THE BLOG

50%? Grin and Bear It

27/01/2014 12:29 GMT | Updated 28/03/2014 09:59 GMT

These days, the political scene is more akin to Wrestlemania than a ground for reasonable discussion. The public pick their favourite privileged champion and become the partisan side-line cheerleaders, blindly adopting every stance they can of their preferred political wing. Meanwhile the wrestlers engage in exaggerated, farcical showpieces; staged battles where the questions are pre-empted and the arguments are ready prepared. The politicians don't need to think too much about their response, they just need to concentrate on how best to entertain their cheerleaders and win the round, no matter how protracted, incompetent and superficial it may be.

Ah the "job creators". The euphemistic mask of the elite. This is one of the favoured arguments for the anti-50% brigade. "Job creation" is one of those notions that no one can be against. Being anti-job creation fits into the same category as racism, benefit fraud and paedophilia. There is no place for it in society and it's widely condemned. The Tory rhetoric has long sought to rebrand the incredibly wealthy as "job creators". It's a neutral term which isn't plagued by the usual semantics associated with the incredibly wealthy. A vote winner.

It's fair to say though that not everyone who falls into the 50% bracket is necessarily a "job creator". Put differently - how many jobs do those people who fall into the 50% rate actually create? My gut instinct - not very many. Feel free to disprove my wild estimations with hard, statistical evidence, but I'm willing to guess that the majority of jobs created in the British economy last year were generated by global conglomerates, not SMEs (though I'd like to stress I am aware they contribute a great number of jobs to the economy).

I'll stick my neck on the line further and say that the majority of any jobs created by the global conglomerates would exist regardless of a 50% rate. McDonald's is unlikely to hold back on hiring new burger technicians because of the new tax rate and it's hard to see how a multinational organisation's hiring strategy will be compromised by a tax rate that affects such a small percentage of the population (and, as far as I'm aware, has no direct impact on its P&L).

So what of the entrepreneurs who do create jobs in the UK economy? Will they really be scared off by the rise in 50% rate? Successful entrepreneurs are usually famed for their astute judgement and ability to measure risk against reward, or, the difference in their take-home salary vs uprooting their entire business and relocating it to a country that can offer a similar standard of workforce and corporate network that a country as advanced as Britain can provide. It's an easy decision to make; relocating an entire SME to a new country would surely be a move akin to, pardon the cliché, cutting your nose to spite your face.

Fairness is another abstract term that is often brought into the tax debate. "It's not fair!" they cry. "The wealthy earned their money fair and square. It's not fair they should have to give so much away". No. What's not fair is the huge number of welfare cuts that have left hundreds of thousands of hard working people relying on food-banks for nourishment. What's not fair is the fact that millions of tax payer funds are embezzled on vanity projects while the desperate need for social housing continues to go unattended to. Fairness is a relative term. Fact, though, is measurable, and it is a palpable fact (through all manner of statistics) that throughout this financial crisis it has been the lower classes, in particular the poorest and most vulnerable in society, who have borne the brunt of the cuts. If anything raising the tax rate for the wealthy would be great for the sake of variety, a refreshing deviation from the norm.

However you look at it, raising the tax bracket will generate income for HMRC. It may simultaneously expedite Britain's seemingly inevitable class war (it will certainly encourage the political cheerleaders to cheer louder and with more fervour), but it will generate revenue. Even if the sum is as paltry as the Tory party make out to be the, this additional revenue will help cut the abstract deficit, the noose that hangs us all (well, the noose that hangs most of us).

We're often told that the Tory party is for those who want to work hard. So to those who are starting to panic at the prospect of having to pay a marginally higher rate of tax on everything above a relatively large sum of money, I say this - grin and bear it. Work harder. Demonstrate prudence. After all, that's what the majority of the British public have been told to do for some time now.