ED BALLS WANTS TO TAX THE RICH IF LABOUT IS ELECTED TO POWER IN 2015 – Shadow Chancellor Ed Balls yesterday announced that a future Government would raise the top rate of income tax back up to 50 pence; effective reversing the cut to 45 pence made by David Cameron.
It is a decision that has deeply divided the Labour Party with some fearing that such a ‘tax the rich until they squeal’ policy will take Labour back to the 1970s where Harold Wilson’s Government policies took an extreme left-wing approach by increasing tax to 83 pence; a massive 98 pence when unearned income was added.
Read full story … Daily Mail
You might find this surprising but many very wealthy high earners don’t have a problem with paying more tax.
Indeed when you look at the likes of Warren Buffet, Bill Gates and Sir Richard Branson who all believe they should pay a higher rate it is obvious there is a degree of merit to making those who can afford it to pay more.
The average European Union top rate of tax is currently 39.9% so Britain has a slight disadvantage to attracting wealth for its current rate stands at 45%.
There’s two ways you can look at the wealthy and that is either consider them as ‘cash cows’ who need milking for everything they have or ‘wealth creators’ who engage in investing their money in order to create jobs and therefore wealth for the lower and middle classes through employment.
Would raising the top end tax rate do any real harm? This of course depends how far you are willing to increase the top end tax; Ed Balls’ suggestion might not be that outrageous or harmful to the economy but if he’s looking to follow in the footsteps of his predecessors, such as Harold Wilson, or look across the Channel to François Hollande’s socialist policies and a top tax rate of 75% then it’s obvious it will do untold harm to Britain’s economy; you only have to look at the current state of France’s economy to fully understand that very high taxation on the rich only drives them abroad.
According to national statistics in 2011 there were 236,000 paying the top rate tax of 50%; this is of course a very small percentage of the population considering there are approximately 31 million taxpayers.
There certainly are conflicting numbers from Labour and the Tories for according to Ed Balls between 2010 and 2013 when the top tax rate stood at 50% the Government raked in over £3 billion.
However, according to the current Chancellor George Osborne, the additional revenue to the Treasury at 50% was only £500 million; the remaining £2.5 billion actually came from a surge in the economy and a number of crackdowns on those avoiding tax.
The Office for Budget Responsibility states that the loss in revenue to the Treasury by reducing the top rate tax from 45% to 50% only amounted to £100 million annually.
I think it’s obvious that the disparity of the figures can only lead to one conclusion; that being that none of those in Government really have a clue what they are doing or what the actual figures are.
The announcement by Ed Balls is little more than a move to appease the socialist element of the voting public in the lead up to the General Election and that any raise in taxation, if Labour came to power, would most likely result in not a move towards reducing the national debt but rather increasing welfare in order to curry favour with the poor.
There are lots of policies I certainly disagree with that the Tories have made during their tenure but lowering taxation for the top earners does allow for better investment; give a pound note to a businessman and he’ll generate two pound notes but give it to the Government and they’ll spend five pounds adding four pounds to the national debt.
The reality is that the money is far better off in the hands of those who understand how to use it to create wealth for the betterment of others instead of those who will use it to effectively buy votes.
We’ve witnessed over the last 18 months a drive to reform welfare and it is beginning to work; that is more people are going back to work due to the cuts in benefits. This in turn increases overall revenue from taxation which should allow the wealthy some relief in order to create more wealth and indeed attract wealth from overseas.
The idea of a 50% top tax rate might not be viewed by many, including the wealthy, as a real problem but it does put Britain at a disadvantage to attracting more overseas wealth and allowing for re-investment.
The question is what does Mr. Balls intend to do with the extra money? If his socialist ideology remains far left then it’s likely he’ll end up scrapping welfare reform which will then see unemployment rise and Britain being pushed ever closer to the abyss of bankruptcy as the Government scrambles to borrow more money in order to prop up the welfare system.
Decide for yourself and certainly there are pros and cons to increasing taxation but ultimately the wealthy have a choice; that is, like France they can pack up and leave which then restricts wealth creation leaving the middle classes to pick up the bill for ever increasing public spending.