Cleaners, gardeners and housekeepers are losing their jobs because of the 50p tax rate
Jan 2012 27

Cleaners, gardeners and housekeepers are losing their jobs because of the 50p tax rate10

Simon Heffer is into shooting. Last year, his shooting club noticed that its members were booking fewer shooting days, thereby reducing the club’s income. When asked why this was, the members replied that they now had 50p income tax to pay. One gamekeeper lost his job.

My neighbour in Kent has a ramshackle garden and wood of about 12 acres. He can’t maintain it himself, as he works on average 60 hours a week. When he bought the property, he had planned to employ a part-time gardener to maintain it. As a result of the 50p he is holding back. His house could also do with a cleaner – who is also not employed for the same reason.

I have heard similar stories about window cleaners, house cleaners, chauffeurs, gardeners, housekeepers, child minders and painters-decorators. In other words: punishing ‘the rich’ has meant that people who do not earn a lot have lost their jobs.

A person with an income of £500,000 now pays £50,000 extra in tax since the 50p rate was introduced. A full time live out nanny-housekeeper in London earns, on average, £20,000 a year. Guess which savings are made first?

Sometimes the full-time position is tuned down to part-time day work, often cash-in-hand instead of fully legal. A number of the freshly fired may end up on welfare, paid for by the same state which is so eagerly hoping for extra cash from the 50p.

As a story, these job losses remain largely under the radar. They are held by people who have no loud public voice, and who are usually not unionised. The right hold back from pointing it out, as they fear the left’s accusation that they only care for the rich. Observe that it is not the ‘rich’ person who loses his job in the process.

The jobs lost because of the 50p rate are often held by people who have no other employment options. They are pushed off the lowest rung of the job ladder by greedy government. Often they are women; sometimes the sole breadwinners or single mothers.

Many on the centre right have claimed that the 50p would bring in less money, rather than more, as those targeted by it would move money abroad, move abroad themselves, or pay extra for good tax advice to avoid it. Back in November Chief Secretary to the Treasure Danny Alexander poured cold water on the clamour to scrap the 50p, claiming it raised “hundreds of millions of pounds” for the Treasury. John Redwood MP pointed out that the Treasury’s own figures show that income tax fell by 8% in the year to September 2011, and that most of the reduction came from the top income scale. I doubt whether the report will also report on the extra welfare paid as a result of the 50p.

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  • Anonymous

    Why do we have to keep reinventing the wheel? As I recall, during Margaret Thather’s years, the then Chancellor, Nigel Lawson, demonstrated quite clearly that lowering tax rates increased the amount of tax collected. As I remember the effect surpassed most expectations.

  • http://twitter.com/tommy5dollar Tommy Long

    Can the TPA please stick to evidence based analysis, rather than wild speculation?

    People earning £500k have plenty of money to still pay for their housekeepers, etc.

  • Steve Collins

    What a fatuous argument.

    The cuts have resulted in hundreds of thousands of people losing their jobs across both private and public sectors – many of whom were poorly paid. Yet you choose to make political capital out of the tiny amount of (anecdotal) job losses allegedly caused by the 50p tax rate.
     
    You use an example of someone earning £500,000 potentially making their £20k a year nanny redundant because of the 50p tax rate. You also mention a neighbour of yours, a 50p rate taxpayer, who allegedly can’t afford to employ a cleaner or gardener.
     
    I suggest that these people need some lessons in financial management. I earn a tenth of £500k, yet I still successfully employ a cleaner.
     
    You also repeat the fallacy that the 50p rate does not raise any money. This is repeated like a right-wing mantra by the TPA, yet there is still not a shred of evidence to support it.
     
    All in all, pretty desperate stuff.

  • Louisebenn

    Of course the £50,000 to the government pays the salary of school teachers, aged carers, for road maintenance, for policing – jobs we all need… The story is delightfully beyond parody and deserves to be widely shared among the left!

  • Rrbg20501

    You do not have to sack the nanny. Simple maths shows that someone earning £500,000 is only paying the top rate of tax on £350,000 of their income.
    Which an extra £35,000 not the £50,000 claimed so a saving of £15,000 towards her wages.

  • Alastair Neely

    Surely the point isn’t about someone earning 500K foregoing a cleaner or gardener because of the 50% marginal tax, after all those who can most afford should pay the most, or even better those who most benefited from the debt fuelled and easy credit bubble should pay.

    But the main point is that we as general taxpayers are losing the 500K taxpayers, as they are moving to Geneva, Copenhagen, and singapore/HK! So you want evidence, look at Brevan Howard capital mgt who have moved most of their highest earners to Geneva, banks including Deutsche bank are permitting staff to move to Singapore to benefit from lower taxes and i know of grassroots movements in a French bank pushing for the same.  As a taxpayer we all lose from this, how are we ever going to rebalance our fiscal budget if we drive away the higher rate taxpayers.  Some forget that services are highly mobile and in an open global economy personnel can move easily accross tax regimes.  We in the UK are not only losing their tax, but the tax on the second round jobs that their incomes support, e.g. the bar staff, restaurant staff, painters gardeners etc.

    The problem is that we are penalising the middle as the really wealthy such as Phillip Green Pay almost no income/capital gains tax here anyway.  And companies pay small armies of finance/tax professionals to evade UK corporation tax.  Perhaps the Mansion Tax is a way to get some tax revenue from the oligarchs and offshore trust set.

  • Alltogether

    Surely the point isn’t about someone earning 500K foregoing a cleaner or gardener because of the 50% marginal tax, after all those who can most afford should pay the most, or even better those who most benefited from the debt fuelled and easy credit bubble should pay.But the main point is that we as general taxpayers are losing the 500K taxpayers, as they are moving to Geneva, Copenhagen, and singapore/HK! So you want evidence, look at Brevan Howard capital mgt who have moved most of their highest earners to Geneva, banks including Deutsche bank are permitting staff to move to Singapore to benefit from lower taxes and i know of grassroots movements in a French bank pushing for the same.  As a taxpayer we all lose from this, how are we ever going to rebalance our fiscal budget if we drive away the higher rate taxpayers.  Some forget that services are highly mobile and in an open global economy personnel can move easily accross tax regimes.  We in the UK are not only losing their tax, but the tax on the second round jobs that their incomes support, e.g. the bar staff, restaurant staff, painters gardeners etc.The problem is that we are penalising the middle as the really wealthy such as Phillip Green Pay almost no income/capital gains tax here anyway.  And companies pay small armies of finance/tax professionals to evade UK corporation tax.  Perhaps the Mansion Tax is a way to get some tax revenue from the oligarchs and offshore trust set.Like
    Reply

  • Anonymous

    Surely the point isn’t about someone earning 500K foregoing a cleaner or gardener because of the 50% marginal tax, after all those who can most afford should pay the most, or even better those who most benefited from the debt fuelled and easy credit bubble should pay.But the main point is that we as general taxpayers are losing the 500K taxpayers, as they are moving to Geneva, Copenhagen, and singapore/HK! So you want evidence, look at Brevan Howard capital mgt who have moved most of their highest earners to Geneva, banks including Deutsche bank are permitting staff to move to Singapore to benefit from lower taxes and i know of grassroots movements in a French bank pushing for the same.  As a taxpayer we all lose from this, how are we ever going to rebalance our fiscal budget if we drive away the higher rate taxpayers.  Some forget that services are highly mobile and in an open global economy personnel can move easily accross tax regimes.  We in the UK are not only losing their tax, but the tax on the second round jobs that their incomes support, e.g. the bar staff, restaurant staff, painters gardeners etc.The problem is that we are penalising the middle as the really wealthy such as Phillip Green Pay almost no income/capital gains tax here anyway.  And companies pay small armies of finance/tax professionals to evade UK corporation tax.  Perhaps the Mansion Tax is a way to get some tax revenue from the oligarchs and offshore trust set.Like
    Reply

  • Questioner

    Fab.

    TPA claims that 50p tax rate hurts lower-paid more, because rich people will economise on shooting parties and groundsmen might lose their jobs.

    Is this article a cunning left-wing plot to discredit the TPA?

  • Root

    If you’re earning over £500,000 _after_allowances_ and you can’t afford your housekeeper, you probably need to spend less money on whores and coke.