We shouldn’t cut taxes for the rich – we should raise them

September 7, 2011 4:16 pm

Author:

Share this Article

TaxesBy Owen Jones / @owenjones84

Today, we learned that right-wing economists don’t like progressive taxation. Not a bombshell, you would think: but a letter signed by 20 economists calling for the 50p tax band to be scrapped was deemed important enough to be the BBC’s main news story. If you’re wondering who’s behind this initiative, it’s being funded by big business using the PR firm Westbourne. This is a blatant attempt by the rich and powerful to soften up public opinion into supporting their selfish economic interests. It’s an old trick of the wealthy to conflate their interests with those of society as a whole.

If you want to read the arguments of these mouthpieces of Britain’s economic elite being shredded, I recommend reading the ever-excellent Richard Murphy’s piece. The 50p tax band was one of the most popular policies of the last Labour government. At a threshold of £150,000, it applies to the richest 1% of the population (about 328,000 individuals, to be specific). We live in an era where a crisis of neo-liberalism perversely led to more aggressive doses of neo-liberalism than ever before: here was the one striking exception.

But I don’t think we should be forced into a defensive position on this. Let’s not simply defend the 50p tax band. Instead, let’s push for it either to be increased to 60p, or to take the threshold down from the current £150,000 to £100,000. In a country where if you earn £21,000, you are bang in the middle, decreasing the threshold would still only affect the very wealthiest – the top 2%, to be precise.

Either move would be popular with a public that wants to see the rich paying more. A poll last year revealed that 54% (against 29% who disagreed) wanted the top rate of tax increased to 60p in the pound.

It is said that higher taxes will just encourage tax evasion by the wealthy. It’s worth noting that – to flip the argument around – the low level of benefits is never offered as an excuse for so-called ‘benefit cheats’. But a more progressive taxation system should be combined with an all-out war on tax evasion and avoidance by the wealthy (worth around £70 billion a year) – from loopholes to tax havens.

It’s not as though there’s a lack of money sloshing around at the top. In the current economic crisis, working-class people are being made to suffer the most. The average Briton is experiencing the biggest squeeze on living standards since the 1920s. But, between 2010 and 2011, the richest 1,000 Britons saw their wealth go up by nearly a fifth. At the end of 2010, it was reported that boardroom pay leapt by 55%. As the bank balances of the richest continue to soar, why not increase the top rate of tax to increase revenues as an alternative to devastating cuts?

Tory opponents of more progressive taxation argue it will damage the economy. Given they back an austerity drive that objectively is damaging the economy, there is an element of chutzpah in this. But it is worth looking at countries with high tax rates whose standard of living is higher than our own: like Sweden (56.6%), Norway (54.3%), Finland (53%) the Netherlands (52%), Denmark (51.5%) and Belgium (50%). But it is questionable whether impoverished Albania has been given much of a boost by its tiny top rate tax (10%); the same goes for Macedonia (10%), the Ukraine (15%) and Romania (16%).

Britain did once have far higher taxes on the rich, peaking at 98% in the 1970s. But our economic growth between the 1940s and the 1970s was greater, more stable and more equitably distributed than it was after Margaret Thatcher trashed the post-war consensus. Indeed, the three catastrophic economic crises of post-war Britain have all taken place in the neo-liberal era: in the early 1980s, the early 1990s and – of course – today. In his book Keynes: Return of the Master (2009), Lord Skidelsky found that average British unemployment in the Keynesian era of high taxes on the rich was 1.6%. In the neo-liberal period initiated by Thatcher’s governments – with ever-lower taxes on the top – it was 7.4%. So much for high taxes being a block on job creation.

The 20 right-wing economists may be part of an orchestrated campaign by wealthy businesspeople, but let’s take their letter as an opportunity and go on the offensive. At a time when working Britons, the unemployed and the poor face being hammered by cuts and – in the case of VAT, higher taxes – the case for the rich to pay more is unanswerable. It is popular and it makes economic sense. And – just as importantly – it would allow us to do what only the right are currently doing: dictating the terms of political debate in Britain.

Comments are closed

Latest

  • Comment Ed’s interview with the British people

    Ed’s interview with the British people

    “Hi, come on in. Sorry to keep you waiting but we’ve had quite a few of these interviews to get through…It’s Ed, isn’t it? Let me introduce everyone – we’re the British people. I understand you’ve met quite a few of us already. Do you have a copy of your CV to hand?…No, that’s fine, everyone forgets things. I think we have one here…yes, that’s all very impressive. What about in your spare time? It says here you like walks […]

    Read more →
  • News “He’s blown it”: Tory MPs slam “painful” Osborne speech

    “He’s blown it”: Tory MPs slam “painful” Osborne speech

    Backbench Tory MPs are privately despairing at George Osborne’s speech to Tory Conference yesterday. The Chancellor’s announcement that he plans to freeze all benefits for working-age people, amounting to a real-terms cut, has dismayed Conservative’s who are concerned with their party’s image among the working class. According to today’s Times (£), Tory MPs are unhappy that in-work benefits will be hit as hard as jobseeker’s allowance, sending out a message that it doesn’t pay to work. The Times reports: A Tory […]

    Read more →
  • Comment Ukip have no plan for the future

    Ukip have no plan for the future

    Lunchtime yesterday, eleven days on from the Scottish referendum, I found myself back on a street corner talking politics. And although the break-up of the UK wasn’t on people’s lips, some of the issues in the centre of Middleton were the same. A frustration about politics, worries about public services and a sense that in hard times people want a sense of a fairer, more prosperous future. I was in Heywood and Middleton to support Labour’s parliamentary candidate Liz McInnes. […]

    Read more →
  • Featured The Tories’ miserable little offer for Britain – and why it’s not working for them

    The Tories’ miserable little offer for Britain – and why it’s not working for them

    Shock and dismay were the order of the day on Sunday at Tory conference, as Lord Ashcroft revealed his latest “mega-poll”. His conclusion was that Labour would win a “comfortable majority”. Cue despair and incredulity from Tories, and delight and incredulity from Labour supporters. After last week’s Labour conference (certainly the flattest in recent years, at least until the final day) Labour members and activists were feeling understandably downbeat – especially following the Ed Balls hammerblow last Monday. But the Ashcroft […]

    Read more →
  • News Another Tory defects to UKIP

    Another Tory defects to UKIP

    Richard Barnes, Deputy Mayor of London between 2008 and 2012, has announced that he has left the Conservative Party to join UKIP. Barnes was also London Assembly member for Ealing and Hillingdon between 2000 to 2012 – but lost out at the last London election to Labour’s Dr Onkar Sahota. Barnes, who had also been a councillor for Hillingdon since 1982 (and became leader of the council in 1998) then stood as an independent council candidate in Harefield but failed […]

    Read more →
7ads6x98y