The most controversial announcement in Chancellor George Osborne’s budget was the cut in the top rate of income tax from 50 per cent to 45 per cent from next year. Most of the opposition party’s response was directed toward this single measure, although it accounted for a mere £50m of estimated lost revenue in its first year. Mr Osborne must have calculated that the economic gain would outweigh the political pain.
He was supported in his economic case by an impressive new study by HM Revenue & Customs, based on the actual tax returns of the 300,000 people with incomes above £150,000. They comprise around one per cent of UK taxpayers, and account for around 30 per cent of income tax revenues. Continue reading »