Even if we taxed the rich 100% it would only reduce the national debt by a puny 2.7% Mr Clegg

Well, political party conference season must be nearly upon us. It’s rather easy to tell that these political confabs are about to take place because we start seeing the garbage that we got today in the press from the Deputy Prime Minister Nick Clegg.

Firstly the piece is totally and utterly 100% political and has absolutely nothing to do with actually trying to fix the UK economy. It’s all about saying something to try and ‘energise’ Klegg’s base and stave off a revolt at the Lib Dems conference which is only weeks away.

And what better way to do that than to grab a few populist headlines about ‘taxing the rich’ and getting the rich to pay their ‘fair share’? Klegg said:

“people of very considerable personal wealth have got to make a bit of an extra contribution… In addition to our standing policy on things like the mansion tax, is there a time-limited contribution you can ask in some way or another from people of considerable wealth so they feel they are making a contribution to the national effort?”

Whenever any politician floats an idea like ‘tax the wealthy’ they never actually tell you what they mean by ‘very wealthy’. Are we talking about people earning £75k a year, or are we talking about people earning £5m a year?

But just to highlight what dire state the UK’s economy is in here’s what would happen if the UK government taxed the ‘very wealthy’ 100% of their income.

For arguments sake let’s say that the cut-off line for being ‘very wealthy’ was £200k – an amount that in these devalued currency day’s is far from ‘very wealthy’. The rough breakdown of people earning more than that in the UK is:

£350k – 89,000 people = £13bn in extra taxes

£750k – 16,000 people = £9bn in extra taxes

£1m     – 6,000 people = £5bn in extra taxes

So just how how much would the government raise in revenue if it took every single penny of income over £200k? At best this would raise about £27bn in one year. And it really would be just for one year because in the following everyone’s wage in the UK would top out at £199,999.99 because nobody works for free.

To put that £27bn into perspective the national debt of the UK is £1000bn. So such a tax regime would only drop the national debt by a tiny 2.7% .

But the pointlessness of Klegg’s words are highlighted even more when you compare that £27bn to how much the government borrows each year. This year the government is expected to borrow close to £100bn when all is said and done. So raising an extra £27bn in one year is a drop in the ocean compared to just how much the government in borrowing at the moment.

In short the UK’s public finances are in such a poor state that even taxing the rich every single penny they earn over £200k wouldn’t even make a dent into the national debt of the UK – yes things really have got that bad in the UK.

What the UK is suffering from is a too much government spending, the UK certainly is NOT suffering from under-taxation.

Let’s not forget that Nick Klegg’s wife would fall into this ‘very wealthy’ bracket, she apparently earns some £500k per year. Add that onto Klegg’s £135k salary and their household is bringing some £635k per year. If he really practiced what he preached about ‘paying your fair share’ he could right now cut a cheque for £63,500 (10%) and send it to the treasury to help pay off the debt? Do you think he will? No because it’s all about YOU paying YOUR fare share.

The populist talk by Klegg to drum up support for his failing party is a worrying move though, it shows a very poor understanding of economics and an even greater lack of understanding about personal property. The government thinks that your hard work is theirs and they are coming to take it one way or another. Rather he should be focussing the ‘how’ wealth is created not the ‘how much’.

The talk of people paying their fair share is a simple distraction from the real cause of the inequity in our society – allowing a small group of men to operate a money printing machine in secret. Klegg should really be talking about auditing and ending the Bank of England if he really was concerned about ‘the average person’. He’s not, all he cares about is staying in power – and don’t they all?

Related posts:

1. UK ‘real’ Debt to GDP reaches 150% whilst the Tories ADD 32% onto the national debt
2. UK National debt explodes under the Tories – up 30% since they came to office, now stands at £1004tn
3. IMF calls for bank guarantees to be included in the national debt
4. UK National debt and the price of gold – 4 year price target should be £4750-5000
5. Super-rich buy gold by the ton

Link to this article: : http://www.goldmadesimplenews.com/analysis/even-if-we-taxed-the-rich-100-it-would-only-reduce-the-national-debt-by-a-puny-2-7-mr-clegg-7783/

Posted by Thomas Paterson on Aug 29 2012. Filed under Analysis. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.