I wonder if Vince Cable can explain how the “mansion tax” he proposes is a “fair” alternative to a tax on those with high incomes (Mansion tax could replace 50p tax rate, says Cable, 28 March). It will effectively represent a levy on pensioners who own, outright, homes with inflated notional values, but who may have small incomes.
The inheritors of such properties would, in any case, be heavily taxed after the owner’s death. How would such a pensioner pay the proposed levy out of a small income? Would they be expected to sell their home in the present depressed market in order to pay the mansion tax? The proposed tax appears to be part of the false idea that the baby boomer generation have somehow “stolen” from today’s young by benefiting from a functioning welfare state. True, many did well out of the property boom, but not nearly as well as the bankers whose bonuses enabled them to purchase buy-to-let properties that further distorted the market.
Professor Elizabeth Wilson
•?I am one Liberal Democrat who does not agree with cutting out the 50% tax rate. The idea that 50% is a penal rate is laughable. Vince Cable, like me, is old enough to remember when the UK (under both Tory and Labour governments) did have penal rates of income tax up to 98%, but that’s long gone.
People whose income is over £150,000 can well afford to pay 50% income tax on their marginal income. High-income families benefit from our public services and should not begrudge paying a little more for them and helping those less fortunate than themselves. Those on obscenely high salaries, like bankers and City slickers, should pay higher rates still.
It’s not as if our tax rates are out of line. Austria, Belgium, Denmark, Norway and Sweden all have top income tax rates of 50% or higher, and Germany, Italy and Spain have rates of 45% or more. Even that bastion of capitalism, Switzerland, has a top income tax rate of 45.5%.
I agree with that great economist JK Galbraith that tax is the price of a civilised society. Let’s have the mansion tax by all means, but keep the 50% rate of income tax.
Dr Mick Taylor
Lib Dem candidate, Leeds Central 2010
•?You report Vince Cable as wishing to move away from the “extremely high” marginal tax rate of 50% (actually, 52% when you throw in national insurance). Do the sums for a prospective university teacher under the future arrangements that Cable’s department has constructed. Three years for a BSc, one year for a MSc and three years for a PhD are likely to lead to a total debt that is north of £50,000. Until earnings exceed £40,000, the annual repayments (9% of the excess over £21,000) will not even match the interest charged. Cable says that a marginal rate of 52% on earnings of £150,000 is too high. Why then does he support a system that will charge a marginal rate of 51% (40% income tax, 2% national insurance contributions, 9% student loan) on earnings of £45,000?
•?Vince Cable really has gone native if he believes that 50% is an unacceptably high rate of marginal taxation. The rate was 60% even under Thatcher.
•?You report that the government is considering cutting the 50% tax rate, claiming that many companies and high earners are finding ways of avoiding payment. Surely the solution is to clamp down on such tax evasion, not reward the super-rich for their refusal to pay?
Ministers are quick enough to tackle social security fraud, so why the failure to act when those on telephone-number salaries are fiddling the system?
Dr Pete Dorey
Reader in British politics, Cardiff University
•?Good news re Vince Cable’s announcement on tax. The government “will” abolish the 50p-in-the-pound rate and will “consider” introducing a mansion tax.
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