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Reaction to Corbyn's suggestion to introduce a maximum wage cap
Commenting on Jeremy Corbyn’s suggestion that a maximum wage cap should be introduced to tackle inequality in pay, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“The Labour leader’s suggestion to introduce a maximum wage cap to tackle inequality is dangerous and, for all intents and purposes, a 100% income tax rate. Wealth is not a zero-sum game – high earners do not deprive others of wealth. In fact, not only does wealth create more wealth by purchasing goods and services and creating more and better-paid jobs, but it also enriches those around them. We want more millionaires and billionaires who can contribute to our economy in this way, not fewer.
“Surely by imposing a cap, Mr Corbyn would incentivise the richest to leave the UK, depriving the British government of their sizeable tax contributions altogether. And what about capital gains – would the cap apply to that too?
“A maximum wage cap is an economically misguided policy and would result in lower standards of living for all, including the poorest members of our society. Given that Mr Corbyn could not put a rough number on where the cap should be – other than confirming it would not affect his own salary – suggests he has not properly thought this proposal through.”
For media enquiries please contact Nerissa Chesterfield, Communications Officer: nchesterfield@iea.org.uk or 0207 799 8909 or 07766 221 268
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
“The Labour leader’s suggestion to introduce a maximum wage cap to tackle inequality is dangerous and, for all intents and purposes, a 100% income tax rate. Wealth is not a zero-sum game – high earners do not deprive others of wealth. In fact, not only does wealth create more wealth by purchasing goods and services and creating more and better-paid jobs, but it also enriches those around them. We want more millionaires and billionaires who can contribute to our economy in this way, not fewer.
“Surely by imposing a cap, Mr Corbyn would incentivise the richest to leave the UK, depriving the British government of their sizeable tax contributions altogether. And what about capital gains – would the cap apply to that too?
“A maximum wage cap is an economically misguided policy and would result in lower standards of living for all, including the poorest members of our society. Given that Mr Corbyn could not put a rough number on where the cap should be – other than confirming it would not affect his own salary – suggests he has not properly thought this proposal through.”
Notes to editors:
For media enquiries please contact Nerissa Chesterfield, Communications Officer: nchesterfield@iea.org.uk or 0207 799 8909 or 07766 221 268
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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