James Max - James Max is a broadcaster, columnist and business expert

50p tax rate – it’s the ideologists who should flee the country – not our high earners

Give me a single argument to defend the 50 pence tax rate that makes any sense. Let me answer that for you. There isn’t one.

With that in mind, the top rate of tax should go. And quickly. The economists who have urged the government to drop the 50p rate are right. Just because a tax rate is higher, it doesn’t mean it will raise more revenue. For a number of reasons. Rightly or wrongly the more money you have or earn the more flight of foot you are in terms of where you locate your business. You also may look harder for ways in which income can be paid to you in different ways or you may simply not bother to work after you have earned a certain amount. It’s complicated and part of the problem here is that ideology is being mixed with policy. That never works.

Unions calling a potential cut in the rate “monstrously unfair” are really asking for it. Those who pay their taxes are already paying more. The more you earn the more you pay. It’s already on a percentage basis so why is it “fair” to ask those fortunate enough to be earning that amount to pay even more? It isn’t. Furthermore is tax there to be a wealth re-distributor? Some would argue yes, but it already does so and surely the argument should go right back to what the state should provide and who should pay?

Indeed I would argue that if you do well and if you work hard, the tax system should not punish you for doing to. That’s a disincentive and a vicious one at that.

After waste has been substantially reduced or eradicated. After all the non-jobs have gone. After the bonfire of quangos has taken place. After the pocket lining of public servants has been stopped. After pension plans to fall in line with the private sector has been completed. After the benefits system has been reformed, then maybe. Just maybe there is an argument to look to the taxpayer for more. If it’s needed. Yet at the moment the government spends a lot of money on things we as a society neither need nor want.

There is a wider argument too. The UK bases its current success as being part of the global market. It is ridiculous for us to think that we can charge tax rates that are out of kilter with the rest of the world. The more money taxpayers have in their pockets, the more they can spend on goods and services. The better that will be for the economy and the quicker we can emerge from this very unpleasant economic slowdown. We won’t expand our economy by maintaining government spending. We will by encouraging investment, providing incentives and rewarding success.

It’s time for those braying for more tax to realise that government is there to provide the services we need and that it has a responsibility to spend the money it raises wisely. It’s also not there to continue to subsidise a bloated public sector or even to punish those who do well. Nor is it there to take money from those who earn it to simply hand it out to those who don’t. Unless there is a good reason for doing so. And that’s why we need a system in which government provides for those who need. Not those who just want.

By persisting with the 50 pence tax rate we are almost saying we’d rather have 50% or nothing than 40% of something. Who should be packing their bags? The ideologists and not our higher earners.

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