Once again I am Baffled of Cheadle. Ed Balls gave a speech yesterday in which he pledged to re-introduce the 50p tax rate.
As someone whose freedom to write music (and the occasional blog) depends partly on the efforts of a top-rate tax payer, I have a personal interest in this. I can only report what happened the last time Labour put up the marginal rate. It was that a close relative of mine went to her accountant and took certain (legal) measures to reduce her taxable income. The Inland Revenue ended up getting less money than they would have done if Labour had left things alone.
I have a pretty clear idea what will happen if the marginal rate goes up again. It is that my relative will put a load of money into her pension, the consequence of which will be not only that the government will get less tax, but that it will immediately have to pay several thousand quid into the fund itself.
Of course an incoming Labour government will probably do away with tax deductible pension contributions for top-rate tax payers, and maybe that's a good thing. But it won't be able to do it overnight.
To be clear, I am all for the rich (by which is actually meant the highest earners, but I'll let that pass) paying their "fair" share of tax. For what it's worth, the top 1% of earners already pay a whopping 30% of all UK income tax. That apparently isn't fair enough. How much would be? The problem for Labour is that the best paid also have a pretty clear idea of where fairness lies, and people who have never taken much interest in their tax arrangements will suddenly find the topic much more alluring.
To be clear also, all studies show that putting up the top rate didn't bring in vast sums of money last time. Some - the IFS for example - have suggested that it might even have lost the Revenue money; that's certainly been my experience. Given that Balls and Miliband undoubtedly know this as well, why on earth are they doing it?
The answer would seem to be that they think bashing "the rich" will be popular. And they may well be right. But popular with whom? A raft of recent policy announcements now show Labour under Miliband drifting well to the Left of the Blairite centre. Those policies make Miliband popular in his own party, but they may well not be so with the people in the middle ground whose votes Labour needs to get into 10 Downing Street.
It pains me to keep harping on this particular theme, but Miliband increasingly looks foolish as well as cynical. It's not an appealing combination.
PS In Ball's speech the Shadow Chancellor tried to position Labour as a business-friendly party. I have to say this claim made me laugh out loud. Straight away came a letter to the Torygraph signed by 24 business leaders which stated that Labour's policy would "kill investment and cost jobs". And, they might have added, damage the tax revenues on which public services depend.
