It makes your blood boil!  The only good news to come out of the UK budget announced by New Labour Chancellor Alastair Darling last week was the slight increase in tax rate that would now be levied on those earning more than £100,000 a year.  The rate was being raised from 40% to 50% to help raise a little more money from those who have benefited most from the credit binge that has now gone bust around the world.

But what a barrage of criticism and rage has erupted from the great and good and from the news media on Darling’s action.  Tycoons and celebrities have lined up in droves to condemn the measure.  Tim Linacre, chief executive at stockbrokers Panmure Gordon tells us that the tax hike “will kill the City of London at a time when it is on its knees.”  Former Labour supporter and Scottish lingerie tycoon Michelle Mone, who owns a bra firm called Ultimo, said the tax hike was a “disgrace” that will damage the economy irreparably.  Sir Michael Caine, the film actor, screams that “he will not pay the government more.  No way, ever.  They’ve reached their limit with me.  That’s the lot”. 

These people were joined by Sir Richard Branson of Virgin, Luke Johnson, head of Channel 4 News (and part-time hedge fund manager), Sir John Madejski, founder of Auto trade and owner of Reading Town Football Club, Stanley Fink, former head of the UK’s biggest hedge fund, MAN and Lord Jones, former Labour minister and head of the CBI, the employers’ federation.  Peter Hargreaves, who runs a huge financial asset management company, says he is “seriously considering leaving the UK in protest at the tax”. 

Well good riddance!  These types have lived off the fat of the land for decades under both Conservative and New Labour governments.  Their income tax rates have been held to low levels; while taxes on their stock market and property windfalls have been reduced as capital gains taxes and inheritance taxes have been slashed.  Now the UK and other countries (that they claimed were best operated under a capitalist market economy where they could make profits with impunity) have seen their economies collapse, but these people still don’t want to pay the price.

Raising the top rate of tax to 50% will only affect just 1% of UK income tax payers.  Given that the average mean annual wage for full-time workers in the UK is only £26,000 a year, the tax will affect people who are earning around four times more than the average – and a lot more for many others earnings less.  It’s not much to ask.

Even this paltry measure has produced backbiting by the Blairite faction in New Labour.  Back in 1998, (Lord) Peter Mandelson said that he was “intensely relaxed about people getting filthy rich as long as they pay their tax”.  Well, it seems that they don’t want to.  Tony Blair, now earning more than a million a year from sitting on the boards of hedge funds, with his wife racking up something similar from lawyering and speech-making, commented that the 50% rate was “a terrible mistake”.  The hypocrisy makes you sick.

The main argument of the rich against the 50% tax rate on incomes is that the top 1% of income earners already pay 23% of all income tax revenues, way higher than in the 1980s.  But the reason for that is obvious: the income and wealth of top 1% has risen so much more than the average income earner that their share of tax revenues, even at the current low rates, has risen.  They have got so much more money that they have contributed more revenue. 

But that is only direct taxes.  When you add in indirect taxes like VAT, petrol and customs duties, the proportion paid by the top 1% on all taxes affecting the 25m households in the UK falls to just 18%.  That’s because indirect taxes are regressive and put a heavier burden on the poor and a lighter one on the richest.

There are 2.5m households that receive over £100,000 a year, of which nearly one-third comes from non-wage income like investments and profits.  They are now being asked to pay perhaps another £7bn a year in tax, or about £3,000 a year more.  It’s not much to ask.  And yet even this produces a howl of anger and open calls to evade paying.

If you read the newspapers, you would get the impression that everybody is against this tax hike.  Yet every opinion poll taken on the subject shows a clear majority in favour – the tax hike is seen as ‘only fair’.  One TV reporter visited the City and interviewed a series of banking executives about the tax hike.  They were unanimous in their condemnation.  As he left one City building, he stopped and asked the security guard what he thought.  The guard exclaimed that the tax hike was right – and as for the people ‘upstairs’, “what do you expect from those bastards?”