This - not envy - gives the truth about tax. Even if you are envious and jealous the best way to get the rich to pay more tax is to let them get richer. All the figures here were perfectly well known 3 years ago but a mob-rule element has frightened the politicians into forgetting the facts.
Christina
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CITY AM 8.12.09
Killing the goose that lays Golden eggs
EDITOR’S LETTER - ALLISTER HEATH
HERE are a few facts that Chancellor Alistair Darling should bear in mind as he prepares to hit the financial services industry and high earners with even higher taxes on Wednesday. The top 10 per cent of earners are already set to pay 53.6 per cent of income tax in 2008-09; the top five per cent will pay 43 per cent and the top one per cent 23.9 per cent. Yes, that’s right, just one per cent of the population will pay close to a quarter of the total income tax take, funding a massive chunk of the welfare state – who ever said the rich don’t pay their “fair share”, whatever that means?
In 1988, when Darling’s predecessor Lord Lawson slashed the top tax rate from 60 per cent to 40 per cent, the top one per cent paid only 14 per cent of total income tax receipts. Lower tax rates and globalisation helped trigger an explosion of wealth and turned London into a magnet for foreign talent; in turn, this led to an explosion in the tax take. Arthur Laffer, the father of supply-side economics, was right after all, a lesson New Labour learnt but that the government (and the Tories) have now forgotten. As recently as 1999-00, the top one per cent paid 21.3 per cent and the top 10 per cent 50.3 per cent of income tax; their share has been going up without higher rates. Lesson number one: a chancellor who wants to maximise his tax take should allow the rich to get richer, not chase them away with punitive attacks.
The financial sector accounts for 25 per cent of total corporation tax receipts and nine per cent of total wages and salaries, bolstered by bonuses; their contribution to income tax and national insurance is even greater.
Lesson number two: while we must prevent another financial crisis, Britain would be bust without the City. Finance needs to be encouraged to grow sustainably in Britain – not be chased away by class war and punitive taxes.
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