90% of Lib Dem members back 50p tax for highest earners & 73% increased taxes for wealthiest

Lib Dem Voice has polled our members-only forum to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Some 570 party members responded, and we’re publishing the full results.

90% of Lib Dem members back principle of 50p rate

LDV asked: In 2009 a new top rate of income tax of 50p in the pound was introduced for earnings over £150,000. Previously the top rate of income tax had been 40p in the pound. At what income level do you think the Coalition Government should set the 50p top rate of income tax?

    2% – Income above £500,000
    7% – Income above £250,000
    50% – Income above £150,000 as at present
    25% – Income above £100,000
    6% – Income above £75,000
    8% – I think the 50p top rate should be scrapped
    2% – Don’t know / No opinion

A pretty clear result: exactly half the Lib Dem members we surveyed backed the current 50p rate levied on marginal income above £150,000, a tax introduced by Labour under Gordon Brown and so far maintained by the Coalition. In total, a whopping 90% of party members back the principle of the 50p rate. However, 9% of you think it should be restricted to those earning £250,000 or £500,000 and more; while 31% of you would like to many more of the higher-paid — those earning more than £75,000 or £100,000 — contributing to the 50p top tax rate. Of course, a 50p top-rate of tax for those earning more than £100k was Lib Dem policy until 2006, when it was scrapped during Ming Campbell’s leadership of the party.

Majority of Lib Dems say 50p rate making no difference to economy

Do you think the 50p tax rate on people earning more than £150,000 is helping or damaging the economy, or is it making no difference?

    33% – Is helping the economy
    7% – Is damaging the economy
    54% – Is making no difference to the economy
    6% – Don’t know / No opinion

An intriguing result. It seems that, for more than half the party, the 50p tax rate is as much about symbolism as it is about impact — the majority think it is making no difference to the economy, yet as we saw from the previous question the vast majority of Lib Dems are supportive of the principle. One-third of members, though, say it is helping the economy, with the Treasury estimating it brings in £2.4bn a year. Only 7% of members think the 50p rate is actually damaging the economy.

73% back increased taxes on the wealthiest

And more generally speaking, do you think the taxes on the wealthiest people in the UK should be increased, should be decreased, or kept at their current levels?

    73% – Should be increased
    4% – Should be decreased
    19% – Should be kept at their current levels
    3% – Don’t know / No opinion

Little doubt here about the direction of travel most Lib Dem members support — almost three-quarters back an increase in taxes on wealth; many, however, argued this needed to be balanced by tax-cuts on income. Here’s a sample of your comments:

Taxes on all wealth, especially land, should be increased to decrease taxes on income and VAT.

Taxes on all should be decreased wherever possible and prudent.

As with bank bonuses we need to change attitudes such that mega bonuses are seen as the greed they are. Income / bonuses earned for a job well done are one thing, income/bonuses as a matter of course irrespective of achievement are wrong. There should however be greater tax benefits to charitable giving for sponsorhip of the arts and social activities – somewhat paternalistic but could have benefits and move away from a statist approach to social provision.

Increased – but only through need, not envy.

Only to bring down taxes for low or middle income families, not to increase overall spending

Loopholes, avoidance and evasion should be tackled properly. Increasing the rates is unfair unless you are making sure that everyone who should pay does pay.

Wealth taxes should be prioritised in order to replace income taxes.

The UK has a perfectly adequate progressive taxation system as is. The lower threshold should rise to – eventually – be equivalent to minimum wage, but upper rates are fine.

Increased, but based on their wealth and unearned income rather than their earned income which we ought to be encourging people to keep, spend and use to increase employment.

  • Over 1,200 Lib Dem paid-up party members are registered with LibDemVoice.org. Some 570 responded to the latest survey, which was conducted between 31st January and 4th February.
  • Please note: we make no claims that the survey is fully representative of the Lib Dem membership as a whole. However, LibDemVoice.org’s surveys are the largest independent samples of the views of Lib Dem members across the country, and have in the past accurately predicted the winners of the contest for Party President, and the result of the conference decision to approve the Coalition agreement.
  • The full archive of our members’ surveys can be viewed at www.libdemvoice.org/category/ldv-members-poll
  • Proviso is that taxes on wealth not income should be increased, this is where the real imbalance is.

    Currently we have an effective tax system for progressively taxing income (although more lower bounds should be included 10p?). However, we do not have an effective system for taxing wealth, this needs to be seriously looked at as there is a disproportionate gap between those with stores of wealth and those with none.

    * Stephen Tall is Co-Editor of Liberal Democrat Voice, and editor of the 2013 publication, The Coalition and Beyond: Liberal Reforms for the Decade Ahead. He is also a Research Associate for the liberal think-tank CentreForum and writes at his own site, The Collected Stephen Tall.

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    13 Comments

    • Stephen – It depends on how wide a view you take of “a difference to the economy”. I think for most of us, it is not “symbolic” as you describe it – it represents a real redistribution of income. It strikes me that when you asked that question, you had little clear idea of how it would be interpreted! that is the only “intriguing thing” about it. As I and others have argued previously, more thoufght and less leading questions need to go into these surveys!

      Had we all been economists, we would have mulled over the income, earning and expenditure effects of giving to one section of the population and taking from another. We all should then have properly answered it would help or damage the economy, not that it would have no effect. This answer merely demonstrates you didn’t design the question correctly.

    • Liberal Neil 13th Feb '12 - 10:12am

      I agree with Tim. That question could be interpreted in different ways. You asked whether it was affecting ‘the economy’ but your comments are about its impact on the deficit, which are two different things. I don’t think it is having much impact on the economy overall in itself but I do think it is helping to reduce the deficit and that this is good for the economy in the medium and longer term.

    • I agree that the “helping or damaging the economy” question was a poor one that tells us little.

    • Richard Swales 13th Feb '12 - 11:16am

      I’m not sure how taxes on the wealthiest could be decreased when there are almost no wealth-based taxes at all, the tax burden falls on income, not wealth – a status quo which is massively in favour of the regular voters in the baby boom generation and against the occasional voters in the younger generation, and therefore unlikely to change.

      As for the 50 percent thing, it depends a bit on what else you would do. Taken in isolation, it would lead to a higher deficit so my answer is keep it. If it is to be replaced by increasing wealth taxes (e.g. more council tax bands), then it is about favouring cutting edge wealth creators over wealth-holders and wealth-inheritors, then I would support scrapping it.

      Generally I think marginal tax(and benefit withdrawal) rates of 50 percent are a bit high, but there are other points lower down the income scale where they are higher and those should be tackled first.

    • Most of those working will have high income, but also high expenditure. Whereas many of those with large sources of wealth may not have high income. This differential needs to be addressed – given that at present the tax system is biased against those with income vs wealth.

      Most people buying a house will be passing a lump sum to the older generation, then paying large amounts of interest over many years to service that, thereby massively reducing their disposable income. This is doubly exacerbated by the increase in space and costs associated with bringing up children (and before we get into “lifestyle choice” – who is it that is going to provide the pensions and workforce of the future to look after the childless).

      Income tax is a blunt, unfair instrument as it bears little relation to ability to pay. We urgently need a rebalancing towards wealth taxation.

    • Foregone Conclusion 13th Feb '12 - 12:50pm

      I said that it ‘doesn’t help the economy’ although I do believe it brings money in. Sorry, but when I think of ‘the economy’, I don’t immediately think of the public finances.

      Interesting that we are so overwhelmingly ‘leftish’ on tax.

    • Tabman, you’re right that income tax is unfair, but your proposal thatwealth taxation is somehow fairer is way off the mark.

      Income is frequently earmarked for things like paying mortgages/rent, or paying down debt, and citizens can’t afford to have the state garnish their wages before they get to see them.

      Assets are frequently illiquid, and bear no relation to ability to pay – e.g. cherished family homes, etc.

      What we need is a shift to expenditure taxation – VAT, etc. People who don’t have money don’t spend money. People who do have money, and can afford to spend it – whether it comes from income, wealth, or what have you – get hit, but nobody else does. The more disposable money you have, the more you spend, the more you pay. This is a fair tax, and what we should be aiming for.

    • @Stephen, I agree with the others – when I read the question, I thought you were asking it in the sense of “Do you think high skilled/high earners are being driven abroard, thus hurting the economy, or not?” (and no, I don’t). I would have looked at the question very differently if I’d known you were going to read it making the same fallacy Gordon Brown did in the debates, when he referred to “The Exchequer” and “The economy” as though they were coterminous.

    • Greg – there is a counter argument that says that assets tied up doing nothing, eg “cherished family homes” with one person living in them, should be liquidated to increase the supply of such assets into the market place.

      This produces a double benefit:

      - it increases the supply of such assets, thereby bringing the price down which makes houses more affordable and lessening the unearned windfall effect
      - it creates stimulus in the economy due to the increased volume of transactions associated with removals

      What’s not to like?

    • Richard Swales 13th Feb '12 - 5:28pm

      Although I don’t think the questions are leading, I would take issue with the statement that 90 percent support the “principle” of the 50p rate. I interpret the question as being more about current tactics (so I support keeping 50p at the moment to close the deficit and start paying down the national debt, and would prioritise other tax cuts and better tapering of benefits, particularly where the effect is a marginal rate higher than 50 percent, as well as allowing joint married tax returns and rescuing Browne report victims from super tax).

      However, in principle no, nobody should have to work half the day for what some politician determines to be “the good of society” before they can work the other half for themselves. There comes a point at which we have to recognise that it isn’t our money even if we might think the owner doesn’t need it as much as we do. The government is not some feudal lord with unlimited droit de seigneur over the time of every person in the kingdom. I wasn’t asked to vote in the survey but I would have been surprised to see my vote (probably for maintaining the status quo for now) , interpreted as my support for 50 percent rates as a matter of principle.

    • Patrick Smith 13th Feb '12 - 7:46pm

      It is not surprizing that 90% of polled L/Ds support keeping the 50 p higher tax threshold and 73% support tougher taxes on the richest percentage of earners.

      I support a tougher tax/bonus regime for the bankers as unless they work for successful and leading banks to small business holders in the High Street.

      The reform prposal by our unimitable Vince Cable aka `Mansion Tax’ on property owners i.e.over £2M is also worth a second look and a opinion test on Coalition L/D supporters, as this could generate the revenue that some say does not come from the 50p tax payers.But let`s have both in my view or at best test again latest opinion with the Spring Confernce on the near horizon.

      I am also a L/D who supports the child benefit removal for the higher tax payers and `Winter Allowance’ as they do not need it, at a time of national austerity.

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