Although the Labour Party leader has declined to identify exactly where the earnings threshold would lie, he told Sky News it would be “somewhat higher” than the £137,000 he pockets as Labour leader. We can assume that this probably wouldn’t apply to Trade Union officials either – although Labour-supporting celebrities could see themselves considerably out of pocket. He has also confirmed that footballers will be targets of his wage cap, along with top bosses.
The arguments against maximum earnings are numerous and overwhelming – explaining why the majority of Brits don’t support the policy. A national wage cap – a policy that effectively amounts to a 100% tax rate on all income above that level – would crush innovation in a highly competitive world. Its anti-aspirational message would reverberate through all levels of society, suggesting that wealth is innately harmful. It would be disastrous for social mobility – crushing not only aspiration but the ability of poorer people to ever earn as much as the ‘landed gentry’, thereby cementing the status quo of ‘old wealth’.
Even worse, these kinds of proposals mislead those on low wages to thinking that cuts at the top will translate to direct top-ups to salaries at the bottom. There is simply no evidence that high earners deprive others of wealth. Historically, prosperity and incomes have skyrocketed precisely because wealth accumulation is *not* a zero-sum game. Ideally we want more millionaires and billionaires who can contribute to our economy in a positive way, not fewer.
If you want a perfect illustration of the problem, just imagine what would happen if wage caps were imposed in football. If footballers’ salaries were, as Corbyn suggests, capped slightly above £137,000 – the Rooneys and Pogbas would face a choice between earning £150,000 in Britain, versus tens of millions in Europe, the US, Latin America or the Middle East. Like most earners in the £150,000+ bracket, footballers are internationally mobile. Who in their right mind believes that they would stay in the UK?
When pushed by reporters to give more information on the policy, the Labour leader’s reply was telling. “The point I’m trying to make”, he said, “is that we have the worst levels of income disparity of most of the OECD countries.”
This statement is full confirmation – if anyone needed it – that Labour’s current leadership is wholly concerned with intentions, not outcomes. When faced with scrutiny, Corbyn simply referred back to the perceived problem of inequality, instead of offering evidence-based justification for his proposal.
To Corbyn and his acolytes, the very existence of inequality is reason enough to justify the kinds of policies that, when enacted elsewhere, have led to top talent leaving the country in droves and everyone being worse off as a result. To borrow Churchill’s phrase, “the equal sharing of misery.” As Corbyn’s statement demonstrates, the only basis for this cap is that high pay instinctively ‘feels wrong’. But pursuing policies based on instinct is no way to govern.
In 2015, official government figures showed that the highest paid 3,000 people in the UK paid more income tax than the bottom nine million. Verbal attacks on the 1% (or 0.001%, in this case), are fairly innocuous, and what you’d expect from a party concerned with inequality. But creating the conditions for a mass exodus of the wealthy is not just idle talk. Corbyn’s pledge to cap salaries would in turn cap the nation’s tax take – and all for the politics of envy and spite.