Monday, 23 March 2009

Tax Policy

I do hope that George Osborne thinks again before agreeing to a 45 pence tax rate on those earning over £150,000. This will not raise £2 billion. It will raise nothing. It will cause people earning over that to use the many perfectly legal mechanisms (such as pensions) to avoid paying it. Except of course they'll actually put more than they need away from the taxman.

That's why, in the 1980s, tax receipts went up when the tax rates came down. High taxes are a disincentive to earn, and thus create work, and thus create jobs, and thus generate taxes.

If George Osborne does not understand this then he should join the Liberal Democrats, who also do not understand it. If George Osborne thinks it should be retained for political reasons because it would send the wrong message not to do it, then I wish he would join the Liberal Democrats because he would be implementing an unConservative policy that would harm our economy for no other reason than political show.

The way to reduce public sector debt is to reduce public expenditure. The way to reduce personal debt is to encourage individuals to pay it off through restricting personal credit and lowering interest rates. The way to reduce corporate debt is to reduce interest rates to a level that makes holding debt on the balance sheet less worthwhile than borrowing to invest in the business. 

The argument 'the rich need to pay their fair share' incenses me. How do the idiots (I use this in the technical sense as I assume they must have low IQs to be unable to do the maths) that argue this case explain how it is that the richest 1% pay 22% of the tax take and yet do not pay their fair share? Presumably they believe that 'fair' means that a tiny group of high earners - who in the main are job creators - should be penalised even more for creating jobs? 

George Osborne needs to be very, very, very, very careful if he's going to promote Social Democratic policies under a Conservative manifesto and hope to get into power. that it I wonder? Is he thinking this might be a good election to lose...

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