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As Ed Miliband knows, the 50p tax rate will not fix a broken market

27 January 2014

Labour’s confirmation that it would restore the top tax rate to 50p was not that much of a surprise, Ed Miliband has always been clear that was what he wanted. But it does raise an interesting question about Miliband’s attitude to the market.

Those close to the Labour leader passionately argue that his agenda is actually pro-competition and pro-market, that it not a throwback to the 1970s. As Stewart Wood wrote in these pages recently, they see him as the heir to Teddy Roosevelt. But the 50p rate will hit any successful business person regardless of how open and competitive the market they operate in is. This isn’t action to fix a broken market but a view about how much tax successful people should pay.

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A consequence of Labour backing a 50p rate is that it will make it that much easier for the Tories to persuade business to be publicly critical of Miliband’s policy prospectus. Tory attendees at Davos were politely surprised at how open business people were to the idea of taking on the Labour leader in public. It will also mean that the Tories can be confident that business won’t object too loudly when they do things such as pushing for a rise in the minimum wage; business is increasingly aware of what the alternative is.

Having said all this, the policy itself is undoubtedly popular and the Tories will not relish having to defend their decision to cut the 50p rate. But I doubt that this policy will have anything like the political impact of the energy price freeze.

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  • sarah_13

    The danger of business attacking labour overtly is that Ed miliband will court the nasty sentiments of envy and resentment and probably encourage the narrative of Ed Milliband, pro workers and Cameron pro wealthy vested interests and business. It is nonsense of course Ed Milliband is a ruthless political individual with no conscience when it comes to the consequences of his politics.

  • Eddie

    Plenty of other ways to tax fairly:
    1) include the value of property in all benefit claims, not just income.
    2) scrap maternity pay linked to income (thereby freeing up £4 billion to spend or children’s education). This is just scrounging by the yummy mummy classes.
    3) Scrap child benefit too. Most use it for luxuries anyway, and those who do not can get benefits in other ways.
    4)raise taxes on property, especially second homes and investment property. Taxes in New York are 10 times what they are here – so let’s be more American on this! Our low interest rates make more property taxes fair.

    Of course, none of these things will happen because they’ll lose votes – and specifically women’s votes – but they WOULD be fair changes and would free up billions to be spent on healthcare, education, cuts to taxes on small business etc.

    Wealthy property-owning people so not need state benefits.

  • Alan Douglas

    How did this policy, which was implemented by one G Brown just a few weeks before the electorate threw him out for the total disaster that he was, become as big a sacred cow as the NHS ? Brown had 13 years to do this, but did it only to lay a banana skin for the next governement. Can we not see what a spin nonsense it always was, and ditch it ?

  • Bert

    To paraphrase the clunking fist
    “this is no time for a Wallace”

    • Alexsandr

      dont be nasty to Grommits friend.

  • Mynydd

    “As Ed Miliband knows, the 50p tax rate will not fix a broken” He has not said it would so stop putting words into his mouth.

    • Nicholas chuzzlewit

      We call it reasonable conjecture you idiot.

  • anyfool

    But I doubt that this policy will have anything like the political impact of the energy price freeze.
    If you actually thought things through you might have looked at how many power companies have started to withdraw the rates that people on benefits get, Scottish Power has just cancelled their Fresh Start tariff.

  • 2trueblue

    Typical of the headline grabbing Balls and Millipede, the two most financially incontinent pair that did nothing in 13yrs with Brown and Blair to ensure that we had anything left in the till, and grew our debt. They introduced the 50% rate with Darling in the last days of their reign out of spite, when it was obvious they had totally wrecked the economy, the infrastructure, education and grown both youth unemployment, teenage pregnancies and child poverty. What a bunch of sleaze bags.

  • RavenRandom

    Of course it’s popular. “Hey do want that guys stuff, here you are.” It sickens me, divisive class war politics, aiming to govern for the few not the many.
    State sponsored theft.
    Irresponsibly bribing the voters with single issue policies (and their own money, or their more successful citizens money) is what Labour is about. Doesn’t matter that it’s voodoo economics that’s failed everywhere it’s tried.

  • Andy

    Another piece of Marxist bullish*t which this idiot learnt from his Father – the man who hated Britain, the Britain that saved his miserable life.

  • toco10

    What the never had a job Miliband doesn’t realise because he is utterly thick when it comes to finance is that not only will tax revenues drop should a 50% tax rate ever be introduced but far fewer jobs would be created thus ensuring those in work would have to shoulder an ever increasing burden to pay for his Marxist pedantry.No wonder he kneels at Hollande’s feet-he is equally shallow and misguided.Look what Red Ed,the dysfunctional and erratic Gordon Brown and bully boy Balls did to our economy just five short years ago.

  • BarkingAtTreehuggers

    RBS just announced it will have to set aside another five thousand million Pounds Sterling for this year alone for compensation/litigation of its criminal activities. Why is the taxpayer/costumers continually expected to pay for this even six years after the events? A 5% rise of top level income tax would surely not be sufficient to cover the additional expenditure.

    • HookesLaw

      The figure I read is £3 billion for activities over 10 years under the nose of Gordon Brown.

      • BarkingAtTreehuggers

        …add litigation costs then you are there.
        In any case I am not penny-pinching.

        • HookesLaw

          In other words you made it up.

          The banks were regulated unders a system devised by Brown. Brown revelled in the profits the banks made and the taxes they generated. Goodwin was given a knighthood.

          • BarkingAtTreehuggers

            I don’t know what sort of guidelines you chaps adhere to when passing judgement but this RBS nonsense MUST end now. End it and for Fawke’s ake charge the delinquents. I hereby declare my refusal to pay for any of this.

            • HookesLaw

              Well you are a bit stuck – the people who are paying for this are the shareholders and Gordon Brown bought this particular pig in a poke on your behalf.

              • BarkingAtTreehuggers

                Rub it in, pal. Who’s Gordon Brown – the chap that saved your world, not mine.
                I will also confirm this is by no means a rolling contract. I hereby declare the refusal of ownership of any non-existent RBS ‘assets’. There aren’t any. Close them down.

                But, no – it’s you who is the socialist here, you’re the one who will not do that. You’re the one whose mates declared only last week that RBS were worth their bonuses. Did you think I would forget that? You will not kid me, pal.

  • Alexsandr

    why do people talk of a 50p rate. people think 50p – that’s not much -its less than a mars bar
    we should talk of a 50% tax rate. And push the idea this is half of peoples earnings.
    but the tax rate isn’t 50%. Its far more when employees NI is taken into account. And when you add in employers NI -well there isn’t a fat lot left.
    and don’t lets pretend employers Ni is paid by employers. They think, ‘I have £150,000 to spend on this post. Then they knock off Employers NI and sickness, maternity, holidays etc so they offer the employee a lot less that £150,000. The employees pay for all this in lower salaries.

    • 2trueblue

      Moving up in a company to a more senior role, how much will it cost businesses to reward those moving up to the higher salary level?

      • Alexsandr

        indeed, or retain staff….

    • HookesLaw

      Yes – or employers pay more to compensate and thus we get wage inflation. The BBC paid its staff as ‘freelance’ to save them paying tax. And in the News the BBC would be
      1 – bemoaning the deficit – the size of which thay had actively added too
      2 – criticising the high paid for not paying tax when they had actively helped their employees avoid it.
      The activities of the BBC should be rammed down Ed Balls’ throat to show what happens when taxes are too high. Lets reserve 3 cheers for the BBC interviewer who does it.

      • Alexsandr

        cameron should have clipped the bbc’s wings in 2010

        How people like paxo get away with it is beyond me. He is clearly within IR35 as his time and work is clearly controlled by the BBC, so he should pay tax and NI on a large part of his income.

        sorry paxo, you are just an example. I am sure many other bbc people are the same.

      • Rainsboro

        Not quite true. The BBC paid its top names as freelances. When I worked for them I did at least a dozen different technical jobs, was paid by the hour, got no holiday pay or sickness pay and could never be sure I’d when I would be working, I was usually told at the end of the week. I was put on PAYE.
        Presenters who had done the same show at the same time every day for years were classed as freelances – the BBC might be bien pensant left in its editorial policies but it’s attitude to its staff is ultra capitalist

    • Holly

      Why should ANYONE have to pay 50% of their earnings to ANY government.
      The same political party, (trying to grab half of your income) is the party who caused the financial mess in the first place.
      But unlike the Tories, who ACTUALLY gave the rich a 5% income tax rise, (compared to what they paid all the years Labour were in government) and the lower earners a £10,000 Personal Allowance hike, (compared to 2009/10- £6475 under Labour) Labour take the easiest option, even though it is bad for the economy.

      What is even more sick about the recent announcements is that this is just another juvenile, ‘white picket fence’, politically motivated cop out by Balls & Miliband.
      It is, however quite heartening to see Labour’s polling lead drop to 1-2 points.

  • McRobbie

    Millie may indeed know the 50p tax is a gimmick but he’s doing his normal populist ploy by making whimsical marxist policies to get another vote or two. He has taken the same view with bank closures, price fixing of energy and the “new way forward”…i.e marxist policies that have failed everwhere they have been tried.

  • wycombewanderer

    The energy price freeze policy has had only one impact, it has raised prices.

    Likewise the 50p rate will have only one effect it will reduce the revenue from higher earners.

    The shortfall will of course be made up from middle and low earners who labour hate with a vengeance.

    • sarah_13

      We know that but Ed Milliband and the Labour Party simply do not care! I don’t understand the lib dem and labour Mansion tax, does anyone know the details? If you have a house worth £2m and no cash do you have to sell your home to pay the tax? Will there then not be loads of expensive properties on the market, if so who will buy these properties will not the tax be an impediment to sales? won’t this then have a knock on effect on the housing market and the economy? I wonder how will it work?

      • wycombewanderer

        It is a tax on London and the southeast, a mansion in the north, a real mansion i mean, might well have a lesser value that a suburban semi in South West London.

        Which sort of puts their one nation nonsense into perspective.

        It also fails to take into account debt.

        Someone who owns a 250k house with no mortgage is wealthier, on paper than someone who owns a 500k house with a 400k mortgage, of course it’s all on paper because until a house sells it really doesn’t have a value at all,

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