The tax cuts for the richest announced for England by the new Prime Minister Liz Truss's Chancellor, Kwasi Kwarteng, has sparked economic panic.
Unless Kwarteng is forced by the markets and the Bank of England to reverse his decision, then come next April the highest rate of tax, 45p in the pound for earnings over £150,000 will be scrapped.
It will hand someone on that level of income thousands of pounds more a year.
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The higher rate in Scotland is 46p in the pound and is not changing.
It has led to some people claiming they are worse off in Scotland.
Let’s be clear; people on the highest incomes are not worse off in Scotland.
We are talking about people earning above £150,000 a year and some are suggesting they will be “worse off”.
They are having such a laugh they should have their own run of comedy shows at the Hydro to rival Kevin Bridges.
Here’s what is actually happening.
In England, the basic rate is 20% on earnings between £12,571 and £50,270.
The higher rate on earnings between £50,271 to £150,000 is 40%.
And the additional rate on earnings above £150,000 is 45%
The basic rate is going down to 19% and the additional rate is being scrapped meaning all earnings over £50k will be taxed at 40%.
According to expert analysis only those earning over £155,000 will actually benefit from these changes
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In Scotland, there are several bands and rates.
Starter rate on earnings between £12,571 to £14,732 at 19%
Basic rate between £14,733 to £25,688 at 20%
Intermediate rate between £25,689 to £43,662 21%
Higher rate between £43,663 to £150,000 41%
Top rate over £150,000 is taxed at 46%
In Scotland, rates are not changing because the Scottish Parliament sets rates and thresholds.
The additional rate in England applies to around 600,000 people or 1.1% of the population.
The government estimates the changes will cost the treasury somewhere between £2bn a year, while the Institute for Fiscal Studies says it will be more and could be as much as £6bn.
Who benefits is clearer. It worked out an average benefit of £10,000 a year for the 600,000 in the top 1.1%.
The more you earn the more you benefit so if you are one of the very few earning £600k you can enjoy another £22,000 and the super-rich with more than £1m a year will add another £40k to their wealth stash.
So, no-one is being made “worse off” in Scotland because everyone will pay the same as they did before.
It is blatantly obvious that anyone who says they are considering moving south of the border because they will be “worse off” is being creative with the truth. Rather they say it because they think they could be “better off” by paying less in taxes.
They are in fact considering moving because they want even more money for themselves.
This is money they are currently contributing to the rest of society. Higher rate taxpayers are extremely valuable to the taxpayer and their contribution should be a source of pride.
They earn more and they contribute more, so there is more to spend on services for everyone.
Money that is used to pay for schools, teachers, hospitals, doctors and nurses, roads, water, transport infrastructure, some social security benefits, police, courts, crime prevention, and the list goes on and on.
Anyone who is considering moving not to save themselves several thousands of pounds but to enable them to keep thousands of pounds they would otherwise pay in tax I would suggest should sit down and question their priorities.
In a cost of living crisis, when people working for the lowest earnings are worried about facing a cold winter and having to make real choices about where they spend their income, the idea that some on the highest earnings want even more is insensitive at least, and downright greedy at worst.
That’s before we consider the damage done to the economy by the abolition of the top rate since it was announced.
It has been, according to most commentators, a disaster and should be reversed before it becomes a catastrophe.
The Bank of England has been forced to intervene as economists warn of a “financial crisis” and the government is facing calls to abandon the tax cut plan.
That makes it all the harder to understand why anyone would be demanding the Scottish Government follow suit and gives the richest a tax cut, at the expense of not just those paying their taxes at the lower rates, but the economy as a whole is hard to fathom.
Unless of course, it is naked greed. It couldn’t be, could it?
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