Just whose pips will squeak?

Jock — Sun, 11 Jun 2006 13:24:39 +0000

Sometimes it only takes the back of an envelope to verify rough tax calculations. Clearly e-Tory Iain Dale doesn't keep real envelopes any longer when he says that in his interview with Andrew Marr this morning Ming Came Clean on Tax Hikes:

Well if you're a lobby journalist scratching your head about what to write tomorrow, Ming Campbell's just given you your story. On the Andrew Marr programme he readily admitted that the cost of his so-called "Tax Cuts" would see "the rich" (which he couldn't define) paying £40-£50,000 a year more EACH in tax, as a result of his reform proposals. Let me spell that out again...

£40-£50,000 MORE in tax per year! Each!

Feel those pips squeak! This will apparently enable him to fill the £12 billion hole in the LibDem tax calculations. I suspect that although they might be able to fill the hole in the first year, the would reoccur in the second. Why? Because every so-called "rich" person will have left the country. Perhaps someone should remind Ming of what Abraham Lincoln once said...

You don't make the poor richer by making the rich poorer.

Aside from the fact that Ming did no such thing as anyone who watched it could see he was reacting guardedly to a set of figures thrown out by Marr himself making assumptions about who would be targetted by tax increases. Marr's researchers had suggested we were talking about, I think he said, the top 250,000 wealthiest households. So just who are they and what difference would it make?

Well 250,000 households are about one per cent of households. Most statistics seem to show that the wealthiest one per cent in the UK own between about 20% and 23% of all the wealth in the UK. By contrast, fully half of the UK adult population shares 7% of wealth including housing wealth between them, or just 1% without housing wealth.

Now the wealth of this 250,000 wealthiest households is growing, at average returns (and in fact they tend to grow faster than the average), at about £50,000,000,000 a year, of which we may or may not want to capture about £12,000,000,000, or around a 25% tax rate, in order to bring my and other average earner's tax rates fall to about 34%.

Seems like a good deal to me for the vast, vast majority of the British public. Scaremongering Tories beware - when people realise who is affected one way or another, I think they will be pleasantly surprised.

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Just whose pips will squeak?