“When I tell my American friends that anyone earning the equivalent of $66,900 a year in Britain pays income tax at 40 per cent”, wrote Janet Daly recently in the Sunday Telegraph, “they don’t know whether to laugh or cry. Any American politician who suggested such a thing would be vaporised before he could make his first TV advert. Even Mr Obama, the most Left-wing president in a generation, would think it outrageous.”
Earlier in the same piece, she asserted this: “Let me tell you why, whatever Mr Obama might do in a second term, America’s economy will recover: not just because its population has an indefatigable belief in success and self-improvement, but because its rates of income tax make it positively worthwhile to work hard. You may want to take a few deep breaths before you read the following sentences. US federal tax rates begin at 10 per cent and increase in increments through 22, 25, 28, etc up to a stonking top limit of – 35 per cent. If you earn between $34,500 and $83,600 you will pay income tax at 25 per cent.”
Now, suppose she is right — and many economically literate people agree with her. Suppose that punitively taxing the rich does in the end actually damage the economy, deterring international investment and encouraging the entrepreneurs we need to power the economy and drive unemployment down to move to Switzerland. Suppose that in time, you really do raise less money as people react to higher taxes, so that eventually, you reach a point where you’re actually losing revenue, a situation under which, in other words, the economy, rather than recovering, simply becomes progressively weaker.
Now, I’m not necessarily asserting here that this is true: simply that it is an argument with which many well-informed commentators agree. And certainly, under a tax regime under which the rich were taxed “until the pips squeak”, as Denis Healey did in the 70s under the last real Labour government, the country was brought to the edge of destruction, to a situation in which we had to go cap in hand to the IMF for a bail-out. That’s why the Blair/Brown governments never returned to such policies, only imposing the 50 per cent tax rate at the very last minute, for political and not for economic reasons, and as a temporary measure.
Now, one thing is certain, however: to assert the opposite sounds on the face of it more morally bracing: taxing the rich to help the poor is an altogether more oratorically satisfactory stance to adopt, even a more apparently Christian stance. But suppose it’s just wrong: suppose it doesn’t in the end help the poor at all: I simply put this as a hypothesis (though one supported by a wide consensus among economists).
Now, consider the words, this weekend, of Cardinal Keith O’Brien, not a man given to cautious consideration of such matters, a man whose moral instincts have so often in the past led him to make colourful utterances which turn out to be what actually does need to be said. Sunday saw him on top form: good swingeing stuff:
THE leader of Scotland’s Roman Catholic Church has unleashed a blistering attack on the UK Government’s economic policy, branding it “immoral”, and reiterating the criticism of David Cameron that he is out of touch with the needs of ordinary people.
Cardinal Keith O’Brien, the Archbishop of St Andrews and Edinburgh, said yesterday the Prime Minister was helping his “very rich colleagues” in the City at the expense of the poorest in society and urged him to introduce a so-called Robin Hood Tax, a levy on share transactions, which, it is estimated, could raise £20 billion a year.
He said: “It’s immoral, it’s not moral, just to ignore them and to say – well, struggle along and the rich can go on sailing on their own sweet way.”
But suppose that George Osborne didn’t in fact lower the top rate of tax to help the Prime Minister’s “very rich colleagues” in the City (and incidentally, what “colleagues” would those be? Mr Cameron isn’t a banker and never has been: does he just mean that the aim of the Budget was to help the rich at the expense of the poor, and that being rich himself led Cameron to do this? If so, that’s a pretty grave accusation for a senior churchman to make). And as a matter of fact, the Budget can hardly be said to have ignored the poor: 24 million were taken out of paying any tax, the point at which people start paying income tax having been increased to £9,205 from April next year. The Chancellor told the House of Commons he wanted “the lowest paid to be lifted out of tax altogether”. “Our central goal is to support working families,” he said. Now, suppose he meant it: that that, and not helping the prime minister’s “very rich colleagues”, was actually the aim of the Budget, and even of lowering the top rate of 50 per cent? Shouldn’t Cardinal O’Brien have considered that as a possibility, rather than blithely wittering away about Robin Hood, who didn’t even exist, for heaven’s sake?
I cannot, as my regular readers (if there are any such) will attest be described as an invariable supporter of this Government. And I have in the past greatly enjoyed and admired Cardinal O’Brien’s colourful interventions on the national stage. But this time, sorry your eminence, but you are not Nadine Dorries, and you shouldn’t behave like her. You should speak for the Church and be careful (for good pastoral reasons) what you say about individuals and their motives: your immoderate personal attack on David Cameron was unjustifiable and frankly embarrassing. On some political issues, there is more than one moral view: and disentangling them can require a certain degree of technical competence. And when it comes to economic policy, you might consider asking yourself whether you are entirely sure that you’ve actually got enough of it.