With the Government openly preparing the public for spending cuts in the upcoming Budget, No Right Turn reminds us that there are alternatives – rather than cutting services and harming the poor, we could always raise taxes on those who can most afford it.
The state of New York is doing this, hiking state income taxes by 1% on those earning over US$300,000, and 2% on those earning over half a million (a relative increase of about 30%), while the UK government has just hiked the top tax rate to 50% and eliminated various dodges the rich use.
We could do the same, and introduce, say, a 45% rate on those earning over $100,000. From Treasury’s 2008 detailed model data, this would bring in over $750 million a year (unfortunately as the table only goes up to $100,000, I can’t model higher thresholds). That’s $750 million we won’t have to cut from our spending on health, education, welfare and roads – and $750 million we won’t have to borrow.
This would help balance the books and reduce inequality, and since the wealthy save a higher proportion of their income than the rest of us it wouldn’t be contractionary.
Of course, National’s policy is to do the exact opposite – they want to shower tax cuts on the rich at our expense.
Unfortunately I can’t see Labour championing higher taxes for the rich at the moment either – they’re still too cowed by the media’s drumbeat for tax cuts over the last five years to realise that the world has moved on.
Still, there’s nothing to stop the rest of us on the Left from pointing out the obvious.