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 | 22 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 AvatarAndrew McCaig 21st Jan - 5:22pm
    Well, after hearing him I was hoping Jeremy Browne was no longer a member!
  • User AvatarSimon Horner 21st Jan - 5:17pm
    The writer of this article poses the crucial question for all of us living in Scotland. "Can we back an independent Scotland as a better...
  • User AvatarPaul Walter 21st Jan - 4:47pm
    Moderator's note: We do not publish "part two" or "continued" comments. There is a length limit in order to keep the debates fresh and stop...
  • User AvatarDavid Raw 21st Jan - 4:38pm
    Fair enough, Fiona - though you hear all sorts of funny things in Dundee. I don't think independence is a done deal - I do...
  • User AvatarCaron 21st Jan - 4:18pm
    When the public announce menu is made, yes.
  • User AvatarFiona 21st Jan - 4:01pm
    @David, you obviously didn't spend much time in Dundee during the referendum. The idea that Scotland could go fully socialist if independent was one of...