50p tax rate 'an expensive luxury'
The Labour government raised the top tax band from 40p to 50p in 2009.
Chief executive Douglas McWilliams said: "Every household in the country could have to pay £30 more in tax for the luxury of keeping this tax. It starts to become a very expensive luxury."
He said the levy was currently pumping more cash into the Treasury, but the revenue would fall as businesses and high-earners move abroad. He believed ministers should cut the top band below 40% - even lower than the original rate - if they want to take more money in tax revenue.
A lower band would encourage entrepreneurs and make tax-avoidance schemes less attractive, he said.
Launching a CEBR report into the 50p rate in the City of London, Mr McWilliams claimed research "suggests the revenue-maximising top rate of income tax is likely to be less than 40%".
The Government has faced calls to axe the 50p rate, though opponents of slashing the tax believe such a move would be politically damaging.
TaxPayers' Alliance director Matthew Sinclair said later: "Higher and higher tax rates will put people off working, investing, building a business and paying tax in Britain. The rest of us will have to make up the difference."
He added: "With the economy in trouble and huge pressures on most families' budgets, it is madness to struggle along with this self-inflicted wound. The 50p rate should be scrapped."
© 2011 Press Association