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Tax cuts will make rich pay more: 'Pull the other one,' says Cable

by William Robins on Sep 19, 2011 at 12:41

Tax cuts will make rich pay more: 'Pull the other one,' says Cable

Business secretary Vince Cable says lower tax rates for the super rich will not stop avoidance, in a key note speech at the Liberal Democrats.

Cable (pictured) said the idea that the wealthy were more likely to pay taxes if they were lowered was 'childish fantasy'.

He said: 'Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear. I think their reasoning is this; all those British billionaires who demonstrate their patriotism by hiding from the tax man in Monaco or some Caribbean bolt-hole will rush back to pay more tax but at a lower rate. Pull the other one!'

Cable attacked suggestions that the 50p top rate of income on those earning £150,000 and over should be cut but relented that his party failed to reign in executive pay.

'It has not been possible for the party to get its own way on everything. I regret to say we did not secure tighter control on bank pay and bonuses. A bad message was sent; that unrestrained greed is acceptable.'

However, he added that the Independent Commission on Banking would help stop the 'dangerous nonsense' of high bonuses.

Cable used the speech to reaffirm his commitment to his mansion tax policy.

'When some critics attack our party policy of a tax on properties over £2 million by saying it is an attack on ordinary middle class homeowners, you wonder what part of the solar system they live in,' he said.

The business secretary also indicated he would target pension funds as investors in infrastructure projects.

'There are tens of billions of pounds of British savings in pension funds and insurance companies ready to invest in transport, energy, broadband and housing if regulators can ensure a reasonable, moderate return.'

8 comments so far. Why not have your say?

Charles Rickards

Sep 19, 2011 at 12:56

Vince Cable is a prat! The British Billionaires don't keep their money where it can be taxed because they think it is unfair that they should have to pay for those who can't be bothered to contribute. Look at all of those pop stars that came back to live in the UK after the Tories undid all of the stupid tax rises the Labour lot put in in the 70s.

Cable is a blight on the landscape and should be buried!

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Frank Meaden

Sep 19, 2011 at 13:59

I'm not sure that the idea is to attract back the absent British billionaires. Rather it's to encourage the vast numbers of talented Brits, who earn a six figure sum and see half of it go to the government, to stay in the UK and to keep working hard.

My view remains that a 50% tax bracket is firstly immoral and secondly discouraging to the most able.

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Sep 19, 2011 at 14:14

'Immoral' - that's a bit strong. I think, arch-Tory Margaret Thatcher had it right with a higher rate tax of 60% - I don't recall a massive brain drain of talent during the 1980's.

The country has a massive debt problem. Services are being cut - which affects the poorest in society. Therefore, to quote another arch-Tory George Osbourne, you need to evidence that 'we are all in this together'. A 50% tax is decent evidence of that - those at the top of the tree doing their bit.

And it's not as though the 50% rate is on every penny. You've got to be earnng well into six figures before it starts to bite.

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John Burchett

Sep 19, 2011 at 15:36

Time to retire Vince. You've lost touch with reality.

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Adam Grant

Sep 19, 2011 at 15:39

I see that Mr Cable can't tell his ar5e from his elbow. Two words Mr Cable, "John" & "Cowperthwaite"

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David Baker

Sep 19, 2011 at 16:04

Self interest drives all personal decisions including financial ones and the money will always follow the best deal.

Is Vince confused? - he's supposed to be a liberal - i.e. more individual freedoms and. less Government (taxes) - perhaps he's really a socialist after all?

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Nick Armstrong

Sep 19, 2011 at 16:08

My great grandfather fulminated when the income tax rate went up to 3 old pennies in the pound. This would have been in the late 1800s. Britain was then at the height of its powers. There was no NHS and MPs only got expenses - no salary. Being an MP was a calling - not just a job.

Search out those countries which have a low rate of tax. Are they successful countries? I believe they are.

I am afraid Cable is so far out of his depth that it is very concerning. He was an occasional jester when he was in opposition, but he is acting as if he will be in that position for longer than 3 years.

S-ville - I thought Maggie brought the top rate of tax down to 40%. I may be wrong.

Forgive me Adam, but "John" and "Cowperthwaite" went right over my head! Please explain.

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John Borgars

Sep 23, 2011 at 18:28

S-ville is right.

When Margaret Thatcher's first Chancellor reduced the top rate of tax from 98% to 60% tax receipts from surtax-/higher-rate- tax-payers went up.

Right-wingers claimed that this proved the existence of the "Laffer curve"; left-wingers implausibly claimed that the rich got richer by more than 60% overnight ... The latter have claimed that the gap between the rich and the poor increased significantly under Thatcher (it actually reduced) by estimating income from tax actually paid ignoring the massive reduction in tax avoidance. There was a noticeable amount of schadenfreude when the FT and others reported on the number of "tax consultants" who joined the ranks of the unemployed!!

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