Tag Archives: wage cap

Corbyn’s pay cap plan boosts the rich, not the poor

As usually happens when hard line Socialist utopias are created, Jeremy Corbyn’s maximum pay plan would help the rich not the poor.

That is because when employees reach the maximum, other ways would be found to reward them which would increase inequality and reduce the tax take from the rich.

In Soviet Russia access to the splendour of the Bolshoi Ballet was a perk for the wealthy. The poor weren’t helped, and no tax was collected on the perk.

So it would be if Corbyn got his way.  Employers would pay bonuses, perhaps in shares or profit share, when they can’t pay extra cash. The thing is, shares or profit shares, when sold, are liable to Capital Gains Tax, not Income Tax as wages are, and the capital gains tax rate is lower than the income tax rate above £140,000. 

Posted in Op-eds | Also tagged and | 23 Comments

The problem with a wage cap

Jeremy Cobyn’s proposal to bring in a maximum wage (or, if you like, a 100% tax rate) would not work, for two reasons. The first, is that the swing voters he needs to attract would never vote for a party with this potty policy. If you are flirting with voting for the Conservatives, you are not going to like the idea of a wage cap.

If any further discussion is needed, then the second reason is that it would not have the intended effect. Presumably the reason to bring down wages would be to reduce inequality. But most rich people do not get their income from salaries, but from dividends, capital gains, rental income etc.

I don’t know if the Duke of Westminster takes a salary, but capping it would not change one iota the fact that he owns a huge swathe of London’s most valuable real estate. If your only source of income is your salary, then capping it only stops you being able to catch up with the already-rich. Or encourages you to take income in other forms. 

Posted in Op-eds | Also tagged , and | 35 Comments
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Recent Comments

  • User AvatarKatharine Pindar 31st Mar - 1:17am
    There is a lot of nostalgia here, and nit-picking, not to my mind constructive. I was a member of the Liberal Party long before the...
  • User AvatarMark Goodrich 31st Mar - 12:39am
    The "great" part of the title is more accurate that the "repeal" part given that it is enacting EU law into English law. It seems...
  • User AvatarJayne Mansfield 31st Mar - 12:08am
    @ matt, I apologise for the delay in responding, I have been searching for the discussion page. I just wanted to say well done. You...
  • User AvatarLorenzo Cherin 30th Mar - 11:46pm
    Caron, in the article , good comments , Sarah Olney in the Commons , excellent mp, Labour in general , useless non opposition, Tory government...
  • User AvatarLorenzo Cherin 30th Mar - 11:35pm
    Bill Good response , keep saying it even if do not fully agree , we need to hear more than I love EU ! David...
  • User AvatarJayne Mansfield 30th Mar - 11:32pm
    @ Fiona, Young people do not need to get their advice on drug taking from drug dealers. They can access information from multiple sources. The...