The rich and taxes

At the start of 2012 Microsoft co-founder Bill Gates announced that he felt the amount of tax he contributed to the American economy was too small for someone with a fortune as big as his. Gates found his views supported by other members of the super-rich elite worldwide, yet most governments, including our own coalition in Britain paid very little attention to the call of the super-rich to pay higher taxes.

The Conservative-Lib Dem coalition in Britain cut the top rate of income tax in this year’s budget from 50% to 45%, a move that the coalition said would result in a decrease in tax evasion and therefore higher revenues for the Treasury. Apart from the ludicrous assertion that dropping the tax rate by 5% will cause those already avoiding to tax to go to the effort of reversing whatever affairs they had in place to avoid tax, this move was a backward one for equality and fairness, particularly in hard times such as these. I presume that the coalition intends to clamp down on tax avoidance, thus forcing tax avoiders to pay their fair share and by 2015 have ‘evidence’ for an increased tax return at the 45% rate, without notifying voters that this same medicine could have been administered at the 50% rate and resulted in even higher returns.

Parties that are ready to fight for equality and fairness therefore have to oppose the tax cut for the rich and hope to reverse the cut in the near future. However, whilst it appears that the current coalition are stridently opposed to increasing tax rates for their super-rich friends, perhaps they could choose to take a more radical path and introduce a tax policy that gives the tax payer greater control over their rates of tax.

If the super-rich such as Bill Gates are prepared to pay extra in times of hardship then I believe that the government should do everything within their power to collect this revenue and distribute it in such a way as to allow the majority back into work and the economy back to health. It is clear that some of the super-rich will need encouragement to warm to the idea of paying extra taxes at a time of recession so I propose that the government allows the super-rich the option of increasing their rate of tax in times of recession and economic hardship in exchange for a temporary cut (dependent in length upon their contributions in bad times) when the economy has recovered. This policy would allow the super-rich to pay higher taxes at a time when their cash flow is probably at its lowest as people spend less. For the government, these extra contributions will plug the gap left by those out of work or earning less in times of recession. Furthermore, in good times, when the government’s tax revenues from the not super-rich is increased as more people find themselves back in work, the super-rich will be allowed a temporary tax cut/relief at a time when their incomes are highest, therefore saving them capital in the long-term, the main incentive.

This policy is based on the simple fact that if the super-rich feel it their duty to contribute more than the highest rate of tax at a time when the government’s tax returns are low, then we should allow them to, and furthermore we should reward them for this service in better times. This extra revenue for the government could then be used towards job creation policies to get the unemployed back into work, and spending more money, to kick-start the economy again, the most important issue facing Britain and the wider world at this time.

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2 Comments

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2 responses to “The rich and taxes

  1. Not actually a half-bad idea, although personally I’d just add some higher tax bands. You might also look to the example of Stanley Baldwin who, when serving as a government minister during WW1, donated a fifth of his personal fortune towards the national debt in an attempt to encourage voluntary donations from the rich. There’s no shortage of millionaires in the cabinet at the moment, and we are, after all…’all in it together’…

    • It would certainly be nice to see, I’d just be worried that to do so would buy them some much-needed publicity with voters and reverse their new ‘nasty’ image.

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