Plan B Forum

Labour would reintroduce the 50p top rate of income tax for those earning over £150,000, if it returns to power, the shadow chancellor has said.

Ed Balls said a government analysis which showed it did not raise much was skewed by ministers' assumptions.

The previous Labour government created a new 50% tax band in 2010 for anyone with income of more than £150,000, but the coalition cut it to 45% last April.

Conservatives said an increase would put "the economic recovery at risk".
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And some business leaders echoed that warning.

Speaking to the Fabian Society in central London, Mr Balls said: "When the deficit is still high, it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut."

He said Labour wanted to finish the job of getting the deficit down by "reversing this unfair tax cut for the richest 1% of people in the country".

Labour would reintroduce the 50p top rate of income tax for those earning over £150,000, if it returns to power

A return to the politics of the 70s.

"... So it is with the Laffer curve. It seems obvious that 100% taxation would induce people to stop working, and indeed very high marginal tax rates due to benefit withdrawal do discourage the poor from working. But arguments from the IEA and others that a 5p increase in the top rate of tax would result in mass flight of talent, resulting in economic disaster, are unfounded. We have no idea what the Laffer curve looks like, let alone where the peak is. Opinions as to the “optimal” rate of tax on the very rich differ wildly, from 40% (IEA) to over 80% (Piketty and Saez). The IMF’s recent research suggests that there is scope for tax rises for the very rich in most countries and especially in developed Western countries, although they don’t go as far as Piketty & Saez. But until someone proves conclusively that at some rate of tax, revenue generation ALWAYS reverses irrespective of other effects, the Laffer peak will remain mythical.

Since no-one has managed to prove the existence of a “tipping point” after which higher taxes become counterproductive, let alone where that tipping point might be, the arguments for and against higher taxation of the rich tend to be fought on moral grounds. And the fight is bitter. ... "

dgs49 wrote:As long as you keep talking in percentages and ignore the amounts, it is possible to, for example, complain that a secretary pays "more than" her boss - when the fact is that the boss actually pays many times what the secretary pays.

dgs49 wrote:I would like to see one politician have the balls to suggest a hard-dollar (pound/Euro/Drachma) ceiling on income taxes; once you've paid this much, you've paid enough.

dgs49 wrote:Regardless of what number were chosen, the political fighting would be fun to watch.

Econoline wrote:And I would like to see one politician have the balls to suggest an enormous but finite hard-dollar (pound/Euro/Drachma) ceiling on income; once you've been paid this much, you've been paid enough (and the rest is taxed at 100%).

Sue U wrote: That would be nice, but I'd settle for a 100% estate tax instead.

Federal estate tax is not imposed on first $5.3 million, and the top rate on taxable amounts is 40%