The UK Labour Party’s shadow chancellor Ed Balls announced yesterday that the party would reinstate the 50% tax level imposed by Gordon Brown at the height of the financial crisis should they win the 2015 general election. Mr Balls stated that the new top-level of tax on earnings above £150,000 would “help balance the nation’s books and create a “fairer” tax system.”
Most economists agree that this level of tax would be detrimental to the nation’s enterprise sector and economic recovery. The only basis that Mr Balls can justify such a crippling tax level is his party’s sense of ‘fairness’ based on a deeply redistrbutaive political dogma. Although the top 1% of earners, 150,000 people, already pay 30% of the nation’s total income tax bill, and the top 10% of earners over 50% of all income taxes, this doesn’t seem to be enough for the Labour party.
Labour party has clearly reverted back to its socialist roots of the late 1920’s. The next election will be fought on the basis of political ideology including the debate about the size of the state. For the Labour party the welfare state is sacrosanct and the ever-increasing tax levels are the only answer to balance the nation’s books. Of course, the Labour party strategist know that as long as there a more Pauls who benefit from robbing Peters the party can always count on the votes of the former. In economic terms this is when the state sector counts for more than 50% of the GDP.
Therefore, the first question that the socialists who currently control the Labour party is to answer the question on how ‘fairness’ is define. Thomas Sowell, a Princeton-based economist, articulated this fundamental question well: “Since this is an era when many people are concerned about ‘fairness’ and ‘social justice,’ what is your ‘fair share’ of what someone else has worked for?” So, the UK Labour party what is your moral justification for the 50% tax rate, why not go whole hog to 70% or beyond?
I am not sure how many socialists read my blog but as Mr Balls will need all the help he can get, I would happily pass on your comments.