Clarissa Tan made a number of fine points about the utility of the 50p rate of income tax yesterday. Tim Montgomerie makes some more at ConservativeHome today under the headline “Osborne is warned that Britain will lose its high earners if he doesn’t abolish 50p tax band.” Maybe, but he might lose the next election if he does.
This is not the 1980s. It was possible then to persuade middle-income voters that tax rates north of 80% were foolish, punitive and counter-productive. Making a comparable case for abolishing the 50p rate is a much more difficult prospect. If these were happy times matters might be different but they are not and there’s no point trying to pretend they are.
The CEBR, the latest think tank to address this issue, suggests that “Combined with increased labour and capital mobility, this means the revenue maximising top rate of income tax is likely to be less than 40 per cent.”
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