Tax rates in Britain

François Miliband

Labour’s growing contempt for capitalism is dangerous for the country

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Readers' comments



"The Tories will fight the election on Labour’s weak point — economic competence."
The problem is that The Economist thinks that any left-of-centre party or government is ipso facto incompetent. Actually someone recently showed that the left-leaning countries of Latin America are doing better economically for most of their citizens (as opposed to a "1%" oligarchy) than are the neoliberal American corporate dominated countries of Latin America.


Forgive me, but isn't "contempt for capitalism" rather hyperbolic? It sounds like the sort of garbage that Republicans in America come up with. If the editors here have a problem with a particular policy, they should argue it on its merits...I really don't think Britain or any other western democracy is about to become Venezuela.

Stavros Saripanidis

Dear Editors,

Marxist Socialist leftists are all alike: they seem cloned.

They cannot understand that heavy taxation is punitive and counterproductive to companies: they will just relocate elsewhere, creating huge unemployment and inability to collect any taxes AT ALL!

Their disregard and jealousy for accumulated, legally earned, wealth is pathological.

Penalising wealth and property actually removes every incentive for growth and prosperity, in any Society.

You are totally wrong on all accounts.

Taxation removes incentives only for those whose incentives for economic activity does not go beyond narcissistic self interest - and, no, pursuing self interest does not automatically translate into the interest of the community.

Had heavy taxation been so counterproductive, Nordic countries would have never prospered.

And, depriving many from necessities in order to provide luxuries for a few is the very quintessence of pathology.


This is all a little surreal - as the blog points out it is impossible to believe that the difference between 45% and 50% will save the finances; but it is also impossible to believe that all those senior finance people will either emigrate or mysteriously cease working if the rate goes up 5% (taking much less than this of their income). Indeed remuneration in the industry has fallen much more than this already. Please can we stick to real issues?

Scottish Mulder in reply to willstewart

True, I believe the Economist even reported that Top Finance folk did flee to Switzerland as a result of some previous banker bashing but most have since returned to London as the lifestyle, school system, etc is more suitable than Switzerland in respect to "new comers".


If you look at UN data, the UK's income inequality is the worst out of all countries in the EU. As for the World Bank's GINI coefficient, the only countries that are worse are countries that were badly hit by the recession such as Spain, Italy and Ireland.

The UK was lucky to have sustained its Economic output so successfully in such a tough climate, but its people have only been getting poorer by the day. David Cameron, sitting with a glass of champagne in a room that seemed made out of gold told everyone that the recession was over, but whereas GDP has grown, income hasn't at all. It looks like corporations have been just as incompetent at rising incomes and making new jobs as the Tories have.

David Cameron's policies gear towards the rich, Ed Miliband's are geared towards the poor. The choice is simple.

Furthermore, raising taxes does not scare off businesses, this conservative talking point has been debunked again and again.


Income only represents part of the story. Perhaps more important is the distribution of wealth in society, and here the data tells us something quite different. In the recently-published Global Wealth Databook 2013 produced by Credit Suisse (published October 2013), the UK Gini coefficient for wealth distribution is assessed (in percentage terms) as 67.7. That puts the UK at 14 out of 34 OECD countries, comfortably in the upper half.

France (69.0), Germany (77.1) and Switzerland (80.6) are all below us (i.e. more unequal societies).

Still more interesting is the placing of Scandinavian countries. Finland is at 66.1 and Iceland 67.3, marginally more equal than the UK. But Norway (77.8), Sweden (80.3) and Denmark, the land of Borgen, (107.7) are all less equal than the UK.

This is such a remarkable finding it is worth highlighting. For years the Scandinavian countries have been held up by the SNP and their fellow travellers on the left as models of the socially-just and equal economies which an independent Scotland should aspire to emulate. But in terms of distribution of wealth, the data is clear: Norway, Sweden and Denmark are all less equal than the UK.

Not true? Well friend you're in for a bad surprise:

Funnily enough I have 3 sets of data which say your data is irrelevant. Also, what do you mean by wealth distribution? Do you not get what is meant by income inequality? It was my understanding that bad wealth distribution = income inequality.

I think what the data you are referring is talking about is a measure that's based around GDP per capita, which literally says nothing about how wealth is distributed.

I agree that income only represents part of the story and perhaps more important is the distribution of wealth in society.

The data for the distribution of wealth in society tells us something quite different from your stats. In the recently-published Global Wealth Databook 2013 produced by Credit Suisse (published October 2013), the UK Gini coefficient for wealth distribution is assessed (in percentage terms) as 67.7. That puts the UK at 14 out of 34 OECD countries, comfortably in the upper half.

You say that UK is only behind Spain, Italy, and Ireland, how about France (69.0), Germany (77.1) and Switzerland (80.6) that are all below the UK (i.e. more unequal societies)?

So "my data" or the Global Wealth Databook 2013's data on distribution of wealth in society is irrelevant?

If you dont care about the distribution of wealth in society then it is irrelevant, if you do care about the distribution of wealth in society than it isnt. Up to you.

All you're doing is telling me what you told me before, all you're giving me is some numbers and not telling me what they mean.

Now I'll tell you what income inequality means: A population is considered unequal on an income basis when the people at the top of the pyramid have incomes that are exponential higher than the people bellow them. In the case of the UK for instance, salaries rose since the so called 'recovery' significantly more for the top percentages of citizens than they did for the majority at the bottom.

This is what I believe your measure of 'wealth distribution' is: GDP/GNI per capita. Essentially an average, not a proper distributive index. The reason I think this is because income inequality IS a measure of wealth distribution, so any index that claims to do the same but differs THIS MUCH either measures something unrelated or is wrong.

I'm not saying I don't care about wealth distribution, I'm saying I'm not sure you understand what it means.

I am not sure you understand what it means.
You keep dismissing the Global Wealth Databook 2013 data on distribution of wealth in society as being "my data".

Just because you disagree with it, there is no need to dismiss it.
I have provided a link to my data, and it is the Global Wealth Databook 2013 that describes it as being a distribution of wealth in society not just me.

Just because the data disagrees with your narrative there is no need to dismiss it.

If you can find in the Global Wealth Databook 2013 that their distribution of wealth in society is just "GDP/GNI per capita" then fine, however don't just blindly state you believe it is that without backing it up.

Thanks, however wasn't from the Oxford Dictionary but rather from the Oxford Economic Papers. However please take it up with Credit Suisse and I am sure they will update the data in their Global Wealth Databook 2013 accordingly if it is incorrect.

I see you edited your comment, however I note that it was originally

"I am getting my master's degree in economics. I don't need to take anything up with Credit Suisse in order to establish the definition of basic economic terminology."

I have my Masters degree in Economics.
However I am not saying that the data is correct or incorrect, merely that as income only represents part of the story. Perhaps more important is the distribution of wealth in society, and here the data tells us something quite different from NoidedPavillion's narrative.

If you believe or NoidedPavillion genuinely believe that data to be incorrect then you or he should let Credit Suisse know so that the data can be updated so that other people using that data have a more accurate picture.

I don't know but I am sure that Credit Suisse will have used people with Economics degrees possibly even with PhDs to look at the data.

I am not saying that the Credit Suisse data is correct or incorrect but until Credit Suisse or another suitable organisation (rather than a forum poster) point out errors or flaws in their data, it is a valid source.


Rather simplistic offering here.
All opinion and no evidence.
Even Cameron has talked about closing loopholes,not that he's done much about it. This would lead business to flee to laxer jurisdictions, you would think and hence is a form of business bashing.


The failure of left to create alternative policies to existing dogma is harming the West.

Mr Milliband and his ilk is no different, they are shoving the tired old remedies to peoples throat in the vain hope that they would be in charge.

Any labour win under Milliband would be no different for common folk than issuing another term for Tories.

The ambitious demagogue, Mr Milliband, should be seen for what he is. He should be sacked!


I am trying to understand why TE seems to think it is OK to raise taxes on "the rich" in the US in order to reduce inequality, but then takes the opposite stance for Britain, The inconsistency seems to me to be a tad bit hypocritical.


The fact that the Economist equates a small rise in personal income tax with an attack on business tells you all you need to know about this shambolic article.

As for some of the criticisms of Labour's other proposals, there is little more nauseating that the sight of those using the wonder of true free markets to defend actually existing and dysfunctional crony capitalism from any attempt to remedy it.

Sadly the squeal of entitlement is all too audible in this editorial.


Winston Churchill


Financial service can't be the only thing to an economy, or even its main focus. Financial services for the sake of what? Keeping the money going in a circle? Please explain to me why such a a large fraction of the well-paid jobs for STEM graduates revolve around financial services, and how this is sustainable? I'm not saying that Miliband's approach is perfect but I sure as hell am more willing to listen to someone willing to shake things up a bit rather than sticking his fingers in his ears and going "lalalala if we just get things back to how they were before, it will be fine..."

Also, arguments that go along the lines of "a think-tank says..." are always presented to sound like they come from objective third parties, whereas their reports are compiled by people who clearly have political leanings (and often the whole think-tank does). You can usually massage the statistics to support any conclusion you like, particularly when "taking into account change in behaviour by affected individuals..."; frankly as a culture and an economy, we have too much faith in data.


The approach of the likes of Miliband has so far not been "anti-business", but more anti-bad capitalism. The sort of capitalism where executives of power companies who have just been awarded significant pay increases advise their most vulnerable customers to put an extra jumper on when its cold. The sort of capitalism where risky lending practices that led to the worst economic crisis since the Great Depression have gone unpunished and still continue. The sort of capitalism where wage increases for the many workers are minimised on grounds of competitiveness while pay for the richest 5% rises, thus resulting in their share of income tax also increasing. The sort of capitalism that, by not sharing the proceeds of success more equally, is sowing the seeds of its own failure.

Much of this criticism is being taken as some sort of march towards socialism, which completely poisons the debate that some politicians, including Miliband, are trying to have. It is about having a capitalism that realises its obligations to society, and that it is not some sort of separate entity that needs protecting at any cost, no matter what harm it brings.

And one final thing. I often hear about how we cannot burden or over-tax 'wealth creators' or they will flee. Not only does this assume that demand for services that generate that wealth goes away, but it ignores one thing: the contributions made under the social contract create the environment in which to create that wealth - treating the sick, education for all, transport infrastructure. Are these people saying that they will wilfully forgo their contribution to this contract while taking the benefit? If so, why should we tolerate such people?

Judge Mental

How many times Do I have to say this? Taxes provide 1/Public goods for everyone (including the rich and the so-called 'job makers' (education, transportation, security, national defense etc etc)
2/ They have a redistributional purpose: they may assist the poor (although UK has tried to put an end to that in the past decadres)and prevent from social turmoil ; and they allow to correct the rent-seeking situation of the '1%'. The UK is among the most inequal countries in the OECD and if it doesn't change its taxation system, it runs the risk of ruining human capital (and social capital)in the long-term (and it's already well advanced in the process, sadly). These factors are crucial to growth (both for economic growth and human developement. Cf the work of Barro on the one hand, and Wilkinson and Pickett).

Your rich job makers create employment in developing countries, and they ones existing in the UK would not move because of tax policy shift.

Morever, most western countries seem to initiate a come back to fairer fiscal policy: see the very recent talks for institution of a minimal wage in the US or Germany.


An increase on top earners provides perhaps a small increase in total revenues. But it marks a beginning, a first step towards reversing the terrible policies--begun in the Reagan/Thatcher era--that has moved the English-speaking world closer and closer to feudalism. Why does TE continue to support the terrible government policies that support the wealthy at the expense of everyone else? The last 30 years have made a mockery of capitalism. One would imagine that TE would support regulated capitalism rathe than the plutocracy of today.



Sorry, but that is disingenous in the extreme. I presume this is based on the figure that was banded about by George Osborne when he justified the cut in the top rate from 50% to 45%. However, I would expect an organ such as The Economist not to blithely use this figure just because it is convenient to its argument, but to mention the effects of forestalling.

The 50% rate was announced a year in advance and its demises was also foretold. As such, many of those that would have incurred the tax either brought forward or delayed salaries or dividends so that they incurred tax at 45% in a different year. This has been documented widely (see the commentary by Faisal Islam around forestalling, for example) and it's a shame that The Economist has just taken it at face value. Must do better.


"Having refused, so far, to match Tory promises of a referendum on Britain’s EU membership..."

This is all Labour needs to promote if it wants to win next year.


The kind of rich person who is likely to decide where to live based on a few percentage points of income tax, is the same kind of rich person who most likely doesn't pay any income tax at all. Time to back up your statement with some research, anectodal evidence suggests you are wrong.


It is telling that TE would look to Singapore, Hong Kong, and Dubai for examples of how to tax the rich properly. All three are city-states built on the back of financial services. All three have carved out political autonomy from their greater socioeconomic environments that allows for great concentration of wealth. It would seem in the latest iteration of capitalism that the nation-state is in decline and the city-state is on the rise. But will that be sustainable?


Actually I'd rather he didn't. We're going to get a Labour government whether we like it or not. Tory backbenchers are indulging in their love of collective seppuku and UKIP is enough to split the vote in marginals, let alone the electoral bias towards Labour.

I'd rather the electorate see what socialism can really do to a country and banish Labour to the wilderness for a good 20 years.

Raj Bhardwaj UK in reply to jimquad

In fairness, if Labour had grown public spending in line with annual GDP growth from 2001 we would not currently have a government deficit at all.
It was also Labour's governance of the finance sector that contributed mightily to the global credit crunch.



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