Look into the table. Tell me what you see
Nelson sees the table as evidence that cutting marginal tax rates is “progressive”. He argues:
“The highest-paid 1 percent will generate 23 percent of income tax collected in the UK in the year before the 50p tax. And spot the correlation between the top tax rate, and the burden shouldered by the richest and the poorest. Which are the most progressive – the figures on the right, or the figures on the left?”
I suspect most progressives will see in the table evidence that income inequality has exploded in the past three decades. They would argue that the reason the top five per cent are paying a greater proportion of the income tax take now is that their incomes have grown at a much faster rate than the rest and have been taxed accordingly.
I think Nelson is probably justified in arguing that the Thatcher era reductions in marginal income tax rates helped to make Britain a wealthier nation overall. But his implication that Britain is a more equal country because of those reforms, or that they somehow made the tax system more progressive, does not convince.Tagged in: fraser nelson, Rorschach test, tax
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