Monday, March 21, 2011

"Baroness backs rich" shock

Somebody who is a Baroness (whatever that is) has contributed some ramblings to a tatty freesheet this evening making the case for tax cuts for the better off (http://www.thisislondon.co.uk/markets/article-23933876-cutting-50-percent-tax-would-throw-a-lifeline-to-london.do).



Apparently the 50% tax rate is a disincentive to "footloose" international companies to create wealth here in London.



It may be that I am an antediluvian, unreconstructed Bennite from another era, but I would just as soon not share the city with the greedy shysters who think only of themselves and resent paying a fair whack for public services which could save their life.



Apart from anything else a lot of these "footlose" money makers actually make money out of moving money in a financial services sector whose dominance over the UK economy has helped to ensure two generations of decline of the really productive economy.



They presumably include the "merchant banker" recently sacked for waving a tenner at demonstrators protesting at cuts.



The suggestion that tax cuts for the rich will encourage growth and job creation is a risible contribution to debate on a serious topic. Private sector growth would be far more likely to be encouraged by public spending on goods and services in the UK, both directly and through "multiplier" effects.



Indeed, the "balanced budget multiplier" suggests that an increase in public spending, balanced by an equivalent tax increase, would provide a modest boost to growth, since public spending will predominantly be in the domestic economy whereas the impact of a tax increase will be a smaller reduction in domestic demand as this will be accompanied by reductions in savings and in expenditure on imports.



So on the whole I think we should be fighting not just to keep the 50% tax band but to increase it - and perhaps with a surcharge for those with titles? A "Baroness" (and "Baron") surchage of 10%, with higher surcharges for more elevated titles up to 30% for an Earl or Countess?

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