Boris Johnson Pledges Cuts to Income Tax on the Highest Earners
Boris Johnson is currently a leader in the Tory leadership contest, and he recently indicated that he would reduce income tax for the highest earners if he does become the party leader. As a top candidate, there is a possibility that he will become the next Prime Minister when Theresa May’s resignation takes effect. Johnson’s previous experience includes serving as the foreign secretary.
Johnson’s pledge to reduce the income tax for the highest earners appeared in an interview with the Telegraph. In that conversation, he indicated that he would increase the threshold for paying a 40 percent tax rate up to £80,000. Johnson would pay for this using the funds set aside to pay for a potential no-deal Brexit. Another portion of these tax cuts would come from increasing the payments from employees on the National Insurance, doing so according to the new threshold for income tax.
Johnson’s plan to increase the threshold for the 40 percent tax would impact an estimated three million people. According to calculations from the Telegram, the total cost of the tax cuts for the rich would be approximately £9.6bn each year.
According to Johnson, he believes that the income tax thresholds should increase as a way to assist the large numbers caught by the higher rate for fiscal drag.
What Others Say
The shadow chancellor for Labour, John McDonnell, responded to the proposal by saying that it shows the extent to which the Tories are out of touch. According to McDonnell, that feeling of being out of touch becomes clear since police services, schools, and elderly care are all at their “breaking point.”
According to Paul Johnson, part of the Institute For Fiscal Studies think tank, this pledge by Johnson would have a significant tax cut for the higher rate of taxpayers. It would mostly benefit those who live just off investments or wealthy pensioners. After all, neither of those groups pay National Insurance, which Johnson would raise as part of the cuts.
Others have also shown their opposition to these proposed tax cuts under a potential Johnson leadership. David Gauke, the current Justice Secretary and former chief secretary for the Treasury, called the announcement the “wrong priority.” Andrea Leadsom, a leadership contender and former Commons Leader stated that the current parliament would make it impossible for a wholesale tax change to be passed.
Others, such as Dominic Raab, said that it would be better to cut taxes for those who pay the least instead of the high-net-worth individuals who pay the most. He said that Johnson’s plan would be seen as an indication that the Tories are the party associated with privilege and only care about those with money. Treasury Select Committee chair and Tory MP Nicky Morgan also states that she felt the lower rate taxpayers should be the ones to experience relief. She also offered an alternative of giving those with child benefits an additional £15 per week with the same funds.
What the Future Holds
Those high-net-worth individuals who would benefit from the tax cuts that Boris Johnson proposed, as well as those opposed to them, should not see them as a given. While Johnson remains a leader in the race for Tory leader and next Prime Minister, it is not a given that he will win. Assuming he does win, he would still need to get the tax cut to pass Parliament, which other MPs and experts alike feel could pose a challenge. It may not even be possible to pass a tax cut at the other end of the spectrum, supporting those who pay the least. Only time will tell what comes from this pledge.
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