Daily View: Should highest earners' tax be cut?
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Commentators ask whether a tax cut will stimulate growth after to drop the top 50p tax rate for people earning over £150,000 a year.
that tax cuts to lower earners would be more effective:
"If people did not have to begin paying 40% tax until they earned, say, £60,000 per annum, this would ease the burden on the households that are most likely to spend on consumer goods - releasing a considerable amount of disposable income to stimulate the economy."
the claim that the high tax rate deters talented workers from working in the UK:
"To suggest that talent and remuneration is correlated is, shall we say, just a little bit of an error? There are extraordinarily talented people in this country making a lot less than £150,000 a year. Most of those who are making £150,000 are either in finance (making sure that pensions funds have generated no net return for their members over the last decade or more, for example - one of the weirdest definitions of growth I know and and also one of the strangest definitions of talent) or are in senior management of major multinational corporations where there is no proven link between talent and return, but much more evidence of a cosy club designed to increase the wage gap between senior executives and the rest."
the think tank predicted some time ago that the 50p tax rate would damage the economy:
"Back in March, in the snappily-titled The Revenue and Growth Effects of Britain's High Personal Taxes, our experts said pretty much the same. Indeed, we calculated that the tax would actually lose the Treasury some £350bn over the next decade, as businesses and high-fliers left the UK for lower-taxed countries. Of which there are many: a KPMG survey of 86 countries last year showed that 82 of them had lower taxes than the UK."
But blogger the tax cut may be hasty as we can't know the impact of the 50% rate for sure until next year:
"Lowering it now would be premature and potentially unfair but it may have to be an option next year. Not because it 'frightens away foreign investment' or 'represses entrepreneurialism' as the right suggest, but because the principle with which the policy was brought in may not become a reality."
Ex Labour treasury minister that the message the tax sends out is more important than the revenue it brings in:
"Of course nobody wants Britain to be a place where greed is celebrated, where rich people are deemed superior, where taxation is regressive and stupid financiers are let off the hook. That would be absurd. But neither should it be a place where hard work is psychologically punished, where honest human success is a problem for policy makers, and where aspiration that leads to action and drive among all people is not something to be nurtured, encouraged and valued by society, rather than - as this tax suggests - only being important up to a certain income level."
that even if the 20 economists were right, it is politically impossible to reduce the tax rate now:
"People forget that it took the Thatcher government nine years to pluck up the courage to lower the rate to 40p. Her fans should be reminded that even the Iron Lady in all her pomp was constrained by the limits of the possible.
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"Nor did she have troublesome Lib Dem allies to contend with, her only opposition coming from a Labour Party that was still slowly working its way back to the shores of credibility."
Finally, how productivity would be affected:
"It is true that lower tax rates may incentivise people to work harder. But they also increase disposable income, which encourages them to play harder too. Many economists believe the gains and losses in productivity may even cancel each other out."
