At what point does taxing the wealthy become a punishment for success? The Liberal Democrats are spending a great deal of time at the moment trying to find ways of ensuring the rich pay their fair share – and more. And it is that ‘f’ word that is open to interpretation: what may be considered fair by some is viewed as extreme by others.
The Liberal Democrats are in a perilous state. Currently polling single figures, they desperately need to develop some policies. What better way than to tap into the growing anger towards capitalism and the so-called greedy rich? The recently-cleared Occupy camp from outside St Paul’s Cathedral drew widespread support. Some were unhappy at their tactics, but you don’t have to search too far to find support for the reasons behind the protest.
So Clegg and Co have been kicking around ideas that might well appeal to voters who want to duff up the wealthy. These include a possible mansion tax – a duty paid on properties with a price tag of £2m or more – and something else called a tycoon tax.
We also know there are splits within the coalition regarding the 50p tax rate, which is levied on those earning in excess of £150,000. Some senior Tories want it scrapped, while the Liberal Democrats say they will only let this happen if it’s replaced with something else that will make high earners pay.
By the time you read this column the Budget may well have clarified this.
But is this the first step towards penalising the well-off simply for being successful?
There is a solid argument that says those who can afford private education and healthcare are less reliant on the state and are therefore already over contributing to society by funding their private provision and paying NI and income tax.
It also has to be remembered that many people who are branded as wealthy run businesses that employ other people, which has a massive role to play in getting the economy back on track.
Even those in the financial sector who get a big bonus pump much of it back into the system through purchasing goods, property or services. Like it or not, this spending helps boost growth.
The trend for hitting the wealthy where it hurts could result in forcing those who are financially successful out of the UK.
After all, why would someone want to work hard to make a success of their career, only to see vast chunks of their income snatched away? We already live in a country where we are taxed to the hilt.
People need to get beyond envy and vote-winning tactics and think about this unemotionally.
We should crack down on those who avoid paying tax through non-dom status, and those guilty of tax evasion, but go much further and you end up penalising those who just happen to be very good at what they do.