Economists call for top tax hike

January 31, 1997

LABOUR's decision to freeze the top income tax rate at 40 per cent for its first term in power, should it win the general election, would sharply reduce its chance of cutting unemployment and reducing economic inequalities, says a leading Cambridge economist.

Jonathan Michie, fellow of the Judge Institute of Management Studies, is co-author with Michael Kitson of St Catharine's College and Holly Sutherland, director of the university's microsimulation unit, of a job generation programme laid out in the latest issue of the Cambridge Journal of Economics. They argue for a higher rate of 50 or 60 per cent, starting at Pounds 40,000, as one of the means of funding a programme to create one million new jobs paying the average wage, which would particularly benefit the poorest 10 per cent of the population.

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