Economical truths

There is much discussion in the UK media about whether the taxes paid by the 320,000 wealthiest people should be reduced (ref). The given reason for tax reduction is to help the UK economy by encouraging foreign investors and “talented workers” to come here. The high tax rate applies to earnings above £150,000 ($240,000) per year, so they must be pretty talented. Twenty leading economists have published a letter in the Financial Times to say that this tax is harming the economy.

Let’s give those twenty economists the benefit of the doubt and assume that they had no role in the financial disasters of the last few years. Even so, the question of whether the UK is better or worse for having these high earners seems more one of logic & morality than economics. The tax only applies to earnings over £150k. So, only people earning considerably more than £150k will be significantly affected. That’s people earning not just 15 times the minimum wage but maybe 150 times the minimum wage.

Whether we view recent economic events as a blip to be recovered from or as the long-overdue bursting of a bubble, a policy of encouraging such a large gap between rich & poor at least deserves wide ranging public debate, preferably involving moral philosophers and unemployed people as well as career politicians and economists, to examine whether the UK would be better off or worse off as a tax-enhanced haven for people who want to make huge amounts of cash.