The Independent: Kennedy drops plan to squeeze high-earners

Charles Kennedy has suggested that the Liberal Democrats will drop their policy of imposing a 50p top rate of tax on earnings above £100,000 a year.

For most of us on the anti-war Left, the Liberal Democrats were a protest vote at the election and we’d probably all admit that, while Chuckie Bum is an affable bloke, he can barely keep control of a topical news quiz let alone a country. Regardless, it looks like the last party espousing truly progressive taxation has decided, like the rest, that they’d be better off appealing to the electorate’s baser instincts and notions of, if not a free ride, then a cheap one. Notice Kennedy’s use of language:

We do not need and we should not seek a punitive taxation system. High taxes are not a moral good in themselves.

Not fair, progressive or modern but punitive. And just why high taxes “are not a moral good in themselves” he doesn’t bother to explain.

This is just one policy shift but on this issue alone, are the Lib Dems about to demonstrate they want the votes to the right of New Labour rather than the ones to the left? Kennedy goes on:

We were correct to point out at the general election that only 1 per cent of all taxpayers would be affected by our proposals on top-rate taxation. But we must not lose sight of those who aspire to achieve income levels which will bring them into the top-rate taxation band in time to come. So we should not fall into the trap of believing that through taxation and spending we can cure all ills.

You could spend all day taking this to pieces. The Lib Dems “were correct” to point out that only 1 per cent would be affected by a 50 per cent tax band but they’re considering ditching the policy anyway? According to the Lib Dems’ election manifesto, this 50 per cent tax for the top 1 per cent of earners was to pay for the abolition of student fees and the provision of care for the elderly and disabled. Are they to be the collateral damage of a move to the right?

How many people in the lower income levels “aspire” to an income of £100,000? Quite a lot I would imagine. How many are prepared to put in the hard work to achieve such an income? Not many, I would guess. Kennedy is tapping into what Michael Moore calls the Horatio Alger myth where hard work will make you rich. Just what the British analogy and its applicability is in an age of hope for fortune via a lottery win rather than through hard work, I’m not quite sure.

But then, I’d argue, Kennedy isn’t appealing to those for who a 50 per cent tax bracket is no more within reach than the moon (except for maybe a deluded sub-section of the aspirational middle classes.) There may be only 1 per cent of the population earning £100,000 a year and a small percentage within a stone’s throw of it but look at what power is also concentrated in those hands. Opinion formers (political and economic), pundits and Paxman are all at the top end and are all people who can give the Lib Dems a hard time between now and the next election. In an interview in the New Statesman in January 2004, Kennedy said:

We’re only talking here about 1 per cent of taxpayers paying the extra amount. I cannot see a French revolution happening in Britain over that.

But in changing his policy so soon after the General Election, it’s clear that it’s not the Sans-culottes that Kennedy fears but the aristocracy itself.