Wednesday, 21 March 2012
Tax the rich. Clegg vs. Cable
This all started with the 50p tax that the Conservatives desperately want to be rid of which was put in place as Super Income tax by Labour for anyone who earns £150k which is a good way of hitting those on high incomes such as executives and indeed Premiership footballers. (rumours have it that Arsenal's new signing Lucas Podolski will earn £100k a week but others earn a lot more especially with sponsorship and appearances etc.)
But what should it be replaced with?
Well, Dr Vince is in favour of the Mansion tax, something Liberals have always liked as it attacks those who do not earn and sit on their wealth rather than those who are working hard. This is why we've fought the Conservatives to raise the level of income tax to £10k so that those on low incomes can enjoy their hard earned money. This Mansion tax will be based on the value of your home and should hit anyone with a home valued at £2 million pounds.
There is a broad understanding that if the 50p rate were to go... it should be replaced by taxation of wealth because the wealthy people of the country have to pay their share, particularly at a time of economic difficulty.
The mansion tax is actually a very economically sensible way of doing it. says Dr Vince (quoted from Evening Standard Cable targeting London as price of axing 50p tax, p2 6-3-12).
Indeed it should raise £1.5bn per year - ka----ching.
Unfortunately it will hit those who live in London and other wealthy cities where house prices are pushed up by the area and may not reflect the wealth of the individual.
If this tax is coupled with Stamp duty crackdowns, which would tighten loop holes and force landlords and tycoons to keep properties in their names rather than companies (worth £1 bn) even more money for central government will become available to lessen the blow of the cuts on the individuals.
However at Conference Nick came out with a new idea; The Tycoon tax.
The tax, inspired by a similar measure put forward by Obama in the US, means that those on high income will pay a proportion of their income in tax. In the US millionaires look at paying 30% of their income to the Government coffers.
Lord Oakeshott described such a tax as; a superficially attractive measure that falls apart under scrutiny and does nothing to do with the super rich non-doms and non-residents.
To whit Nick responded; The only person who argues against a tycoon tax is one of our very own tycoons.
According to the Guardian report (Nick Clegg and Vince Cable split on Tycoon tax 11th-3-12) Clegg's aides had briefed him that Oakeshott was isolated and that Dr Vince would back the plans - it was a gamble as Dr Vince, a brilliant economist, didn't bite and only cagily said;
I have not seen the proposals so I cannot give you a very informed comment. The idea is an interesting one.
Danny Alexander, had a slightly more pro Clegg approach;
I think it's a very interesting and goood idea. It's one that could really help to ensure the thing that we all need to do as a country, which is to make sure that the wealthiest of this country pay their fair share of tax.
The problem is Lord Oakeshott believes that a Tycoon tax will take the onus off the mansion tax (which will hit nondomicials who maintain huge houses here like the Beckhams etc). It seems that Nick has backed down on the glossy tax for this budget but will push for the next one.
Still, as Chancellor George Osborne limbers up for today's budget we will have to see if Mansion tax is on the cards.