Having read several newspapers and watched a couple of hours of telly since yesterday's Budget, the two aspects that got the bulk of the coverage - in roughly equal measures - were the 50% tax rate and the plans to double overall government borrowing over the next few years.
The 50% tax rate is a stupid jealousy surcharge that won't raise much money (if at all) but a minor niggle in the grander scheme of things (seeing as there are loads of people in the UK with an overall marginal tax rate in excess of 50% anyway), the really important and/or terrifying bit is the planned government borrowing.
Maybe, just maybe, the 50% tax rate will in fact increase tax revenues by a couple of billion a year, WTF has that got to do with the planned borrowing of £700 billion? There's just no comparison is there? That's an average borrowing of £20,000 per taxpayer that's all going to have to be paid back in future (or eroded by inflation).
Thursday, 23 April 2009
The 50% tax rate - a stroke of genius, actually
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10 comments:
The hike in tax isn't designed to raise revenue - it's designed to appeal to the the Labour voter base and thus secure another election victory. This is the last budget before an election and would, normally, be a "giveaway" budget - but given the perilous state of the finances, that wasn't possible - so Darling resorted to the Old Labour tactic of stoking up the class war and bashing the rich. It was purely symbolic.
Happy St George's Day!
http://www.youtube.com/watch?v=YbK9lYEEi4Y
S, excellent points. It's economic shite, but political gold!
Anon, thanks.
The way I see it is, they know they are out on their arse come election time so, like squatters, they have left a dirty big turd lying on the lounge floor for the next tenants to clean up.
The 50p tax rate is a stunt. The idea is that if the Tories oppose too vigourously Labour can portray them as the party of "Tax cuts for the rich".
I dunno about that Rab - from the comments I've read and heard on various sites the tactic appears to have struck a chord with the Labour voter base. Will it be enough to save them? Probably not, but it may be enough to ensure that the Tory majority is a slim one.
You're right about the turd - more of a steaming pile than a single item though. I've said all along that even if Cameron wins he'll just be the next Ted Heath - one disastrous term blighted by industrial unrest (although, not actually anything to do with industry as the public sector is now entirely unproductive), economic meltdown, rising unemployment and declining living standards.
Still, at least he can console himself with a nice cosy job with the EU and a comfy pension.
50% - who'd want to venture any capital in a business in the UK just now?
@JamesHigham: you only pay 18% on capital gains, so now theres even more incentive to make your money on the sale of the business, not running it. So it actually encourages short term investments whereby you can borrow the money, strip out the costs,make the profits look good, sell it on. That way you pay 18%. Run the business long term and take the profits out as income, pay 50%. Which would you do?
Sobers, that is exactly what we tax advisors have been telling clients (i.e. James H in this example) for ages (the maths is more extreme now, but the principle is the same). Well spotted.
Re Sobers point, it clearly shows one of the problems with society today GREED!! Its would be better to run a business long term and make a modest living whilst providing jobs and helping the country, this though requires righteous thought and integrity. No, I am not a labour supporter and have never voted for them.
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