LibLink: David Laws and Tim Farron – Budget 2012: Osborne must help the squeezed middle and tax the top

by Stephen Tall on March 17, 2012

Rumour a-plenty ahead of George Osborne’s third budget. Adding to theose rumours — or, more likely, giving us the inside gen on what’s likely to transpire — are the former Lib Dem chief secretary to the treasury David Laws and Lib Dem party president Tim Farron in The Guardian. Here’s an excerpt:

Nick Clegg has made the Liberal Democrat priority very clear – a significant acceleration of planned increases in the starting point for paying income tax. This should be Osborne’s centrepiece – easing the pressure on household budgets, after the unprecedented recent squeeze. …

… whatever decisions Osborne makes on individual taxes, here is what he could do. First, clamp down hard on avoidance with specific measures, including on stamp duty, and a tough new general anti-avoidance rule. Second, make it harder for wealthy foreigners to shelter their money from tax. Tax wealth, including property, more. And third, stop some of those in the top 1% from paying such a tiny share of their income in tax (think Mitt Romney’s 13.9% tax rate!). Clegg’s tycoon tax proposal, a basic minimum rate of tax on all income, is a very good idea.

Action for the squeezed middle. A bigger contribution from the top 1%. A tax system for entrepreneurs, not accountants. Those are the liberal litmus tests for the budget.

It’s a good, liberal stance — and interestingly (and very much deliberately) is jointly presented by Orange Booker David Laws and social liberal Tim Farron.

The Guardian and the left will want to frame the budget solely around the issue of the 50p tax rate for higher-rate taxpayers earning more than £150k. This article is a timely reminder that liberals — for whom taxing unearned wealth is preferable to taxing earned income — need to focus on outcomes, namely: How can our tax system best reward those low-paid folk who need a helping hand by redistributing from those not currently paying their fair share?

As David and Tim say, that’s the true ‘liberal litmus test’.

* Stephen Tall is Co-Editor of Liberal Democrat Voice, and also writes at his own site, The Collected Stephen Tall.