Did 50p tax rate cause a millionaire cull?
Some Conservatives claim the new HMRC figures vindicate the Coalition income tax cut for high earners from 50p to 45p. Is it that simple?%VIRTUAL-SkimlinksPromo%
Tory MP Harriet Baldwin claims in the Telegraph that the original 50p tax band led to an exodus of millionaires from the country. "Labour's ideological tax hike led to a tax cull of millionaires," she says. "Far from raising funds, it actually cost the UK £7 billion in lost tax revenue."
A cull of millionaires?
What Harriet Baldwin may not have noticed that the country was in deep trouble during 2009. People earn less in a recession. Many wealthy people, also, are able to effectively disappear from the stats because they will be highly mobile, or able to bring forward payments, or delay them. Ruses abound.
ConfusedSince Osborne announced that the top 50p rate will be cut to 45p from April 2013, an extra 4,000 people have stated that they have incomes of more than £1m - despite the new 45p rate not being introduced yet.
What is also less understood by many is that the 50p tax rate - introduced by Labour in 2010 to compensate for declining government revenues - only took effect for earnings of more than £150,000. It was only a tax that every impacted on very high earners.
Ed Miliband claims the move to cut the upper tax threshold from 50p to 45p has handed around 8,000 millionaires an extra £107,000 each a year. Tax, however you cut it, is becoming a big issue. But not a well understood one.