Footballers don't necessarily work harder if they're paid more. Photo: Getty
Show Hide image

Transfer Deadline Day blows apart scare stories of Labour's plan to reinstate 50p tax rate

How footballers behave on Transfer Deadline Day suggests that raising the top tax rate isn't that dangerous.

Today sees a biannual event in which tens of thousands of people in our country glue themselves to their television and computer screens in a mass monitoring of a rare and globally mobile species. No I am not describing Autumnwatch with Bill Oddie. I am of course talking about Transfer Deadline Day, and the movements of many millionaire footballers across the globe.

The event twice a year when we can all watch members of the 1 per cent truly respond to national tax rates. For example, just monitor the movements today of Radamel Falcao; will he leave the tax haven of Monaco to come to England or Spain? The latter has a new 52 per cent tax rate.

Yet this more tracksuited version of what takes place daily in the financial sector also provides the first opportunity to test whether Labour’s plans to reinstate the 50p tax rate is having the apocalyptic effect that the Tories like to claim. How many of these starlets who are signing in and around the country will refuse to sign up for anything beyond six months for fear of the “war on the better off”, as the Telegraph’s Allister Heath describes a 5 per cent increase in taxation?

One of the big debates over the 50p rate is around the behavioural response it is claimed it creates. Of course there will be those who do choose a country by the lowest marginal tax rate, whether it is 45 per cent or 25 per cent. But the government argues that the behavioural response of such high-paid people coming to our country, and those already working here, would be huge. However, this argument relies on few facts and instead anecdotal evidence – a bit like rumours on Transfer Deadline Day.

Nevertheless, it does not stop there. As according to George Osborne’s logic since April 2012, players such as Wayne Rooney have been playing better, and working harder for their clubs. In fact, we should probably be thanking George Osborne (a Chelsea fan) for the excellent performance of the England team in the World Cup…

This is because the other plank of rightwingers' use of the behavioural argument by which Osborne axed the 50p rate is rarely disputed: that the rich work harder when taxed less. And to be fair, Rooney and other footballers earning over £1,000,000 a year (if we assume they declare this as income) may have indeed been training harder. But would it be because such a millionaire footballer has had an additional £700 a week more added to their current minimum of £20,000 a week?

Don’t get me wrong, £700 is a lot of money to me and most people. But to put it in perspective, that is the equivalent of the median earner who receives £517 a week (£26,800 a year) getting around an extra 18 quid a week more. Again not to be sniffed at, but not even enough for a Wayne Rooney hair appointment.

But would an £18 a week pay rise (or an increase in your wage by a 1/28) considerably raise the work rate of most people? I would hazard a guess that it probably would not in general. For example, would you work longer hours, such as an extra three hours a week, for a marginal pay rise of say £18, or would you be happy to get away at lunchtime on a Friday even if that meant you’d lose £18?

This is of course a relative question, given that those on middle and low incomes are more effected by other taxes such as VAT, than the average Premiership footballer. But surveys have shown that most people would rather work fewer hours even if this led to marginally lower pay. Shouldn’t we assume therefore that top millionaires are no different? Especially when you consider the proportions in pay they are dealing with.

So even if you are not interested in football nor footballers, you should still pay attention to this Transfer Deadline Day, and the whereabouts of Falcao, as it’ll be a prelude to one of the biggest arguments on taxation at the general election.

Getty Images.
Show Hide image

Jeremy Corbyn challenged by Labour MPs to sack Ken Livingstone from defence review

Former mayor of London criticised at PLP meeting over comments on 7 July bombings. 

After Jeremy Corbyn's decision to give Labour MPs a free vote over air strikes in Syria, tonight's Parliamentary Labour Party (PLP) meeting was less fractious than it could have been. But one grandee was still moved to declare that the "ferocity" of the attacks on the leader made it the most "uplifting" he had attended.

Margaret Beckett, the former foreign secretary and former deputy leader, told the meeting: "We cannot unite the party if the leader's office is determined to divide us." Several MPs said afterwards that many of those who shared Corbyn's opposition to air strikes believed he had mishandled the process by appealing to MPs over the heads of the shadow cabinet and then to members. David Winnick declared that those who favoured military action faced a "shakedown" and deselection by Momentum activists. "It is completely unacceptable. They are a party within a party," he said of the Corbyn-aligned group. The "huge applause" for Hilary Benn, who favours intervention, far outweighed that for the leader, I'm told. 

There was also loud agreement when Jack Dromey condemned Ken Livingstone for blaming Tony Blair for the 7 July 2005 bombings. Along with Angela Smith MP, Dromey demanded that Livingstone be sacked as the co-chair of Labour's defence review. Significantly, Benn said aftewards that he agreed with every word Dromey had said. Corbyn's office has previously said that it is up to the NEC, not the leader, whether the former London mayor holds the position. In reference to 7 July, an aide repeated Corbyn's statement that he preferred to "remember the brilliant words Ken used after 7/7". 

As on previous occasions, MPs complained that the leader failed to answer the questions that were put to him. A shadow minister told me that he "dodged" one on whether he believed the UK should end air strikes against Isis in Iraq. In reference to Syria, a Corbyn aide said afterwards that "There was significant support for the leader. There was a wide debate, with people speaking on both sides of the arguments." After David Cameron's decision to call a vote on air strikes for Wednesday, leaving only a day for debate, the number of Labour MPs backing intervention is likely to fall. One shadow minister told me that as few as 40-50 may back the government, though most expect the total to be closer to the original figure of 99. 

At the end of another remarkable day in Labour's history, a Corbyn aide concluded: "It was always going to be a bumpy ride when you have a leader who was elected by a large number outside parliament but whose support in the PLP is quite limited. There are a small number who find it hard to come to terms with that result."

George Eaton is political editor of the New Statesman.