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50p Tax Hike Analysis

In: Business and Management

Submitted By silverleaf1
Words 830
Pages 4
50P Tax Hike Analysis
Econ201
2/12/14

50P
The 50P tax was a brilliant idea at one point or another. However in this current economy and the market failure this, in my opinion, this is not a piece of legislature that will help anything. The tax was made to help bring in revenue and to make the higher income people to pay their fair share. This seems to be a popular idea that the wealthier individuals aren’t paying their fair share of taxes although the wealthy pay the largest amount of taxes.
Majority tax
The 50P tax is no different; it raises taxes in a tough economic time and that is always a bad idea it doesn’t matter who the tax is on. When you raise taxes you actually decrease revenue and hurt the economy. To strengthen a stalling economy the “Fed” should pull back as much as possible without causing too many ripples. This would let the free market have reign and give a steady boost to the economy. The 50p plan is one that I like to call simple complex simple or a Majority tax. £35,000 should pay tax around 20%. Income up to £150,000 you will pay tax at 40%, and any income you get above £150,000 you will pay tax at 50% which is where the 50p rate comes from. Great Britain had done away with that policy earlier, but it looks like it is back and here to stay. The total needed to handle Great Britain’s national debt is pitiful compared to America’s but they are two different countries and can’t be compared on that basis.

Pros
There are some good things to the 50P tax. The good things is that those below a certain level will not have to worry about the tax politically this is brilliant because the majority of constituents would not be affected by the tax and only those who are demonized as wealthy will be. Another pro is that this measure would help decrease the British national deficit. By raising capital for the government they can thus expand programing and fund it. There could be many more positive uses but with little or no access to the bill or reinstatement being put forth in parliament it is hard to come up with them. I do think however that the measures taken if this bill was enacted again would help fund the government better.
Cons
All things considered this is a bad idea to get the economy out of failure. There are a couple pluses to the bill but now let’s examine the negatives. This bill raises taxes on people who are already struggling. This is always a bad idea. When the economy is in failure it isn’t the time for government to become more robust. What people never seem to realize is that Government can never create anything it only takes what others have made and gives it to those who have not earned it. Government is a consumer not a provider, and especially in Great Britain we can see just how much it doesn’t work when people try to make the government a provider. Another con or negative would be all the political promises it would break for the Torries. There is also the matter for the economy taking a dive because people have less expendable income to keep it moving. You are faced with a choice keep the government going or keep the market going. Which is better for the economy?
In Conclusion
To me there is little more to be said while there are some pluses to the fiscal act they are not significant enough to contradict the potential damage to be done. There is also very few people who would not be really affected by the change in law and the change wouldn’t be a good one. Raising taxes in an economic or market failure is never a good idea. The goal of every country and people should be to keep the economy moving as best as possible and this fiscal law doesn’t cut it.

References:
Hodges, D. (January 25, 2014) Yesterday, flat-lining Balls had a bad economic policy... now he's got no economic policy at all, writes former Labour adviser DAN HODGES, Daily Mail, viewed on: 2/5/14, retrieved from: http://www.dailymail.co.uk/debate/article-2546074/Yesterday-flat-lining-Balls-bad-economic-policy-hes-got-no-economic-policy-writes-former-Labour-adviser-DAN-HODGES.html
Parker, G. (January 26, 2014) Labour’s 50p tax rate vow underlines its priorities, Financial Times, viewed on: 2/5/14, retrieved from: http://www.ft.com/cms/s/0/434e3dd6-8671-11e3-aa31-00144feab7de.html#axzz2sWCInRAs
Eaton, G. (April 2, 2013) The Welfare Cuts that the 50p Tax Rate Could Have Prevented, The Staggers, The New Statesman’s Rolling Political Blog, viewed on:2/5/14, retrieved from: http://www.newstatesman.com/politics/2013/04/welfare-cuts-50p-tax-rate-could-have-prevented

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