Why the 50% tax rate should be permanent

On 21 March 2011, Jo Valentine wrote in the Evening Standard that the 50% higher tax rate should be ditched. Since then, George Osborne has said that he views the tax as temporary. We set out the case for why the tax rate should stay.

We are, we are constantly told, in a time of fiscal austerity. Where every penny, be it in the family budget, or the Chancellors, is a prisoner. We are all in this together, and we should all shoulder as much of the burden as we are able.

A person earning £150,000 is paying tax at the 50% rate. This constitutes an increase of almost £19,442 from what they paid before. That's not a small sum of money.

So should the 50% tax rate be abolished? No.

That same person is still taking home £9,405 a month after tax. An adult on minimum wage earns just £10,556 a year.

It is argued that high taxes stifle entrepreneurism. But if a high tax puts you off setting up a business, then you shouldn't be starting up a business in the first place. It'll be years before tax bands become relevant to what you earn. Concentrate on your next promotion instead.

To suggest as well that companies and individuals will flee London because of the tax-rate does London a disservice too. Look at the heritage, culture, nightlife and restaurants here, and so much more besides. To misquote David Cameron himself, perhaps business people would be better off if they thought about well-being as well as economic growth.

We do need one change, however. We must learn to celebrate our high tax earners, who in turn must learn to think differently about their tax contributions.

Rather than get depressed over losing the equivalent of the deposit on a sports car in tax, top-earners should think of that £19, 442 in tax being spent on 10.5 months supply of Herceptin, or 1,940 school text books, or the winter fuel allowance for 48 pensioners. How awesome is that? These people are tax-paying superheroes.

Slashing taxes for the already wealthy is what got us into this mess. Greed is not, it turns out, good. The theory of trickle down economics is as broke as UK plc.

When Save the Children tell us that 27% of the children of Tower Hamlets live in severe poverty, perhaps we should try a new strategy. By introducing a living wage, and increasing the spending power of the nation's poorest, some of that money will trickle upwards, and lead to a flourishing domestic economy.