“Tax Cuts for Millionaires”

I posted recently about overuse of the phrase “hard-working” by politicians of all hues, and noted that with luck this would go the way of the little-mourned “ideologically-driven”, which enjoyed a brief spell at the tip of every left-wing politician’s tongue before someone realised it just wasn’t catching on. They’ve gone for something new, now, and it’s much harder to argue with. “Tax cuts for millionaires”.

They’ve done their research, this time. Every time someone tells a Labour politician that the reduction of the 50% tax rate to 45% doesn’t just affect millionaires, they can shrug and say, yes, true, but millionaires are one group it definitely does affect. They’ve even got the numbers, precisely how many millionaires are affected, paying how much, and, probably, how well connected they are to George Osborne. When confronted with the fact that the 50% rate was only supposed to be a temporary measure anyway, and Labour themselves had planned to return to 40, they can shrug again and point out that in the face of crisis, politicians need to be adaptable, to change their tune – something the current Chancellor seems unable to comprehend. When told that instead of benefiting the rich, the current government have taken more tax pounds off them per year than any in history, they can shrug again and ask why they can’t get a little more. When told that “little” is the operative word, that the country doesn’t really lose much if anything at all by reducing the rate to 45%, they can point to the equivalent in cuts, immensely damaging to the groups affected but saving the Treasury no more than a pittance.

They’ve got every base covered, it seems, except for one.

The big question.

Because if the Tories have cut the top rate for “ideological” reasons, or as a gift to their toff friends while the poor starve in the streets, as Labour would have us believe, then why on earth haven’t they gone the whole hog and reversed the rise entirely. Why haven’t they cut to 40%?

Well, why haven’t they?

The truth isn’t particularly pleasant reading for the Tories, either, even if it’s nicer than being thought of as heartless champagne-swigging monsters. The truth is that the tax cut was a poorly thought-out, half-arsed measure that doesn’t really do many people that much good at all. My guess? If they could go back in time now, they wouldn’t have bothered. It’s hardly provided the fillip to employment and entrepeneurialism it was supposed to. All it’s done is provide the opposition with a handy knife to stab the coalition with, a knife being wielded both frequently and with increasing accuracy as the weeks and months go by.

So why don’t Labour use this point, either? Why don’t they spend a bit more time attacking the competence of the Tories, paint them as half-baked as much as hard-hearted?

Because that would open Labour up to their own uncomfortable truth, which is that as much as the Tories didn’t introduce the cut for ideological reasons, Labour don’t oppose it for ideological reasons either. As all sides know, 5% over £150,000 makes not the slightest difference to the deficit or to the economy. If Labour wanted to use the top rate to make a difference, they’d be increasing it to 60% and reducing the threshold to £100,000 or less. And if they did that, it would make a difference, both to the economy and to the deficit, and they’d probably lose more votes than they’d get. So they won’t. They won’t let ideology get in the way of popularity. They’ve seen what happens when you do that and as much as they might curse the ghost of Tony Blair in public, in private they worship him for pointing the way out of that eternal wilderness.

Which is all a fairly roundabout way of saying that “tax cuts for millionaires” don’t mean a thing, not at these levels. It’s all spin. It’s just that right now, it’s more effective spin for Labour than it is for the Tories.

 

Just in case I’m accused of favouring one side over the other here, I’ll add a little comment to redress the balance: the coalition’s own favourite soundbite, varying between “we inherited the worst fiscal mess since [insert global catastrophe of your choice]”, and “it all went wrong on Labour’s watch”, is all pretty much spin as well. Because however you look at it, the big mess we’re in now is down to overreliance on the banking sector even more than it’s down to overspending by previous governments. And, funnily enough, during those heady boom years, I don’t recall too many Tories arguing for a rebalancing of the economy.

Liked this? Take a look at the opening chapter from the soon-to-be-published Without Due Care here.

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