The London Telegraph reports that the “50p tax rate,” by which individuals pay 50 percent of their income after the first £150,000 in individual income, is not raising revenues, despite the fact that “most other taxes produced higher revenues over the same period”:
The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.
Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.
The self-assessment returns from January, when most income tax is paid by the better-off, have been eagerly awaited by the Treasury and government ministers as they provide the first evidence of the success, or failure, of the 50p rate. It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1billion.
This isn’t greatly surprising. Despite the insistence from both the Labour government that introduced the rate and the new Conservative-Liberal coalition that it was necessary until Britain ”gets out of the crisis,” the move has had its critics. Last year, the Guardian noted that “a group of economists called for Britain’s . . . top rate of income tax to be scrapped ‘at the earliest opportunity’ to boost growth, amid fresh concerns that the UK is slipping towards a double-dip recession.” The group’s letter, written
by economists, who include Cambridge University academic Bob Rowthorn and former members of the Bank of England’s monetary policy committee DeAnne Julius and Sushil Wadhwani, claims the top rate introduced by the last Labour government, which applies to high earners on an income over £150,000, “punishes” entrepreneurship.
They called for a return to an “internationally competitive tax regime” to stimulate the faltering economy.
“We are concerned that Britain’s 50p income tax rate is doing lasting damage to the UK economy,” they wrote. “It gives the UK one of the highest personal tax regimes in the industrialised world, making it less competitive internationally and making us less attractive as a destination for both foreign investment and talented workers.
“It punishes wealth creation by imposing on entrepreneurs and business people a marginal tax rate in excess of 50% once national insurance contributions are added in. This is particularly damaging when the UK needs to create new businesses in new industries.
The economists, who said the rate applies to just 1% of people who pay 24% of all income taxes, added in the letter: “We call on the government to drop the 50p tax at the earliest opportunity as part of a package of measures to stimulate growth.
“Only by returning to an internationally competitive tax regime will Britain enjoy long-term sustainable economic growth.”
Are you watching, Mr. President?
I can’t verify the true motives of British politicians wanting to whack the rich with 50% tax rates (although I suspect its the same for progressives the world over), but achieving higher revenue clearly is not Obama’s rational. His is simply to promote material ‘equality’. Look close behind the misleading rhetoric and you’ll see this philosophical thread running through every policy put out by Obama and the rest of the Democrat party. Despite the gnashing of teeth over both Reagan and Bush’s tax cuts, revenues steadily increased after the reduced rates went into effect. This indisputable fact can easily be checked in about 10 minutes by anyone looking at the government’s various budget and financial websites. The progressive agenda is so well misrepresented and is such an alien way of thinking to most people that independents and even many conservatives fail to recognize it. A conservative wants everything to be better for everyone. A progressive wants everything to be equal for everyone. To be successful, progressives must shroud both their goals and that of their opponents. This needs to be called out more when spotted lurking within a progressive initiative. When the message of each is clear, conservatives will win. When the message of each is obscured, liberals will win.
Reply to this commentLinkReport AbuseOh, he's watching. He doesn't care. The whole point, to Obama, is to take other people's money and give it to those he desires to have as his dependents. Besides, I am convinced the man, like most Americans, is unfamiliar with basic economics and absolutely ignorant of predictable human behavior.
Reply to this commentLinkReport AbuseBut...but...all the liberal policy wonks, and plenty of "New Reformer" conservatives who want us to get past Reaganism, have been telling us for years that higher tax rates don't impact economic growth and tax revenue because the rich are just the sort of people who will keep on earning money no matter what
Reply to this commentLinkReport AbuseObviously they need to move to a 70p rate to make up for the lost income.
Reply to this commentLinkReport AbuseI wonder if the guys who keep telling us that raising taxes in this country will bring in Soooo much money, are paying attention.
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