Is this a rhetorical question? I’m sure tax cuts as suggested would not play well under the current climate.

The question shouldn’t be “is it fair” but “does it raise enough revenue”?

To answer the question directly, why don’t the Left attempt to talk up cuts in regressive taxation? Why not get the ball rolling for a cut in VAT? Or even, dare I say it, a tax cut to take the poorest people out of council tax? This could be sold as helping people get back to work as it would mean that low paid orkers would keep more of their money, more than say raising the income tax threshold ever would. Most of the income tax threshold raising never goes to the poor anyway, to be honest.

@1 ‘I’m sure tax cuts as suggested would not play well under the current climate.’

It’s got nothing to do with the ‘current climate’, it’s to do with the tories winning the next election. There will have to be tax cuts for them to achieve their next win. Sunder Katwala is saying (I think) that to fight back against what will become a campaign to make it seem logical that tax cuts must be made, we first should understand how taxes such as the 50p rate work. I don’t agree with ‘since numbers above 150,000 often just turn into telephone numbers for many people.’ and it’s a shame the post here or the Next Left version don’t actually explain how the 50p rate works.

2. Richard

The question shouldn’t be “is it fair” but “does it raise enough revenue”?

Not necessarily.

At a time when the rank uselessness of low taxing, free market economics has been exposed, it may be wise politically to raise taxes on the wealthy even if that tax is revenue neutral.

That helps shape an atmosphere where ordinary voters feel like the rich are also shouldering some of the burden.

Politics isn’t a zero sum game.

Boris is talking as Mayor of London trying to promote the interests of the metropolis which he reckons includes keeping the objectionable overpaid bankers in London because they generate jobs and income for the rest of us. To do this he talks about reducing taxes (some bankers left for Switzerland after higher rate tax was modestly increased to 40%). He remembers that “carrot and stick” involved hanging a carrot from a stick so that it was a foot in front of the donkey’s nose.
If he really want to go back to the early days of Mrs Thatcher, that would involve increasing higher rate tax to 60%, but he’s not going to mention that as it would certainly cause the US banks to relocate some personnel.

Well if reports are to be believed the diminutive Mr Osborne is planning significant tax cuts in the March budget. I can’t see them reducing the top rate as the politics would play badly. When politics trumps economics we all suffer and Mr Lambert the outgoing Director-General at the CBI said that is exactly what is happening with the coalition government.

Many people including Labour have called on the government for a growth strategy. The thing is government can’t make growth happen, they can only put in place policies that allow it to happen. Cutting personal and corporate taxes is always good. Mr Balls would find it difficult to criticise because it is consistent with a Keynesian approach and he is a Keynes adherent. Most Tory activists do not earn above the £150,000 top rate threshold and neither do the majority of the Tory core vote. Therefore, even though some think tanks and advisors may be telling them to cut the top rate there is not much political advantage. Whereas, there would be plenty of tax cuts for the rich and services cuts for the poor taunts.

Taxes are too high and the Coalition would be right to reduce them. The median worker is suffering a real squeeze on their incomes and living standards. Their real wage is about 15% less than two years ago and it is going to get worse over the next few years. So many people in this category have no significant savings and live from wage to wage. Therefore, the correct thing to do is cut their tax burden. Alas, the Coalition are not ambitious enough. I suspect that they will bring forward the LD proposal to take out of tax altogether those earning up to £10,000. I would make all income tax-free for those earning below the median wage. This would just be a start as the tax burden needs to shift away from income to carbon and consumption etc.

For their economic strategy to have any chance of success they really need to see a surge in business investment. Although it is rising, it is not rising fast enough. This is what translates into jobs for workers so they really need to figure out tax cuts for business to encourage them to invest and expand. One way to get business to invest is for the government to invest. So cuts in capital expenditure are unwelcome. We really need a massive programme of infrastructure investment in this country. Although, it is doubtful whether the Coalition are ambitious enough.

http://en.wikipedia.org/wiki/Laffer_curve