On-Money

 People taking home more than £100,000 a year should pay higher tax rates, the Trades Union Congress has suggested. 

The £27.7bn fortune of steel magnate Lakshmi Mittal was said to be double his nearest 19th Century equivalent and the TUC will call for higher tax rates to be imposed on earnings between £100,000-£150,000 and over £200,000.

the TUC has published a study – Do the super rich matter? to coincide with the organisation’s annual congress in Brighton.  The report says that the Russian oil magnate and Chelsea Football Club owner Roman Abramovich is currently Britain’s second-richest man, worth £11.7bn, followed by the Duke of Westminster on £7bn, the Hinduja brothers on £6.2bn and Alisher Usmanov on £5.7bn.

The report suggests that while in the 1990s a value of £50 million was necessary to be be in the UK’s 200, but now more than £400m is needed.

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Comment: Those with memories of the 1970s will remember when very high taxes were introduced and many film stars, successful writers etc left the country to avoid nearly 100% tax. This continued until Margaret Thatcher dropped taxes to a lower top rate. The super rich do not have taxable salaries as such and can relocate to avoid punitive tax regimes.  The 70s were typified as Britain being the sick man of Europe and higher tax rates of thos sort would speed up a return to those times.

A flatter tax system would reduce administrative costs and be easier to administer with concomitant gains through reduced HMRC labour costs. These days £100,000 is not unusual in the City of London and higher rate taxes would have an adverse effect on one if the UK’s major earners.

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 The U.S. government is planning to take over Fannie Mae and Freddie Mac on Sunday, September 7 and all shareholders of the two mortgage giants will lose out. 

This is expected to be announced later today, and is believed to be possibly the largest financial bailout in the nation’s history, in an attempt to prevent further damage to a housing market experiencing the worst downturn since the Great Depression.

The government will run the two companies suggesting that the chief executives would be removed. The two government-sponsored enterprises were sent a letter by their regulator, the Federal Housing Finance Agency, that detailed problems at the companies and said why the federal government was taking control.

The two companies own or guarantee almost half of the country’s $12 trillion in home mortgage debt and being placed in receivership would be a major blow to the administration and likely to have adverse effects on the dollar as well as confidence in the administration. A bailout would avoid the more onerous step of being placed in a receivership in the interests of debtholders.

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