Rationale behind abolition of 45p tax rate reflects failed ideology

theguardian.com:

It has been quite a week for UK economic policy. Lenders pulled 1,000 mortgage packages in a day, the Bank of England was forced to intervene to avoid pension funds going bust, and the pound hit a record low against the dollar despite the chancellor’s insistence that his plan for growth “will work”.

The blame for all this falls squarely on last Friday’s “mini-budget”. Kwasi Kwarteng used it to propose radical tax cuts, with no suggestion of how they will be paid for. Nothing signalled the government’s new priorities more clearly than the surprise abolition of the 45p top rate of income tax.

This top rate is paid by only half a million people – around 1% of adults – but raises around £6bn. Commentators immediately seized on the fact that cutting it by 5p was a handing a benefit to those with incomes of at least £150,000, the threshold at which the rate starts to apply.

But it is worse than that. Our analysis shows that more than two-thirds of the total tax saving will go to those with an annual income over £500,000 each – just 0.1% of adults. In fact, incomes are so concentrated at the very top that cutting the 45p rate will hand a £1bn windfall to Britain’s richest 2,500 individuals. That’s an average of £400,000 each.

In a cost of living crisis where low earners are struggling more than ever, there would need to be some very big economic upsides to justify this largesse. Kwarteng put forward a three-pronged argument, stating that “the higher the tax, the more ways people seek to avoid them [sic], or work elsewhere, or simply work less”. So, let’s look at the evidence.

First, there’s no doubt that when the rich are handed easy opportunities to minimise their tax, they – like most people – take them. Although headline tax