What would the economic implications of salary capping be?

'isn't there lots of fiddling going on with communism whereby the common man gets poor standard of living whilst the bosses get loads of treats?'

You're confusing communism with capitalism.

the reality of wannabe communist states was just like that though...or more extreme...communist party members having enough to eat, and their neighbours starving...

to be fair those weren't truly communist countries, but then the UK isn't truly capitalist either.

there used to be salary capping in the football leagues...it meant that many were only semi-professionals, and some would leave to do better paid work!

the theoretical purpose of a salary is that it should be high enough to attract an appropriate candidate... fact of life is that some jobs need a higher offer price than others 'peanuts and monkeys' comes to mind..

I think dreamingofsun has given an excellent synopsis of what communism is everything like

'isn't there lots of fiddling going on with communism whereby the common man gets poor standard of living whilst the bosses get loads of treats?'

You're confusing communism with capitalism.

Would it 'Create a more utopian society?'

Only if you think that utopia is a socialism that limits freedom, where Big Brother Loves You and decides what is best for you

So you'd like to impose a 50% pay cut on people such as top surgeons? It's a highly portable skill, and British trained doctors are much in demand internationally. Who would fill the gaps? And are they the people you want operating on the sickest and most vulnerable?

OK, it's an emotive example, but I hope you see the point. And as well as the potential for the best to leave (and there don't have to be that many departing to really hit services badly), what would happen to anyone who owns a small business - can they not take the profit they make? What about successful authors? Who should get the proceeds of eg Harry Potter books, if not the author? Who gets the excess? The Government? What sort tax rate is that (boggles at the thought of trying to work that one one!).

I think dreamingofsun has given an excellent synopsis of what communism is everything like

'isn't there lots of fiddling going on with communism whereby the common man gets poor standard of living whilst the bosses get loads of treats?'

Erm isn't this just communism all over again? That works well doesn't it?

No. It's nothing like communism.

Cogito-

Last time we made it too difficult to be wealthy in the UK with 90%+ tax rates, they relocated overseas.

Really? When would that be? Would that be during the 1970s, when income inequality was at its lowest, and people had a great deal more disposable income than they do now?

Professionals are already leaving the UK in higher numbers than in the past.

And what evidence do you have of this? Did you just make it up?

Seeing as this government is cutting corporate taxes, reducing funding for 'HMRC', and is ideologically bent of privatising all public services, I don't think the UK is any more 'business unfriendly' than it has been in the past (financial crisis and banks unwilling to lend excepting). In fact, the opposite is probably the case. Structurally, the government continues to seem to want to kiss the arses of big business and the rich at the expense of the public.

Making rich people poorer doesn't make poor people richer

Actually, it can do exactly that. All the money which is rewarded to the very top earners in the form of bonuses which are rewarded to them regardless of performance (and this practice is widespread), detracts from the corporate budget which could otherwise be spent on those at the bottom end of the payscale.

All the money which is collected from the millionaires in the form of taxes increases state revenue, which can be used to provide tax relief to those at the bottom of the pay scale.

Making rich people poorer doesn't make poor people richer.

Ooooh beautifully summed up.

The Premier League would be a strangely silent place, that's for sure.... Last time we made it too difficult to be wealthy in the UK with 90%+ tax rates, they relocated overseas. Professionals are already leaving the UK in higher numbers than in the past. Making rich people poorer doesn't make poor people richer.

i didn't think communism did work - or were you being sarcastic hermione? i think a lot of higher earners would go PT and this might mean shortages in certain professions. i think people with assets worth a lot would look at fiddling the system - isn't there lots of fiddling going on with communism whereby the common man gets poor standard of living whilst the bosses get loads of treats?

There would be people for whom it would suddenly not be viable to work (if coming up for retirement on e.g. a final salary pension) or who would suddenly have to work (SAHM who can't afford to be at home any more).

Asset values would crash massively e.g. house prices because if the max you could pay for a house would be 320k, that would cover those currently selling at 1m plus, for your average house, you'd be looking more at selling it for 50-100k but you would still be liable for all the difference between the mortgage you took out and eventual sale value but with less salary to pay for it.

It would make the current toxic assets held by banks look triple A rated (although they were of course, but that is another story) so the banks would crash so it would be impossible to borrow money which means that many businesses would fail. There would also be a substantial and ever increasing black market for tradesmen/food supplies etc which would operate outside the law and be undeclared.

I think there are valid arguments for encouraging house prices to slowly settle and to limit pay to 10x the pay of the lowest ft worker in a company but I would prefer not to see the complete meltdown of society.

Less motivated to work hard or start businesses.

Assets are worth more than this, so trade would go abroad in art sales/antiques etc as they couldn't be sold here, with the concomitant loss of revenue.

Were you planning to wave a wand and make people's debt disappear? If £80k were to be top whack, where would that put minimum wage?

Your idea seems to me to be pie in the sky.

Erm isn't this just communism all over again? That works well doesn't it?

Would this hypothetical law be worldwide or just in the UK?