Tax rises for the rich will be popular, conservatives take note

Independently of whether it works economically (£2 billion might be all the revenue gained), the proposed tax rate increase is well judged politically, because it catches the mood in the country, much of whom will want the rich to pay. Politically it makes the labour government look like it is concerned with social justice and it creates a dilemma for the conservative party in that they either go along with it or been seen to be siding with the bad guys in the financial sector. Arguments about whether it is a cynical move are irrelevant to the political signal it gives.

There is evidence for diminishing returns of increasing high-income tax rates, but many electors will be impatient of this, because they are frustrated with the inequalities associated with the last decade; this group goes beyond leftists protesting about Thatcherite economics. We still hear on the right “Is it a return to class war and the politics of envy?”; on the left, “capitalism is unjust because it creates inequalities and in our society we have a growing pool of disadvantaged, vulnerable, excluded, poor people”. These miss the point because they have a simplistic contrast between rich and poor. There is not just rich and poor: there is also a middle class, which for our purposes includes many working class people who have been honourably employed over the last 10-15 years. We live in a dispensation, unaffected by Thatcherism of the rich getting richer (and less taxed) combined with a welfare state that rewards people who don't work at all. How do you get a council house?: not by working hard; the best way is to a complete misfit or have a large family while not working; or turn up as an asylum seeker with nothing but a family to feed. Those people who can't get a council house, but are too poor to obtain a mortgage have nowhere to go; as the housing boom progressed, under a labour government, an ever increasing pool of people were priced out of being able to afford a home. In London, ordinary working people, including professionals, were priced out in favour of bankers and non-domiciles; stealth taxes squeezed their incomes and funded the underclass; immigration lowered their wages and increased the scarcity of resources. These are the people who conservatives should be helping, the bedrock of the country. The fact that we have been increasingly living beyond our means as a country has been funded by ordinary people, while the very rich and the non-working poor have not been obliged to pay their share.

A higher tax rate for the rich points a way, perhaps tokenistic, to a more just system, one where people who are not very rich or living off welfare can get the share of the pie they deserve. If the right doesn’t address this, they will lose legitimacy. Into the moral vacuum will step the left, who will extend big government, erode our traditions and suppress our freedoms even further.