We need a debate on the 50p tax band..

Fraser Nelson at The Spectator is calling for a debate on the 50p tax band and I agree with him.  Anyone who knows me knows my view that it’s akin to highway robbery but my view alone isn’t necessarily representative of the taxpaying public.  However, as a tax adviser I’ve seen a number of my clients turn their back on the UK and leave permanently because of the tax burden they faced.  Some were UK nationals but not all.  One in particular who had come to the UK from Greece to work in a reasonably high paid job in London threw the towel in and left when he realised how much of his work effort was being taxed.

As Nelson points out

Yet I believe this argument is too important not to have. If it could cost billions – and the economic models suggest it very easily could – then it would be madness to implement it. To break the 21-year truce with the high paid would, I believe, lead to a substantial drop in revenue from those above £150,000 which means the tax system becomes more regressive as the rest have to pay more. As I never tire of saying here, at the time of the 1988 Budget the top 1 percent paid 14 percent of all income tax – by 1997 this rose to 21 percent. And why? Because the top rate was cut from 60 percent to 40 percent.

The article is well worth a read.  It’s well written and relevant with comment on the Laffer curve.  The comments under the article are revealing too.  Tim Carpenter writes…

“Why do we need a long debate? The rate is nuts. The personal tax allowance theft from £100k is nuts. It is envy politics….” “…We should be aiming to make the entire UK a tax haven. We want capital to flow in. We want talent and wealth creators to remain and more to come.”

Aless Bieri comments:

I fear that the danger isn’t so much that rich people will go abroad and hire accountants, it’s that they won’t do the same amount of work. As you say, richer people are generally more able to pick and chose their work and their income, and it would be a shame if high tax made people think it wasn’t worth putting in the effort