There is a good article by Simon Jenkins in today’s Guardian. It is a response to the letter in the FT earlier this week demanding a reduction in the 50p income tax band. “whenever 20 economists put their name to a letter it is a near certainty that nonsense is being perpetrated.”
Jenkins points out that the claim in the letter that the high rate punishes wealth creation and stifles growth is totally unsubstantiated. The main beneficiaries would be high earners in the financial sector whose reckless entrepreneurship in the past has crippled Britain’s prosperity.
He also points out that this cut would further exasperate the highly damaging trend towards increases disparity between rich and poor and that the more enlightened wealthy are clamoring for high taxation of the rich.
The area Jenkins focuses on is the neglected one of property taxation. He points out that the revenue collected from council tax has declined from 12% to 5% over the last 30 years, and that the differential between the highest and lowest bands is unfairly too small. Property taxes cannot be avoided and, unlike stealth taxes they are paid in anger so there is a demand for accountability.
In the discussion that follows Physiocrat pointed out that the best form of property tax is based on land not buildings and upon the economic rent rather than market price.