The Chancellor said in his budget the Revenue will study the effects of the 50% tax rate on tax revenues.
The Adam Smith Institutue has already published some of the important findings. (In the “Revenue and Growth effects of Britain’s high personal taxes”)They show that the Howe Lawson income tax cuts in 1979 and the middle 1980s increased tax revenue and the proportion of income tax paid bythe rich substantially . At 83% the rich paid 11% of the tax revenue. At 40% the rich were paying 21% of the total by 1997. The total went up.
Democrat President Kennedy knew this was true. He said ” It is a paradoxical truth that tax rates are too high today and tax revenues too low and the soundest way to raise the revenue in the long run is to cut the tax rates….” Kennedy’s cut increased tax revenue and the proportion paid by the rich.
President Reagan went much further, cutting the top rate from 70% to 28%. In 1981 the rich paid 17.6% of income taxes. This soared to 27.5% by 1988 as the big tax cut worked through. Total revenues powered ahead.
President Bush I managed to lower the revenue with his 10% surtax on the top income bracket.
The Adam Smith Institute also have similar evidence from France, Canada, Hong Kong, India and Russia. Each time top tax rates are cut revenue rises and the rich pay a bigger share. What more evidence does the Revenue need, before it decides to tax the rich more here too by cutting rates?
Governments usually tax things they do not like or wish to reduce. So they tax smoking heavily to try to stop it. They tax drinking heavily to try to reduce it. They should not now tax enterprise, talent and hard work heavily for fear of discouraging and stigmatising them. Surely we need more of all those things, not less, to get out of our economic difficulties?