If a contingent of Americans reacted to President Obama’s tax plans with tea parties and protests, will the recently announced, significantly more draconian tax measures proposed by Alistair Darling, Britain”s Chancellor of the Exchequer (aka “Head economic honcho”) result in a English alternative, perhaps sailing over to the New World and trying to tax our paper products? (As if the newspaper industry didn’t already have enough problems…)
The budget lined out by Prime Minister Gordon Brown’s administration features a top tier of taxation of 50 percent. Anyone making more than £150,000, the equivalent of $218,649 at the time this was published, will now see half of their earnings eaten up by the government. It’s something that seems so outlandish, so extreme that it’s hard to believe. By the way, the top tax tier in the U.S. 35 percent, and with that $218,649 in earnings, you’ll currently pay $57,297, or 26.2 percent of your income. Fun stuff, right?
This is, after all, under the watch of Brown, who helped steer the financial ship into the untraveled, unguarded waters of lawless speculative investments, under whose watch London became a haven for the financial industry. Just look at Canary Wharf, once a thriving hub of banking in east London, where the number of skyscrapers seemed to match the number of clouds in the sky. There’s an underground mall running down part of it, for Pete’s sake! London’s recent resurgence was thanks in large part to its newfound status as once of the nexuses of the finance revolution that’s now dragging everyone to the bottom of the sea.
There are a few schools of thought with this new tax. The school that Britain’s Darling (no, not Susan Boyle, the white-haired guy) belongs to rationalizes the tax as a punitive, preventitive and revenue-raising measure. Given the massive amount of debt the British are currently racking up, and the not-so-carefully veiled references to massive cutbacks in public spending in the years to come, the British government, the government needs a quick source of revenue. What better way to grab that cash than punish those filthy rich cons who beguiled the populace into going along with their reckless schemes? The country would be better off if a grand portion of their excessive earnings went to the common good, right?
The alternative school sees this new tax rate as a potentially crippling measure. The rates won’t come into effect until next April, giving plenty of time for both businesses and executives to leave for more favorably taxed waters. And once they’re gone, that 50 percent will vanish to a garish zero. In fact, there’s the possibility that the tax rate will discourage not only businesses from moving to the UK, but put a hold on personal accomplishment as well. Why take a raise that bumps you up into that crazy new tax bracket if it means a great deal more responsibility and minimal net revenue?
I doubt anyone in the Obama administration would ever seriously consider such a tax plan (and if so, they must not be seriously concerned about the likes of Texas seceding). Just watch out for next year, when the Brits announce the rejuvenation of the East India Company to provide much-needed employment.