I don't agree. Here are five reasons why.
- The rich already pay a high proportion of income tax
Stephen Herring, head of taxation at the Institute of Directors, argued that the progressive nature of income tax already ensures the rich contribute their fair share. “According to HMRC, the top-paid 3,000 people pay more [income] tax than the bottom 9 million people,” he said. “Our system is already deeply progressive in how it applies, and rightly so. But it would be foolish to take it to the levels of confiscation and would disincentivise investment in the economy.” John Ashcroft, CEO of Pro-Manchester echoed the sentiment, adding: “The rich should pay more tax – but, indeed, they do.”
- Additional measures to tax the rich may be doomed to failure
Before their general election defeat Labour proposed a mansion tax under which owners of properties worth over £2m would face an annual charge. However, Herring insisted the tax would cause more problems than it would solve. “Estimates for how much it would raise range from £700m to £1.7bn. Let’s say we collect a billion; if we set that amount against the £170bn collected by income tax, it’s a tiny sum that makes no difference to the funding of public services. It does have a disincentive effect, though, and it’s a price just not worth paying.”
- Rich people are better at spending their money than governments
Ashcroft argued that rich people are better placed to spend their money on good causes than governments would be if they received it through taxation. “We know we have an obligation to do our best for the poor, but the great arrogance of the left is to suggest that they are somehow better at spending other people’s money than anyone else.”
- Removing tax reliefs for large charity donations could result in less money for good causes
The rich may be less inclined to donate to charities if they are denied tax reliefs on charitable donations, claimed Ashcroft. “Some of the very wealthy give considerable sums to charity. I have a client who gave £2m out of a £3m income to charity. The charities say if you took away that relief so that the rich pay more we will get less in charitable donations.”
- When rates of tax increase, rich people flee
Following François Hollande’s planned “temporary supertax” on earnings of more than €1m (£815,000), French actor Gérard Depardieu fled to Belgium to avoid paying the tax. “The way to get more out of the rich is not actually to increase the tax rate,” said Ashcroft. “You need to keep it around the premium level of 50%.”
-Taken from an article published by The Guardian: