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Friday, December 18, 2009
What a Darling
A recession is when an economy not only ceases to grow, but contracts. Economic contraction means less wealth is being generated in one period of time, than over a previous period. If one's goal is to grow the economy - for it to generate more wealth - surely the last thing you should wish to do is punish those who generate the most wealth in society. Britain's Chancellor of the Exchequer, Alistair Darling, doesn't see it that way. After having run up a historic deficit last year, all in the name of fighting the recession, he now needs to plug the enormous hole in the public finances. Taxing the rich, i.e. the most productive, is the politically expedient thing to do.
Mr Darling is considering levying a one-off windfall tax on bank profits and a super-tax on bankers who receive bonuses above a certain level, and indicated that he expected the rich to pay more in tax.
Taxing profits at 10 per cent would bring in about £2bn this year alone, but while both moves are said to be “on the table”, a final decision has yet to be taken and the Chancellor was discussing the options with Gordon Brown yesterday.
Mr Darling indicated there would be no back-tracking in Wednesday’s pre-Budget report (PBR) on the new higher rate of income tax — of 50p on earnings of more than £150,000 — to be introduced from next April.
Politics and philosophy would seem to have little in common. Politicians do, roughly, what they think will get them elected. What gets them elected are the views and values of the electorate. The Chancellor can get away with proposing so economically stupid a policy because of the widespread philosophy of egalitarianism. The belief that people are entitled to equal outcomes, regardless of talent or effort, partly underpins the progressive income tax system. Thus the more productive you are, the greater your "fair share" of paying for the public finances. Taking money from the rich is just part of evening the score.
Posted by Richard Anderson on December 18, 2009 | Permalink
Comments
Taking money from the rich is just part of evening the score.
Posted by PUBLIUS on December 18, 2009
You're really behind the curve on this issue. Labour's tax policy only superficially changed when Phoney Blair convinced the left within the party that maintaining high individual tax rates would consign them to the opposition. With Nu Labour gone and old Labour back the class warriors have reappeared. Look at the number of people / companies leaving for Jersey and the Isle of Man and the 50p tax will fail as well. Labour's problem isn't tax it's convincing it's core to stay with them and not move to the BNP.
Posted by: The Stig | 2009-12-18 12:25:17 PM
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