The goalposts are being shifted on the 50p tax rate

When George Osborne’s review into the effects of the 50p tax rate were announced, along with some fairly leading words about how pointless it was if it was raising no money, those on the right were satisfied that the 50p tax rate’s days were numbered, with those on the left being equally dissatisfied.

The politics of scrapping the tax rate were always going to be such that it would be incredibly difficult to get rid of it without some sort of replacement tax or accompanying tax cut for those on lower incomes, but we were left in no doubt about the Tories’ intended direction of travel, the tax rate would be going in time for the next election.

Bearing this in mind I was amused to read on The Telegraph website, of all places, about how the Osborne commissioned report is now showing what some predicted all along, that the 50p tax rate has actually raised significant amounts of money.

It reveals the ideological rather than pragmatic opposition of the Tories however, that instead of accepting this the goalposts are now being shifted and instead of the scare being that our talented workers are being driven away, or that it won’t raise money (and indeed could lose us money) because people will leave or avoid it, we’re now being told that the real danger is the long term effect as people develop new ways to avoid paying it.

As time has passed and the City of London hasn’t collapsed around our ears people can obviously see that their original arguments haven’t held true, so the goalposts have been shifted to a longer term, more invisible but equally deadly danger.

It’s a classic case of trying to shift the debate when only a few weeks before they were arguing a completely different case, albeit still in opposition to the tax, which Number 10 has privately polled and admitted remains quite popular despite their best efforts to denigrate it.

Bear this in mind whenever you hear over the coming years about the long-term dangers of the 50p tax rate that these are the same people who were arguing about an immediate brain drain and tax revenue loss when it was first implemented in 2010.

Now David Cameron comes out and insists he still wants to scrap it, saying that it’s bad to have high marginal tax rates. It is bad to have a high marginal tax rate, but according to The Telegraph his changes to tax credits are massively increasing marginal tax rates for the poorest, so maybe he could use money from the 50p tax rate to reduce those that affect people outside the top 2% of society instead of focusing on the marginal tax rates paid by the richest in society.

When the facts change they don’t change their mind, they just change their reasons for opposing it.

UPDATE: Daniel Knowles at the Telegraph has a good summary of the right’s new position on the 50p tax rate, including the lovely line that the from the start the idea that the 50p tax rate would instantly cut tax revenues was ‘supremely silly’. In fairness, you can even go back to a post from last year and see he said something similar, albeit in a grossly different timeline, saying it ‘must’ go by 2013 whereas now it’s some indeterminate point in the future (but definitely after 2015).

So why the change in timeline? Well it might be that we know it’s not going before 2015 perhaps so he’s staying relatively loyal to the Tories by promoting their new timeline.

It might be some sort of cognitive bias (is it cognitive bias?) where evidence that backs up his broad view, despite not chiming with his short term view (e.g. 50p tax rate BAD, damage in short term BAD changes to 50p tax rate BAD, damage over longer term BAD), allows him to instinctively adjust the facts to fit into his existing world view.

Or it might be that the evidence looks like it will take longer to cause a drop in revenues than he initially anticipated and there’s nothing more to it.

I’m being cynical here of course, but it’s another example of a slight shifting of goalposts, even coming from someone like Knowles who is far more reasonable than many of his colleagues at the Telegraph.

However, speaking of cognitive biases it’s equally important for the left not to dismiss evidence if it goes against their (our) instincts on the tax rate. If Osborne does order an annual review of the 50p tax rate, yes he’s eagerly hoping he’ll be able to please his election funders by scrapping the tax, but if we accept the early reports showing it raising hundreds of millions we’ll have to accept future ones if they show a drop in revenues from the rate. Otherwise we’ll be guilty of the same thing I’m accusing the right of here!

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4 thoughts on “The goalposts are being shifted on the 50p tax rate

  1. Also it’s strange that the Tories continue to make such a fuss about people earning from £150k to £millions paying 50% on the top part, whereas the effective 60% rate just above £100k (through tapered loss of any personal tax allowance) goes without mention?

    • That is interesting, though you’d anticipate that statistically the 100k bracket would also be overwhelmingly Tory so why do you think that is?

      A focus on millionaires or 150k+ earners because that’s where their donors are?

  2. Pingback: Group opposed to immigration can’t prove link between youth unemployment and immigration « Alex Ross

  3. Pingback: George Osborne lobbies the business community to scrap the 50p tax rate « Alex Ross-Shaw

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