Thank goodness that amidst the turmoil in financial and political circles currently raging in Europe there is one news item that proves that some things never change. I refer to an open letter printed in the Daily Telegraph in which leading businessmen call for the Chancellor of the Exchequer to reduce the rate of income tax for top earners. It’s good to know that when we’re all required to pull together during times of austerity the wealthiest are doing their bit.
Amongst numerous recommendations, the top businessmen, with absolutely no vested interest whatsoever, state that “An early removal of the temporary 50 per cent tax rate would attract wealth generators to the UK and support the entrepreneurs we need to help us grow the economy and provide jobs.”
Now I’m quite keen to be a wealth generator, particularly in the Dunford household, so the letter written by these troubled souls got me thinking as to what might be done, both to put them out of their misery and for the economic benefit of the country.
The first and most obvious concern is how a wealth generator could cope financially with the burden of a 50p tax rate on annual earnings over £150,000. Desperate times call for desperate measures so I tentatively suggest that if the various chairmen and CEO’s could limit their annual income to £149,999 they would avoid the higher tax rate. It would mean, of course, that they would have to struggle to make ends meet with only £2,884 coming in each week. A challenge with which we can all sympathise.
The other alternative is to act on their recommendation, reduce the tax rate to 40% and increase the tax that lower earners pay to make up the shortfall. The benefit to all of us would be the flood of wealth generators entering the country.
Following from that, there is, however, a question in my mind about the principle of generating wealth at all. As far as I can make out the benefit to the economy does not come from accumulating large sums of money but in spending it and redistributing it. So, for example, one of the letter’s signatories is Sir Nigel Rudd, chairman of the British Airports Authority, and it turns out Sir Nige is a millionaire and lives in a £7million house in London. It’s easy to see how a 50% tax rate is inhibiting his ability to generate wealth. Nonetheless, as a concerned citizen he could be benefitting the country far more, in my opinion, by unzipping his wallet and indulging in some retail therapy. I’m sure I’ve got a picture or two that would enhance chez Rudd.
A cynical mind might think that the illustrious millionaires who wrote the letter are lobbying the government simply for their own ends but it’s inconceivable to me that the multimillionaire old Etonian Prime Minister and the multimillionaire Chancellor would put big businesses interests above the common man. However, I remain available for them to call on, should the advice of the old Etonian Cabinet Secretary, Oliver Letwin, leave the argument in the balance.
One final question about reducing taxes remains in my mind. If reducing the tax burden makes a country more attractive to entrepreneurs, surely the Greek system of collecting next to no taxes is inspired? Maybe we will end up rueing the sad loss of the collective wealth generation of Sir Nige and his colleagues to a mediterranean business paradise.