The 50p tax rate is seen by some as a way of tackling the “undeserving rich” discussed in this week’s Spectator. For others, it is a counterproductive
imposition driven by envy. The primary practical justification for allowing wealthy people to retain their earnings is that it empowers them to invest in productive enterprises. Over 80 per cent of
the funding for business start-ups comes from personal savings or loans from family and friends. And just now we need to give the maximum encouragement to people with the determination to start new
businesses.
Opponents of a tax cut will no doubt say that wealthy people will not invest in enterprise but fritter away their gains on luxuries. One remedy for their fears would be to convert the tax into a compulsory contribution to a bond in a new “enterprise bank”, whose job would be to make commercially sound investments in new and existing businesses.
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