Cut taxes for the super-rich
Next time you read about an investment banker's huge bonus or a Premiership star's staggering wages, don't get worked up by their pay packet but think about this - they probably pay a lower percentage of tax than you.
So, while you are paying out on increased national insurance, being levered into a higher tax bracket by fiscal drag, or forking out for petrol and train fares, there's another world out there. In that sunny place, salaries are offset against fictional losses, bonuses are paid in wine, everything's on expenses and Ferrari's are in.
But I don't begrudge our super-rich friends a penny of it. After all, it's not easy becoming super-rich. Ignore those trading on inherited glory and Britain's highest earners work incredibly hard for their cash and have to be extremely talented. You don't get a £1m bonus by knocking off at 5.30pm every night and you don't become a Premiership footballer without serious dedication on the way up.
What's wrong is that the system means super-rich tax avoidance, as highlighted in tonight's BBC Two programme No Tax Please, We're Rich, is seen as a necessary evil. The super-rich make billions for our economy every year and if they had to hand over half their earnings in tax they'd just leave.
That's why we need a flat tax rate. Set it at 20% for everyone and raise the thresholds for the lower earners. Do the sums right and lower and middle earners will pay less and the rich will pay what they're meant to - because it's not worth paying to avoid.
It's a tactic that has drawn serious investment into Eastern Europe, but as for Britain I'm not holding my breath. Now where's that wine glass?
- Simon Lambert, This is Money
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