Lower taxes make sense - Telegraph In his April 2009 Budget, Alistair Darling announced that the top tax rate would rise to 50p for those earning more than £150,000. The increase, which breached a Labour manifesto commitment, took effect the month before the Coalition came to power - an exercise in political cynicism by Gordon Brown, who wanted to leave a parting gift to the Tories of a tax rate on the wealthy that would be politically painful to cut. We warned at the time that such a rate - with National Insurance contributions, it left high earners handing more than 60 per cent of their income to the taxman - meant that wealth generators would be driven away. Figures published yesterday reveal how accurate that prediction was. In 2009-10, the year before the increase, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs. The following year, with the 50p rate in place, the number fell to just 6,000. Almost two thirds of the country's highest earners either moved abroad or took steps to avoid the levy by reducing their taxable incomes. Labour said the new tax would raise £7 billion; it has actually cost £7 billion in lost revenue. This is why George Osborne was right to cut the 50p rate in the last Budget. But the reduction to 45p from next April does not go far enough. The 40p rate should be restored because we know it will generate more tax revenue, which should be the Chancellor's sole consideration. Further down the scale, the aspirational middle classes will be hit hard by the lowering of the threshold for the 40p rate next April. It will leave close to five million people paying the higher rate, which was originally aimed at the rich. What incentives do the middle classes have to get on when the tax system is so punitive?