Letters - 20 March 2015
From Tax Justice to Death cafe
Tax justice
I was puzzled by Ernest Hall’s letter (6 March), which appeared to suggest a substantial cut in income tax for high earners, who currently pay forty-five per cent on income over £150,000. I don’t think many multi-millionaires would object to his proposal, let alone threaten to leave the country!
A flat rate of income tax looks superficially fair, but you need to look at what is left, not only at what is deducted. Even our Friend acknowledges that those on the lowest incomes would not be able to survive without state support on what was left after a twenty per cent deduction from their gross income.
What Ernest doesn’t seem to have taken into account is the enormous amount that would be left after a twenty per cent deduction from a high income. If you earn £10,000 per annum you will have £8,000 left, whereas if your income is £10 million per annum, you are left with a paltry £8 million to survive on!
For that reason pretty much everyone agrees that it is fair for higher earners to pay higher rates of direct tax on income above the basic level. Even the Conservative Party hasn’t proposed abolishing the two higher rates. The only tricky part of differential rates of tax is where to set the threshold, in order to be fair.
Stevie Krayer
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