50% Tax - For What?
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In yesterday's budget, the Chancellor had a special little surprise for everyone earning 150k+ - a new tax rate of 50%.
And whilst I am generally in favour of innovation, this is going a little too far. As anyone who lives in London by choice, you might begin to wonder whether the return on the emotional and personal investment of living in the UK is worth the effort.
Of course, other countries, primarily socialist (aren't we all nowadays) have equally high if not higher tax rates. Or as one French colleague put it, "That's not what I left France for!" For instance, in the famously high-taxing Scandinavian countries, your tax serves a purpose, and citizens can expect services in return: childcare for working parents, paid paternity leave and good state schools, to name but a few. Where's the UK in the PISA studies again?
But now we - probably foremost bankers - are being asked (of course rhetorical since you can't decline) to give up half of our peak salaries for what exactly? I still have to pay for my children's nursery, probably won't be able to send them to state school, and during paternity leave, the state paid me to stay home for one week at the whopping rate of £114.
Of course, that is not really what this is all about. The high earners are implicitly being made responsible for the mess that this country is in, and have to contribute to sorting it out. The credit crunch and subsequent takeover of the financial services sector by Whitehall has burned holes into the Public Finances which will take decades to replenish. On top of that, reviving the long-out-of-fashion John Maynard Keynes, deep recessions are heydays for government spending. Deficit spending it's called, and boy, with the current and to-be expected deficit, does it deserve its name.
The problem is that every student of economics knows that in boom times you need to pay back the debt you have accumulated in the bad years. Despite the fact that the last decade was one of unprecedented boom, this has not happened.
It's Macroeconomics 101 that every penny the state borrows, it needs to repay some day. Which will mean my children, after I paid for their childcare and education, will have to pick up the bill for the tab that was pulled out of a rather shabby briefcase today.
Unless of course they decide to live some place offering a better return on investment.
Of course, other countries, primarily socialist (aren't we all nowadays) have equally high if not higher tax rates. Or as one French colleague put it, "That's not what I left France for!" For instance, in the famously high-taxing Scandinavian countries, your tax serves a purpose, and citizens can expect services in return: childcare for working parents, paid paternity leave and good state schools, to name but a few. Where's the UK in the PISA studies again?
But now we - probably foremost bankers - are being asked (of course rhetorical since you can't decline) to give up half of our peak salaries for what exactly? I still have to pay for my children's nursery, probably won't be able to send them to state school, and during paternity leave, the state paid me to stay home for one week at the whopping rate of £114.
Of course, that is not really what this is all about. The high earners are implicitly being made responsible for the mess that this country is in, and have to contribute to sorting it out. The credit crunch and subsequent takeover of the financial services sector by Whitehall has burned holes into the Public Finances which will take decades to replenish. On top of that, reviving the long-out-of-fashion John Maynard Keynes, deep recessions are heydays for government spending. Deficit spending it's called, and boy, with the current and to-be expected deficit, does it deserve its name.
The problem is that every student of economics knows that in boom times you need to pay back the debt you have accumulated in the bad years. Despite the fact that the last decade was one of unprecedented boom, this has not happened.
It's Macroeconomics 101 that every penny the state borrows, it needs to repay some day. Which will mean my children, after I paid for their childcare and education, will have to pick up the bill for the tab that was pulled out of a rather shabby briefcase today.
Unless of course they decide to live some place offering a better return on investment.
Here Is The Writer : Square Mylo
Square Mylo came to London with the intention of staying six months and never left. He has worked in Canary Wharf and in the Square Mile, but still maintains a clear conscience since he's never worked in Mayfair. Being a banker is his true calling. Maybe he should have listened more closely.
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