investment makes no sense that I can see. It is the fall in investment that causes a fall in demand as consumption falls. As a consequence that increases the government deficit and when they cut expenditure demand falls further. If you are a Keynesian, that was his whole point. The government should step in and fill the shortfall caused by the fall in private sector investment until the ‘ animal spirits ‘ return to the private sector and they increase investment.

Keynes was attempting to refute Say’s Law, that says supply creates its own demand and the temporary shortfall in investment would be self-correcting. Say’s Law does not hold with money and the fall in investment need not be self-correcting as money is hoarded. Monetarists would say that money is too tight and that causes the shortfall in investment and can be reversed by monetary loosening.

The letter writers are rather implausibly suggesting that a cut in their tax rate would encourage them to increase investment. It might, or they may just hoard the money. UK corporate balance sheets have more money on them than at any time I have every seen. I doubt whether the 50p tax rate is doing us any good, but I also doubt whether cutting it will do much good either. A cut in taxes would be more effective through cutting employers NI and VAT. Moreover, randomly rip up some regulations would also be more effective than cutting the 50p rate. Doing it randomly means that it is highly unlikely that you will inadevetenly rip up a useful one. Taking a chainsaw to planning restrictions and regulations would also be more effective than a 50p tax cut. All would raise investment and contrary to Sunny would also raise demand.

“Doing it randomly means that it is highly unlikely that you will inadevetenly rip up a useful one.”

What could possibly go wrong!

…

Richard W,

yes, I think he must mean something like demand for investment goods will pick up when aggregate demand more generally does, and not before.

@23 planeshift: But even if it was entirely replaced with central government funding/central govt just paying everybody’s CT bill as a stimulous, this would still represent a better use of money than cutting top rate of income tax

CT is a regressive tax, so yes I agree.

So if the rate is cut from 50% back to 40% what exactly will these Modern day Louis XVI & Marie Antoinette wannabees be sacrificing? Because remember folks, we are all in this together. Or some such clap trap.

The elites are all for Austerity and sacrifice…… just as long as it is not them doing the sacrificing.

Did these business leaders disclose how much they would personally gain from this measure? Thought not.

@28 – Now now, *the 1%* are in this together.

@30

How and you and Sally doing with benefits? Got enough to live in W. London? How are taxpayers in Sunderland doing? Do you care? No – just send the money, you know it makes sense.

@30 – Feel good to spit at people for being poor? Gotta drive the poor out so you don’t need to live near your inferiors? No, no, keep on piling on the pain, it’s not like they’re Human or anything.

For a start, the problem with the economy now is the lack of demand, not lack of investment… Companies are sitting on mountains of cash – they don’t want to invest because no one wants to buy anything.

I think this is a bit confused.

Can anyone more familiar with he data untangle it?

Roughly what has happened to the time path of consumption and business investment over the last couple of years?

The problem with Watchman’s argument, as has been demonstrated by economists ad nauseum, is that a reduction in tax on the top does not generate more spending because they hoard it in savings.

Two proposals (in order of priority):

(1) Raise the income tax allowance to 12,000 to encourage the poor to work, other casual employment of graduates and students, and to reduce the disincentives currently built into the system which discourage benefits claimants from returning to paid work. Gradually reduce benefits such as Income Support in proprtion to the tax breaks.

(2) Abolish 50 tax. You socialists can sit here massaging your onanistic fantasies about how we all should live, but the fact is demanding what amounts to about half of someone’s income from them (when other taxes and rates are counted in) is frankly immoral. It’s these sorts of policies which are responsible for our long term decline. Look at Asia for God’s sake! They will leave us in the dust while we sit in our privileged European bubble trying to create the perfect welfare state. I know this sounds a bit ‘ranty’ but I really think people on here need to know how the world actually works, and perhaps at the same time drop their hatred of the rich – the rich make us all wealthier.

No they don’t.

35

No one is buying trickle down theory these days apart from tory butler trolls. It was a crock of shit 30 years ago, and has got worse.

@35 – Raising the tax threshold is primarily a tax cut for the middle class, not the poor. If they’re not earning the current threshold (and many are not, in part-time jobs) then it won’t help them at all!

Also, “half” someone’s income is immoral? Really? Because the rich pay 28% on much of their income, as it’s from capital not income. Having the rich NOT pay as much tax as poorer people, THAT’S immoral.

And Asia? Ha. Japan has too much debt to expand it’s economy, Taiwan is worrying about China and China itself is about to see the consequences of holding it’s currency down artificially for years.

The Nordic nations are doing just fine, with a TRUE 50% transfer of wealth. Your moral argument falls flat on it’s face, exposed as a corporatist puppet.

35
Just to point out that it is not socialists who are calling for higher taxation on the rich. Socialists support an economic system which does not produce such massive inequality consequently no need for varying tax rates.