I think James and Danny Finkelstein are correct. Political considerations trump the need to satisfy the Conservative party’s right-wing. And that means that, regrettably, George Osbourne is probably right not to promise to abolish the new 45% income tax band for the rich. At the very least this should be an aspiration not an immediate priority.
But the problem is not so much the 45p band, but the number of people trapped by the existing 40p band. This has been one of gordon Brown’s most successful stealth taxes, drawing more and more middle class voters into his clutches every year. Even this years’ widening of the bands does little to redress the matter. The effect is that an awful lot of middle-income earners are paying high-income taxes.
As James wrote way back in October, increasing the 40p entry level to £50,000 ( including the £6K personal allowance) would take more than half a million taxpayers out of the higher band.
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