Bridget Rosewell: 'The 50p rate ends up costing the exchequer'

The 50p tax debate has created a complex, peculiarly British argument about envy, retributions, aspiration and the super-rich. It may sound like the ingredients of a political blockbuster. But my reasons for calling for its abolition are all drily economic.

First, the 50p tax is counter-productive. History and other countries' experience teaches us that high rates end up costing the exchequer revenue that could pay for hospitals and schools. That is because it deters enterprise and harder work.

Nobody wants to see a return of the "brain drain" of the 1970s, and in today's global economy it is more important than ever that punitive income taxes do not damage Britain's reputation for welcoming wealth creators.

Recent data from the World Economics Forum ranks the UK at the bottom of its international table of tax incentives for hard work, a shocking 95th place. As Alistair Darling, the former chancellor, acknowledged yesterday: "In the long run you have got to keep your tax rates internationally competitive, which means something like the two rates we used to have."

Second, the 50p tax puts a drag on economic growth. To work hard but to be taxed harder sends the wrong signals to wealth creators and the aspirational. Last year's OECD report on sustainable policies for growth said the 50p rate should return closer to the former rate of 40p because high tax "adversely affects incentives and entrepreneurialism". In other words, it diminishes revenues by providing a disincentive to those wealth-creators to strive harder and take more risks. And it makes mobile investors less likely to remain in Britain.

Third, the 50p tax rate is bad news for civic society. As well as reduced revenues, which means less money for the public services many vulnerable people rely on, they create a disincentive for philanthropy – which punishes charities. For instance, in a 2009 report on charitable giving, the Economic and Social Research Council criticised the 50p tax band. "The 50p tax band may reduce incomes at a time when they are already falling and have a negative impact on giving," it said.

George Osborne should ignore the political pressures for maintaining this tax. It is time to focus on the economics. A successful recipe for growth must encourage wealth creation and celebrate aspirations. If the politics of envy and retribution win over sound economics, everyone suffers.

Richard Murphy: 'Most people on £150,000 are not wealth creators'

The 20 economists calling for the abolition of the UK's 50p income tax rate are wrong to do so.

The reality is that this tax rate will raise £2.7bn to close the UK's fiscal deficit caused by the failure of UK banks – for which many who have incomes of more than £150,000 a year, and so pay this tax rate, work.

It's also true that while the UK undoubtedly needs tax cuts to stimulate the economy, a cut in the 50% tax rate is probably the least likely to do this. Cutting it will boost savings, of which we already have a glut, or house prices in the south-east, which are already too high. There's little or no chance it will stimulate spending.

Nor will it boost entrepreneurship, which is about people taking risks and creating companies. Most people earning £150,000 a year do neither. They speculate for banks and pension funds using other people's money (where, let it be noted, most have been so successful that their average rate of return in the last decade has been about zero at best) or they rise through the ranks of multinational corporations, enjoying secure employment and large pensions until appointed to positions where they can distort pay and rewards in their own favour. As a result their main contribution to society is, in fact, to increase the income and wealth gaps, which we know produces worse outcomes for all.

So that's not entrepreneurship. Entrepreneurship which leads to growth, new business and new jobs is done in small companies by people who often work for long periods for nothing (and so pay little or no tax). Their income is usually sheltered in companies – and those companies only pay tax at about 20%. The 50% tax rate is no disincentive to real entrepreneurship.

So how did so many economists get this so wrong? Because they think accumulating cash through manipulating markets is wealth creation. Well, as someone who has been an entrepreneur: they're wrong. What is more, the last thing entrepreneurs worry about is tax. They take risks and create businesses just because, like those who climb mountains, they need to do so.

The person who claims they're put off by tax is not an entrepreneur at all – they just want to accumulate cash. The UK Exchequer is justified in asking for a fair share back to ensure it can provide the support needed to the real wealth creators in the UK – very few of whom make £150,000 a year.