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 AvatarAdam Bernard 23rd Jun - 11:24am
    John: Fair enough. I'm open to the idea that the AO setup is not correct in general. I jumped to conclusion that you were suggesting...
  • User AvatarJohn Barrett 23rd Jun - 11:16am
    Adam. - People are clearly free to join and call for recognition of as many groups as they like and good luck to them. I...
  • User AvatarCatherine Jane Crosland 23rd Jun - 11:01am
    I was very disappointed to hear that Norman has decided not to stand. I voted for him in the 2015 leadership contest, and would have...
  • User AvatarHuw Dawson 23rd Jun - 11:01am
    The correct position to take - I think most people are just hoping for a good contest at this point. :-)
  • User AvatarBarry 23rd Jun - 10:55am
    Eddie: Thank you. So you favour a criteria based on skill levels, immediate family members, and refugees. All other immigrants should be stopped, forthwith, from...
  • User AvatarElaine Woodard 23rd Jun - 10:53am
    I hope we have a contest but we can't make people stand if they don't want the job. We only have 12 in our pool...
Sat 1st Jul 2017