Last week 537 business leaders signed a letter urging that the 50p tax rate on very high earners be immediately scrapped in George Osborne's upcoming budget. On Question Time the conservative dinosaur John Redwood and the random bigotry generator David Starkey took it in terns to lament the two-year-old tax rate, arguing that scrapping it in favour of a "more competitive rate" would actually raise more money by making the UK a more attractive corporate proposition.
I'm not an economist, so for all I know these calls might be completely true and perfectly selfless. However the sheer convenience of this position is slightly dubious and it reminded me of an infamous incident earlier in the year. Back in January Francesco Schettino, captain of the ill-fated Costa Concordia, described to a judge how he had escaped the disaster before so many of the passengers by saying "I tripped and I ended up in one of the boats. That's how I found myself in the lifeboat". His astonishingly Berlusconiesque lack of self-awareness would have been funny if it hadn't been for the numerous fatalities. However the point isn't so much the validity of the captain's claim but the convenience of his supposed accident. While the passengers panicked and the staff worked to evacuate them, the man responsible for the disastrous situation, accidently found himself sitting in a lifeboat.
Since the election of the coalition we have told, "we're all this together", as if the financial crisis is a violent storm and we're all experiencing it in the same boat. However the top 1% of earners (you can probably see where I'm going with this) is a demographic of which most will not have been responsible for the economic situation but also accommodates all who are, has to be tempted into helping the country by being made to feel as comfortable as possible. They could pay more but they wouldn't want to and without them we would doubtless be left to stagnate in a mercy puddle off mass unemployment. Luckily our leaders (also for the large part, members of top 1%) are eager to fluff their pillows by protecting them from unappealing non-competitive ideas like the Robin Hood Tax.
It sounds terrible doesn't it; especially at a time when child benefits and tax credits are also being cut. However if the rich must be pampered to enable financial recovery then we don't have much choice. That is unless we take leave of our senses and invest in an economy that doesn't rely on the perpetual seduction of those who only love us for our tax-rate.
However David Starkey is right (minus the unnecessary misogyny) as far as his framing of the debate goes, this argument should not be an emotional one, instead it should be analytical. So have 'competitive tax rates' for high earners worked elsewhere? The answer depends on how you define "worked". (The following figures are taken from the United States Census and have been adjusted for inflation for the year 2008) When Bill Clinton left the White House in the year 2000 the median income for American families was $52,500. When George W Bush left the same office after eight years of cutting taxes for the wealthy, that figure had fallen to $50,303. That was a drop of 4.3% and the first time since records began that the figure had fallen over a two-term presidency, over the eight years of the Clinton presidency (prior to the tax-cuts) it had climbed by 14%. During the George W. Bush presidency wages remained more or less stagnant while the cost of living increased. At the same time corporate profits ballooned like they never had before and the money saved by the wealthy was not reinvested in the US economy. In America cutting taxes for the wealthy did work, if you happened to be wealthy.
However like I said, I'm not an economist and I like to think of myself as an open-minded person. There may be many factors separating our situations from that of America, the 50p tax rate may help to grow our economy and Francesco Schettino may very well have tripped and fallen into the lifeboat. However if there is one international thread running though this downturn is that the people who caused it have seen little or no personal consequence (give or take the odd knighthood) and that the economic suffering is endured by rest of us. The people who feel the least effect, many of whom are the perpetrators, always get to keep their yachts and mansions while we are told that it is for the best.
The reason Mr Schettino's excuse so eye-catching was because we all grew up aware of the idea that 'a captain always goes down with his ship'. The problem is that since we've been giving away power and influence to the private sector, those in power, the captains of industry, have no ship. They will simply trade wherever the best place to trade happens to be and that could be anywhere. For this reason there is no pretence of social inclusion, we are not and cannot be, all in this together.
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