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
Advert



Recent Comments

  • User AvatarLorenzo Cherin 25th May - 3:40am
    James We do not need a post Liberalism, we need a robust Liberal Democratic agenda and stance. There is a discussion on Lloyd George, Asquith,...
  • User AvatarLorenzo Cherin 25th May - 3:19am
    David Evans People like you, is not a phrase I like, why not be more specific and less combative . That gets to my point....
  • User Avatarjames 25th May - 1:07am
    And the left are doing NOTHING about it. Where's the dialogue, where's the policy innovations, where's the intellectual bravery in saying `we were wrong`. As...
  • User AvatarPeter Watson 25th May - 12:13am
    @John Littler "A lot of Labour people seem to like it." That raises an interesting point. While being anti-Tory and anti-UKIP, the poster is not...
  • User AvatarGlenn 24th May - 11:38pm
    James. The thing is most of these problems are caused by the ideas of the Right. Religion, regime change, war, economic inequality and so on....
  • User AvatarAndrew T 24th May - 11:36pm
    @ David Raw I don't think the war was won at all. @ Tristan Ward Isn't that what the Lib Dems are supposed to be?...