Seems rather illogical actually. The bankers weren\’t creating value but were getting high pay. So we should tax them more.
Instead, he suggests cutting taxes immediately for those on lower incomes, balancing this out by raising those for the wealthier. Although in the LibDems\’ proposals this is gained through clampdowns on capital gains tax and tax avoidance schemes, Cable is also theoretically in favour of higher tax rates for the bigger earners instead.
It is a traditional LibDem policy, but one which is becoming ever more popular in the wake of the financial crisis.
Says Cable: "I think we are living in a world which has moved further to the left than a year ago, and it\’s probably caused by the meltdown in the financial system; by the realisation that people who were being paid extraordinarily high bonuses in the City were not actually wealth creating at all, but were creating a vast pyramid selling scheme that has caused gross financial stability. This was not reward for wealth creation; it was reward for excessive risk-taking and ultimately for failure – and that has fundamentally changed peoples\’ attitudes."
Except, you see, those bankers ain\’t gonna be making those high incomes any more, because there ain\’t no profits to pay them from. So what he\’s actually suggesting is that we should raise taxes on those who are still creating value, those with high incomes not in the banking sector.
Which really doesn\’t sound all that sensible. Punish those who didn\’t contribute to the mess as a way of punishing those who did?