Want a stagnant economy? Then keep the 50p tax!
David Cameron said today that he will not scrap the 50p tax rate, because “it would be unpopular”; because “the broadest shoulders should do more”; and because it would not be appropriate now that the economic situation has deteriorated. Let us dissect the arguments one by one.
Cameron approaches the argument from the wrong end. He wants to balance the books. But these are the books of a socialist state. This government is spending the most money any government has ever spent in the UK. Arguably, a government which merely seeks to finance such an excessive state is not Conservative. The question is not whether 50p raises money; or whether it is popular. The question is: will this 50p rate produce growth and therefore prosperity for all?
Of course 50p is popular with a majority in the land: they are not paying it. Something is not right because it is supported by the majority. It is possible that expelling hundreds of thousands of immigrants would be popular with a majority. It is possible that banning travellers would be popular with a majority. It is possible that expropriating anyone who owns more than, say, £500,000, would be popular. Democratic majority rule must always be subject to rules which limit what the state is allowed to do. In effect: limiting coercion by the state to an absolute minimum. Key in the limits to government stands the protection of private property rights – the ownership of one’s body and the fruits of one’s labour. Property must not be made subject to majority rule because it is of enormous benefit to all – including those who don’t own anything.
Private property (including the fruits of one’s labour) does not need protecting because of a “belief”, but because it advances society and therefore civilisation as a whole. Pay, profit, and resulting wealth shows which behaviour should be imitated and which shouldn’t: go out to work, or stay in bed? It shows which methods are the most effective, thereby leading to innovation and progress. It sends signals to everybody else as to which goods and services are required where and when: when the Soviet Union abolished private property it resulted in long queues and shortages. Accumulation of property and capital allows investment. Exclusive products become mass produced because wealthy people pay too much for them initially. Countries with no respect for private property stagnate or decline. Is it a coincidence that this government coerces us through taxes to part with the biggest share of our private property ever; while at the same time its country produces no growth whatsoever?
Should the biggest shoulders do more? They already do, of course. When I last checked, shoulders were situated on top of a body that can walk away. This is precisely what is happening in the City right now. Those biggest shoulders are moving to Switzerland and Dubai and Singapore and Hong Kong – and the rest of us will eventually have to pay for the shortfall in tax take. HMRC enthusiastically reports that the 50p brought in hundreds of millions in the first year. Presumably, it takes a while before people start fleeing. Perhaps the 50p payers even hang around for a bit longer while Osborne dangles the prospect of the future abolition of the 50p in front of them? What the increased revenue does not show is how much tax take is not achieved because those high-end employees never arrive on our shores; or because entrepreneurs decide to invest outside of the UK. What that increased revenue does not show is what harm it does to the economy. This government of the 50p is also the government of no growth. Countries which slashed their taxes always experienced a high growth as a result. 50p tax seems to be part of an Agenda for No Growth.
It is said that we could not cut the 50p, because the economic situation has deteriorated. Has anyone in Osborne’s department ever wondered whether the one does not (in part) cause the other?
In this whole debate one very strange argument popped up. According to The Telegraph. “Ministers are also thought to believe that the decision effectively to extend the public sector pay freeze until 2015 has postponed the removal of the 50p rate”. Perhaps they mean to say that everybody should tighten the belt. To me and mine a public sector pay freeze comes not even close to approaching effective measures to reduce the size and therefore the cost of our bloated state. How about firing half of all the public sector employees so we can cut taxes to jump start the economy? Firing half of our public sector employees would have the added advantage that there would be fewer around to harm our economic endeavors with their rules and regulations.
Demanding that people part with 50p in tax is excessive. Add to this social security contributions, VAT, stamp duty, fuel tax, flight tax, and a myriad of other taxes, and you reach levels of 70 or 80% of taxation. Such taxes are not characteristic of a free people.
