Polly Toynbee is quite right that next month’s budget should be a defining event, both economically and politically.
She’s also right that there’s substantial public anger with bankers, with the privileged and the wealthy.
But she’s totally wrong that the correct response is to make the centerpiece of the Budget putting up taxes on those over £100,000.
Why? Because the centerpiece of the budget needs to be what we’re doing to help people who need a helping hand, not how we’re going to punish those who deserve a slap.
Our focus has to be on reducing the tax burden on the poorest and providing extra income to working families who find it hard to make ends meet (not least because they’ll spend the money), providing mortgage payment support for the middle class who lose their jobs, reducing tax burdens on small businesses, and providing both tax breaks and investment to support research, skills and innovative technologies that will employ thousands of people.
We should do that because it’ll help the economy get moving again, it’ll provide help to the many, and it’ll be effective in boosting demand.
Of course there’s an a need for improved global regulation. But that’s a longer term question which benefits from careful planning. It can only be implemented over months, not weeks.
So right now it’s a rhetorical and narrative need, not an economic one.
As for increasing taxes on the super wealthy – why do it now? It may feel obscene that people are still buying $200,000 watches, but why remove more demand from the economy if we can avoid it?
We will need to increase the overall tax burden after the recession, but is it smart economically to do it now?
As for dealing with those who have profited by venality and the assurance that the taxpayer would rescue them, the politics is quite different from the economic need of the country. We shouldn’t confuse them.
There’s a case for allowing a latter day Thomas Cromwell to “visit” a few of the great houses of Banking to see what has hidden in the crypts. Perhaps Polly would relish the job herself?
It might even be good politics for some modern Court of Augmentations to then appropriate the ill gotten gains of the malefactors of great wealth and display them to a wondering public, but I suggest at least a little caution and restraint.
It is probably a good idea to go for a little pour encourager of les financial autres, but it can rapidly get out of hand. (Besides Polly, look where Cromwell ended up.)
Right now, the big priority for government has to be helping the many. Punishing the few can wait a little while.
First, let’s get through the storm. Then we can present the bill for the damage, eh?