Given Alastair Darling's brave move of increasing income tax to 45% for those earning over 150,000GBP there seems to be a wider debate starting regarding how taxation should be implemented for 'top earners'.
For me, I am perfectly happy with the 45% tax band, not that I earn anything close to 150k. And nor do I have any desire to earn that much for 150k is, quite simply, too much.
Going against the British tradition of mentioning one's pay, I was earning close to 40k before I took off on my travels and I felt like Scrooge McDuck for every day of it, bathed in bank notes and unable to shift the stuff quickly enough before another truckload arrived in my overflowing account the next Friday. It helps when you're a tight-fisted Scotsman of course and the idea of luxury is going out for some French Toast, Maple Syrup and Bacon for breakfast as opposed to some Rice Krispies or a Mars Bar.
So, with this top rate of tax nudging upwards, what are the chances we could go down the old Swedish route? Tax income up to a salary level that is considered too much (obscene) and then move tax rates up to 70, 80, 90% for anything earned beyond?
I understand it is controversial to suggest a Government can state categorically what is too much for a person to be earning. The libertarians will be pulling their hair out. That's fine by me though, it's a free world after all. My own thoughts are, if you do reach the heady heights of pulling in hundreds of thousands of pounds, you've either been born into it, workd your way into it or a mixture of the two. Either way, you should celebrate your success and learn when to shift your priorities from making money to something more civic-minded (creating jobs, funding charities).
After all, there are only so many scoops of ice cream successful little boys and girls should be allowed on their plates.
So, surely a group of Government geniuses can sit down together and work out how much annual income a family or person would need to earn in order to have:
- a big 5-bedroom family house, stables, wine cellar, secure entry and fountain
- a fat pension for later in life
- 2 nice cars
- a small yacht
- places in decent private schools for Timothy and Tabitha etc
- a kitchen always stocked with enough food to feed a small country
It may sound obscene to a rampant socialist like you and I but for some the above is probably relatively meagre. Can't we, as a country, say that anything desired beyond the above is too much and should be put almost beyond reach with a rigorous tax system? Greed, as the world is currently remembering, is not good.
And, for the sake of argument, let's say a combined income of 500,000GBP is all that is needed for the enjoyable lifestyle above. Why not tax at 90% anything earned beyond that point? Sweden have been doing it for years and have 100% literacy, awesome complexions and pride of place in the feel-good, health and sporting tables at every turn.
High earners taxed to the hilt don't actually seem to mind all that much and, if they do, they shouldn't.
And although I'm not saying for a second that the lazy unemployed lumpers should get bumper cheques like manna from heaven, there are areas where a financial windfall would be felt all across the country. Schools spring to mind straight away. Teachers, nurses, firemen all getting a wage that is needed to ensure a civic equilibrium. Doesn't sound too bad to me?
With Labour closing the polling gap on the Tories to 1%, maybe they won't need something as radical as this to get them safely through for a 4th term. But with Gordon Brown occasionally forgetting who it is he is fighting for in his role as PM and as leader of the Labour party, maybe this tax rabbit that is still sitting in the hat could be pulled to good effect somewhere down the line.
Or hey, maybe if the Scottish Government are ever granted full fiscal freedom, it can provide a more Socialist, Swedish model north of the border where such a philosophy would be more easily adopted. Scottish Labour have talked about social justice for years, I'm sure they'd get onboard.
But 45% is a good start. With the increased borrowing and VAT tax cut we'll need to start upping the tax rates sooner rather than later. Here's hoping Darling goes for it hammer and tongs.
** Yes, I fully expect to get a lot of stray hits from disappointed internet users with that title!