How a higher tax rate led to less tax revenue


Official forecasts:

Budget 2010                                                      Autumn 2012

2008-9     £22.5bn                                                £ 22.5bn

2009-10   £21.7bn                                                     £ 21.7bn

2010-11    £21.5 bn                                                     £21.5bn

2011-12     24.2 bn                                                      £20.3bn                           

2012-13     £ 29.2 bn                                                    £22.6bn

2013-14      £32.5  bn                                                    £23.8bn

2014-15      35.1                                                       29.4


Self Assessment tax income fell 10% from the peak to 2011-12. It fell 5.6% in 2011-12. By the end of the second year of the 50% rate receipts were down by 6.5% on the level before its introduction.

The bulk of the Self Assessment Income Tax is at higher rate. The decline in 50% revenues is likely to have been faster than that in total Self Assessment revenues.

It is interesting to contrast the very optimistic forecasts made by the government in June 2010, and to see just how much they have taken off their forecasts in the light of experience since then.  This year they think they will be almost £7bn down on estimate, and the revenues are currently undershooting even the latest forecast.

In contrast, raising the VAT rate has produced some extra revenue. Capital Gain tax receipts are forecast to fall this year.

The poor performance of revenues is the main reason why the public borrowing figures have remained high this year, well above the 2010 forecast.

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  1. Mike Stallard
    Posted January 23, 2013 at 6:51 am | Permalink

    Please let me talk about the philosophy behind taxation which is never discussed.

    Why should I support the state? Well, there are a number of reasons actually. But why should I pay taxes to support the state?
    Up to a point this is obvious. Defence, Police, the Law. (All currently under threat).

    But the Welfare State? There really is no answer. If I throw away my Christian principles, as we are constantly forced to do, then what, actually is the reason that I should support other people at all?
    There really isn’t one. Bentham, Nietzsche, Hegel even Kant have absolutely no answer. Marx has long fallen out of favour. Certainly no 20th century philosopher has a cogent answer that convinces me.

    And if the State starts taking the Mick, as it really really is…….

    I wish someone could solve this one.

    • uanime5
      Posted January 23, 2013 at 4:31 pm | Permalink

      Well if you don’t support a welfare state how are people who for whatever reason cannot get a job going to survive? If it’s through the black economy, other crimes, or being homeless than the welfare state is the least bad option.

      • libertarian
        Posted January 24, 2013 at 11:05 am | Permalink

        Er if those people cant get a job how are they able to work at crime or the black economy ? If they just can’t find paid employment then work for themselves. If they are unable to work through true disability or illness then that is a totally different issue

        • uanime5
          Posted January 24, 2013 at 3:34 pm | Permalink

          They can’t get a job because there are more people than jobs available and they can’t work for themselves because they lack the skills, equipment, or customers.

          By contrast there’s always plenty of things to steal, so crime is always viable.

          • Bazman
            Posted January 24, 2013 at 8:10 pm | Permalink

            Flexible hours with career progression as option too. Norman Stanly Fletcher…

      • P O Pensioner
        Posted January 24, 2013 at 12:10 pm | Permalink

        The problem with our welfare state is that the expenditure is drastically out of control upwards. Where will it stop. There are undoubtably many people who could have found a job back in the Labour “boom” years but didn’t because the benefits being made available by the goverment made the attraction of not having an official job more attractive. Even with rising welfare payments the black economy and crime has been growing. What we have in this country is a growing underclass of uneducated, zero skilled people who don’t want to work in the mainstream even if a job is offered to them.

        • uanime5
          Posted January 24, 2013 at 3:36 pm | Permalink

          Given that even during the boom years most jobs, especially low skilled jobs, were filled it’s clear that it was much harder than you claim to get a job.

  2. Steve Cox
    Posted January 23, 2013 at 7:03 am | Permalink

    And most sensible people accept that tax rises are more damaging to economic growth than public spending cuts, which helps to explain why we are still up to our necks in the merde.

    • lifelogic
      Posted January 24, 2013 at 6:01 am | Permalink

      Indeed release the private sector and stop Cameron’s tax, borrow and waste now. Alas already too late for 2015.

  3. Nina Andreeva
    Posted January 23, 2013 at 7:29 am | Permalink

    Totally off topic John, but why is Dave not trying to drive a even bigger wedge between the Milliband Bros over “taxing the rich” and still show that New Labour are obsessed with personal wealth over how much David Miliband is earning at the minute? According to last Saturday’s FT he is pulling in( alot of money each -ed) a year. To me it is faintly banana republicish when the MP is the biggest earner in the town, South Shields is my home town and there is no one else pulling in that sort of money.

    As an aside I do not know why you bothered taking part in the welfare debate as the quality of NE Labour MP remains as dismal as ever from their contributions

  4. Narrow Shoulders
    Posted January 23, 2013 at 7:46 am | Permalink

    Thank you for publishing these figures. However I do not believe that the situation is a black & white as you have painted it.
    Firstly you have not made allowance for income reduction among the high earning demographic. While I do not think they are feeling the pinch just yet, bonuses in the city have reduced as has the headcount. A mean figure per self assessed payee may have been more illustrative.
    Secondly those subject to 50% rates would have found it easier to shift their incomes around for the short period that the 50% rate was in operation. I do not feel that the rate was given sufficient time to bite and to be evaluated.
    I am not in favour of taxation levels being punitive but do advocate fairness. To this end I would have left the 40% rate payable by those earning up to £350K with a 60% rate therefter. This would have been both economically and politically expedient.

    • libertarian
      Posted January 24, 2013 at 11:10 am | Permalink

      There are a record number of people in employment ( 29.2 million) so I don’t think your income reduction stacks up and also bare in mind that taxes at this level are levied on earnings in arrears so again I’m not sure your argument is valid.

      The one thing that is always overlooked is that actually rather than being jealous of the 1% of high earners and punishing them with what you laughingly call “fairness” we ought to be trying as hard as we can to create far MORE high earners

      • uanime5
        Posted January 24, 2013 at 3:39 pm | Permalink

        There’s a record number of people in employment because the population keeps growing.

        What the UK needs isn’t more high earners but more jobs that pay a living wage rather than minimum wage. Demand in UK economy will not be increased in any meaningful wage by having a few more rich people.

        • Edward
          Posted January 24, 2013 at 8:18 pm | Permalink

          Given that the top 1% pay over 20% of income tax it seems to me to be quite the opposite.
          We need many more super rich in the UK, then more of the lower paid and average income citizens would be relieved from having to pay tax and would be better off as a result.

  5. lifelogic
    Posted January 23, 2013 at 7:48 am | Permalink

    Indeed lets let pretend we are being tough on all the the nasty rich people – for political reasons – but raise less tax and destroy growth and jobs in the process.

    Meanwhile we can go on about climate change, “renewable” energy, gender neutral insurance, gay marriage, the gender pay gap, royal succession gender rules, not being a greater Switzerland, a referendum years after the Tories have been voted out and all the other idiotic distractions …….

    • lifelogic
      Posted January 23, 2013 at 12:52 pm | Permalink

      Just like the mindless drivel from the BBC’s mate Saint Obama yesterday. As he makes almost as much a mess of the UK economy as Cameron and Osborne have.
      At least they are fracking.

      I read in the telegraph that Alice Arnold (Claire Baldings partner) says she can not speak out about gay marriage as she is free of the BBC. But is anyone at the BBC against gay marriage? I rather doubt it. I have never heard anyone at the BBC who is not on message on gay issues, AGW, the EU, ever bigger taxes and bigger state sector, immigration, hatred of Thatcher etc. – are there any at the Beeb?

      I am in favour of gay marriage anyway – but the fact that Cameron and the BBC are makes me think I should think again.

    • uanime5
      Posted January 23, 2013 at 4:42 pm | Permalink

      How many jobs were destroyed because someone couldn’t earn over £150,000 per year?

      • JimF
        Posted January 23, 2013 at 8:44 pm | Permalink

        Those of anyone earning more than £150’000 a year

        • uanime5
          Posted January 24, 2013 at 3:39 pm | Permalink

          Given that people are still earning over £150,000 it’s clear that there jobs haven’t been destroyed.

          • lifelogic
            Posted January 25, 2013 at 11:42 am | Permalink

            it’s only clear that “some” of these jobs haven’t been destroyed! Use some logic for a change.

  6. Andyvan
    Posted January 23, 2013 at 7:51 am | Permalink

    The law of diminishing returns. Keep mugging people and eventually they will stop carrying money. Take all the money out of the productive sector and give it to civil servants and the economy dies. No surprises here.

  7. Johnny Norfolk
    Posted January 23, 2013 at 7:55 am | Permalink

    Over Taxed. Over Governed.

  8. They Work for Us
    Posted January 23, 2013 at 8:54 am | Permalink

    On a more important subject, Camerons speech on Europe is not enough.

    He is kicking the can down the road hoping that something will turn up and then that when/ if a referendum is actually delivered, obfuscation will deliver a woolly yes to stay in. By that time with the influx of EU immigrants and other immigrants he is hoping that the UK then will be different to delivers “stay in”.

    It is a crying shame for conservatives that UKIP is still the force for the change we need now. Lord knows how Miliband will jump, probably in favour of more EU Socialism. We must be vigilant that the decision must be a UK matter without the EU throwing our own money back at us to promote a stay in campaign as they did in Ireland.

    The EU is unlikely to change as their agenda is an EU state, an even larger state and bureaucracy and more and more regulation.

  9. Disaffected
    Posted January 23, 2013 at 8:59 am | Permalink

    No John, The borrowing has increased because Cameron has not made any substantial cuts as you have highlighted before. It is not just about income it is also about outgoings. When you do not have any money you cut back. Cameron has increased Eu spending, he has increased overseas aid, he has increased welfare by 5.2%. Need I go on?

    Today he makes a claim he will give an in/out referendum on the Eu if he is elected. Is this the same cast iron promise for a referendum on the Lisbon Treaty that he gave before the last election? He claims to want to repatriation of powers. He did not make any changes to the Lisbon Treaty in autumn of 2010 when he came to power and had the opportunity to do so. He allowed the EU arrest warrant to be implemented in the UK when he never had to so. Citizens can be arrested and taken to other parts of the EU for offences that do not exist here FFS. ANd now after all his failed cast iron promises and U turns he expects the public to believe him for something that might happen midway through the next parliament. WHat utter contempt he shows the public. He has surrounded himself with Europhile ministers and advisers like Heseltine and Major and wants the public to believe him?

    I am beginning to wonder whether he is rational in his thoughts as there is no consistency or coherent logic to what he says..

    • Disaffected
      Posted January 23, 2013 at 9:10 am | Permalink

      How long before Cameron introduces Levison recommendations along EU lines?

      A quote from Guido Fawkes that is worth a read.

      “All EU countries should have independent media councils… Media councils should have real enforcement powers, such as the imposition of fines, orders for printed or broadcast apologies, or removal of journalistic status.”

      First they came for the journalists…

      UPDATE: Toby Young has found an even worse line:

      “The national media councils should follow a set of European-wide standards and be monitored by the Commission to ensure that they comply with European values.”

  10. Lord Blagger
    Posted January 23, 2013 at 9:00 am | Permalink

    Not it isn’t.

    The main reason is that spending is up up and away

  11. Brian Tomkinson
    Posted January 23, 2013 at 9:19 am | Permalink

    Will you please show us the spending figures as well? Then we can see just why the borrowing figures this year are not only well above the 2010 forecast but higher than last year’s actual!

  12. stred
    Posted January 23, 2013 at 9:23 am | Permalink

    Next time you have a chat with Mr.Osborne, would you please explain to him that holders of long term investments, intended as a supplement to inadequate pensions, would love to sell and pay CGT at 18% and with inflation allowances restored. This still applies in other countries, even high tax ones such as France. Currently, they will not pay a tax which in effect is now 28% x the inflation rate since they made the investment. In the case of 20 year old investments this means the real rate is over 60%.

    On the other hand, bankers and CEOs given shares may find that these double in value over a few years and are happy to sell and pay a real rate of say 35%, which is way below upper rate of income tax.

    The latest regulations and licensing of rental property will lead to many owners tiring of the hassle and expense, and many would wish to sell. These houses would become available to new home owners or others entering buy to let. The prices might then drop and allow lower rents and a chance for younger people to buy. -And lower HB costs too.

  13. Wilko
    Posted January 23, 2013 at 9:39 am | Permalink

    Avoidable taxes are weak, and collectable or not, at the discretion of avoiders.

    If Govt decided instead, to raise all its income solely from tax on electricity generation at source, the cost of payment would reach every user.

    Avoiders would have to attempt refraining from buying any product involving electricity in its development, or pay their fair share according to all the things they consume.

    What would happen then?

    • Mark B
      Posted January 23, 2013 at 9:26 pm | Permalink

      I’d buy candles.

      Starve the beast into submission.

    • Bazman
      Posted January 24, 2013 at 8:17 pm | Permalink

      The government does do this any government take petrol as an example of this. If the idea was extended to ludicrous levels such as VAT at different punitive rate you would have what you want regressive taxation benefiting the rich. Bentley’s and mansions I suspect would be taxed less than bread. Thus putting the onus on the ones using the services to pay for them. Tory ideology in a nutshell.

  14. Iain Gill
    Posted January 23, 2013 at 10:02 am | Permalink

    Just pushes more high earners to operate through their own limited company rather than PAYE so they can take the money out as share dividends and get taxed significantly less, this whole area needs sorting out as its full of contradictions which dont do the tax payers or the country any good.

  15. MajorFrustration
    Posted January 23, 2013 at 10:04 am | Permalink

    As a company you compile your forecasts but when things go awry you adjust your spend and or look at revenue enhancement. Taking no action and telling the bank manager “The poor performance of revenues is the main reason why…….” will get you nowhere.
    OK its not quite so straight fwd when in Government but its would be interesting to understand what monitoring goes on when the forecast start to veer off course and what action is being taken to get the show back on the road. Or is it just the soft target tax payers that give comfort to the politicians. Were business so easy.

  16. Winston Smith
    Posted January 23, 2013 at 10:09 am | Permalink

    Borrowing figures are high because a) Govt spending has not been cut sufficiently and where it has, it has been removed from the domestic cashflow, whilst increasing the outflow to the political elite’s interests abroad, and b) taxes are far too high (14% employers NI!!) and the system too complicated, which is stifling enterprise and ambition.

    I like Litteljohn’s summary of the State’s debt timebomb and the pathetic attempts to resolve it:

    “I’ve adapted it to Britain, using data for 2011-2012, the last full financial year available. The figures come from the BBC and Guardian websites, so no one can accuse me of being biased.

    UK tax revenues £550,600,000,000
    Spending £694,890,000,000
    New borrowing £117,500,000,000
    Outstanding debt £1,312,100,000,000
    Spending cuts £11,000,000,000

    Now take off seven zeros and pretend it’s a household budget.

    Annual family income £55,060
    Annual family spending £69,489
    New debt on credit card £11,750
    Outstanding credit card balance £131,210
    Family spending cuts £1,100

    • Jon
      Posted January 23, 2013 at 8:35 pm | Permalink

      I like the conversion to a household budget.

    • alan jutson
      Posted January 23, 2013 at 9:13 pm | Permalink


      An excellent way to present figures and to show the real scale of the problem, and the rather pathetic response/action taken as a proposed solution.

    • stred
      Posted January 24, 2013 at 9:05 am | Permalink

      Money forging in garden shed £14,400. Likelihood of Dad being sent to prison zero.

  17. James Reade
    Posted January 23, 2013 at 10:32 am | Permalink

    “fell 10% from the peak to 2011-12. It fell 5.6% in 2011-12”

    When was the peak?

    Can you link up some time series so we can actually make some judgement on this claim you’re making?

    Because if you’re saying tax receipt fell from a peak that was round about just before the recession, then I can’t see how what you claim in your title has any support based on what you present.

  18. Paul H
    Posted January 23, 2013 at 11:21 am | Permalink

    But the 2010 budget projections were quite clearly unsupportable at the time, and obviously designed to help dress things up. So much for the “R” in OBR.

    • Wilko
      Posted January 23, 2013 at 2:17 pm | Permalink

      If the OBR were assigned on a payment by results basis, the rebate on their forecasts might help reduce the tax burden.

  19. Shade
    Posted January 23, 2013 at 11:22 am | Permalink

    John, can you explain? Total income tax raises about £150bn. We are told that the top 1% of taxpayers contribute well over 25% of that total. Assuming that all(?) of these people fill out SA returns, and many others on much more modest incomes also do SA, why are the figures in your article so low?

  20. John
    Posted January 23, 2013 at 11:29 am | Permalink

    The Labour party wanted to end bankers bonuses. Because of the financial collapse they have dropped from something over 10 billion to about 2 billion. 8 billion at 40 % is 3.6 billion which is what is short

    • uanime5
      Posted January 23, 2013 at 4:52 pm | Permalink

      Well I’m sure they’ll use the extra 8 billion to create jobs and invest in the economy, rather than pay themselves huge salaries.

  21. Acorn
    Posted January 23, 2013 at 12:23 pm | Permalink

    Meanwhile for those of us who are on PAYE, have a look at where the money ends up. . Have a look at Fig 6. Notice how steep the curve gets when you get past 98% Households. The last 2% have a nice little pile stashed and they ain’t spending it. How much tax was paid on that lot do you thing?

    Like wise, now the BoE has bought a third of the Treasury Guilts for cash from the Banks, there is a load of interest payments the Treasury is paying to itself, via the BoE; that ain’t getting spent either; it only existed for a moment on a disc drive somewhere.

  22. Simonro
    Posted January 23, 2013 at 12:40 pm | Permalink

    Of course, falling self-assessment & capital gains receipts could have nothing to do with the complete and utter lack of growth we’ve had since the last election, or the Inland Revenue’s letter writing champaign urging people to not self assess unless they really need to.

    In fact, given that GDP is static, but employment is up, you’d expect lower wages on average.

    I await with interest the growth in self assessment receipts once the tax rates are lowered.

  23. uanime5
    Posted January 23, 2013 at 4:55 pm | Permalink

    John the official forecasts in 2010 were based on high levels of growth and lower levels of unemployment. The fact that reality didn’t match overoptimistic predictions (particularly that City pay, bonuses, and employment levels would rise to pre-recession levels quickly) doesn’t mean that the current tax system is to blame.

    You also ignored that the decrease in Self Assessment Income Tax could be through greater tax avoidance, such as setting up a company and paying yourself in shares (which are subject to CGT, not income tax), which has become more common recently. It could also be due to more people using PAYE rather than self assessed tax returns.

    Finally you haven’t factored in that the wealthy would have taken more income before the 50% tax revenue was introduced and deferred much of their income after Osborne announced that he was reducing the 50% tax rate in 2013. Had Osborne not reduced the 50% rate so soon after it was introduced tax revenues from high earners wouldn’t have been artificially reduced.

    In other news the CEO of British Gas had said there won’t be any shale gas production in the UK for 10 years (it takes time to set everything up) and won’t be the game-changer it is in the USA. So we can’t rely on shale gas to fix the economy.

  24. Jon
    Posted January 23, 2013 at 8:53 pm | Permalink

    Labour and the Unions struggle with the Global economy. They started out praising how wonderful it is. The Unions went to a global union meet in China if memory serves me and got short shrift for their demands, they were seen as rich fat and lazy and the unions from the developing countries wanted to keep the price competition to put an extra ounce of rice on the plate for the family. Labour can’t get their heads round not hiking up taxes for the rich and getting less back. Ed Balls’s answer to that is to raise VAT and stealth taxes but that hits all income groups, their squeeze the middle policy.
    They would sooner see wealthy employers leave and make up the difference by taxing the ordinary than give up their 19th century ideology.

  25. Credible
    Posted January 23, 2013 at 8:56 pm | Permalink

    Buying an unbrella lead to a drought.
    Giving up sweets caused a toothache.
    England didn’t win a World Cup after the Beetles broke up.

  26. Richard1
    Posted January 24, 2013 at 8:39 am | Permalink

    Can there really be any leftists who still deny the Laffer curve? Re the debate on this in the US, one ‘fact’ often cited by the Left is that a cause of the US deficit was George Bush’s ‘tax cuts for the wealthy’. This in fact turns out to be wrong. The cause was too much spending. Between 2001 and 2003 Bush cut federal tax rates for all taxpayers (not just the rich). Guess what happened to receipts? They rose sharply, peaking in 2008, falling only after the financial crisis. All those of us who believe in free markets and small govt need to do to win arguments against the Left need to do is focus relentlessly on the facts.

    • P O Pensioner
      Posted January 24, 2013 at 12:54 pm | Permalink

      It is amazing that the leftists still cannot read and understand the information that has been coming back about high taxation. Back in the seventies the Labour government had very high personal taxation and when the Tories under Margaret Thatcher reduced the highest tax to 40%, there was mass condemnation from Labour although the later tax figures showed that more tax was being raised at 40% than was raised at the much higher rate. My only criticism back then was that the threshold rate for 40% was too low as it still is now.

      The last Labour government got away with their pledge not to increase personal tax rates by introducing many stealth taxes that led to average taxation rising by some 5% or so above what they inherited from the Tories.
      Although Brown decided to increase the top rate to 50% just before he and his goverment was kicked out at the 2012 General Election.

      It is very depressing to see how taxpayers money is being wasted by all departments of government and even by some local authorities. The recent comments by the ex number 10 advisor who said that the civil service run this country and not the elected politicians made chilling reading. I wonder if the Civil Service will even allow an EU referendum?

      • P O Pensioner
        Posted January 24, 2013 at 12:55 pm | Permalink

        Typo: should be “2010 General Election”

    • uanime5
      Posted January 24, 2013 at 3:48 pm | Permalink

      You’ve ignored that until 2008 there was higher tax returns because there was higher growth; which was caused by easy credit, not low taxes. That’s why when the easy credit ended in 2008 tax revenues fell because the source of the growth was removed.

      If you’re going to focus on the facts you should actually try to get them correct.

      • Richard1
        Posted January 24, 2013 at 5:43 pm | Permalink

        It is true that there was a credit bubble which also inflated income and therefore tax receipts. But the claim (so often made on the political left) that cuts in tax rates causes lower tax receipts and therefore caused the higher deficits is plainly wrong. It is further evidence for the Laffer curve. The data in the UK point to the same conclusion.

        • Edward
          Posted January 24, 2013 at 8:25 pm | Permalink

          You are quite correct in all you say Richard,
          Its just that those on the left cannot bring themselves to the point where they will accept higher rates don’t succeed in bringing in more tax revenue as they predicted.
          If you want the rich to pay more tax then you need to be clever and set rates that maximise revenues.
          But that flies in the face of their hatred and envy based politics.

    • Bazman
      Posted January 24, 2013 at 10:34 pm | Permalink

      Basically what you are talking about is the trickle down effect and as we all know that is a right wing fantasy. Also the lafer curve in some instances requires taxes to be increased, though you conveniently do not mention or maybe do not believe this. You can’t just shout “Laffer curve!”, decrease taxes, and expect everything to be great. In a progressive tax system, lower income people should be paying, approximately, a total tax of 10-15% and upper income people in the 60-70% range, comparable to the 70% that was found to give an optimal result in Sweden in the 1970s. In the 2011 American tax year, the highest Federal bracket was 35%. A worker earning about $20,000 a year pays a 15% income tax plus almost 15% in “payroll” taxes towards the Social Security and Medicare/Medicaid programs, or about 8% less than the tax rate paid by someone earning a hundred times as much.

      • Richard1
        Posted January 25, 2013 at 12:40 pm | Permalink

        Your post is replete with nonsense. There is extensive evidence – including in the US – that lower tax rates produce higher revenue. 60-70% tax rates at the top end as you advocate would be both uncompetitive and a disincentive. Lets watch France over the next 2 years and see how it works out.

        • Bazman
          Posted January 25, 2013 at 6:56 pm | Permalink

          The Laffer curve is often used as a blanket ideological justification to reduce income taxes, especially the higher marginal rates paid by high-income individuals, regardless of where current tax rates might lie on it and a holy symbol of the faith of supply-side economics.
          The lower the rate the more tax is collected and the higher the revenue is not the Laffer curve theory as much as you would like it to be. As I said you believe that it is the trickle down theory and that has largely been debunked. Ram it.

          • Richard1
            Posted January 28, 2013 at 2:21 pm | Permalink

            What do you mean ‘ram it’? Do you mean you can’t think of a coherent argument so the best thing is to be as rude as the editing will permit? Look at the actual data from numerous countries over many years. There is a clear correlation between lowering tax rates and increased revenues. Of course the effect is more dramatic at the top end as the rates are higher. My post set out the fact that when George W Bush cut tax rates – all tax rates, not just those at the top – federal tax receipts rose. Another leftist blogger attempted to attribute the whole increase to the credit boom, but it won’t wash. Look at the facts, think a bit & try to engage in rationale debate.

          • Bazman
            Posted January 28, 2013 at 11:31 pm | Permalink

            George Bush gave billions to the rich causing a deficit from a surplus and what did America get in return? Massive public debts is the answer and little else. Lowering taxes does not always mean more revenue and the Laffer curve theory does not say this as the only rule. Only you say this and believe in the horses and sparrows theory, so you need to and get your theories and facts right Dick before coming out with your religious belief in supply side economics. The next thing you will be telling us is that companies create jobs and squirrels invented evolution. Ram it.

  27. Colin Adkins
    Posted January 24, 2013 at 6:53 pm | Permalink

    Am I the only person confused by the apparently contradictory figures quoted for the differences in trade balances between us and the EU and us and the rest of the world?
    I realise it is a bit of a cheek to ask but is there any chance of a further blog on the subject which might help to explain the different figures that have been quoted by the various bloggers and yourself.
    Understanding this is vital when forming a response to some of the figures that are thrown about by commentators for the two sides of the argument.

  28. Derek Emery
    Posted January 27, 2013 at 5:52 pm | Permalink

    All political parties prefer simpering over-optimism to dismal reality and have done for decades. Hence government departments can be relied upon to produce optimistic forecasts to meet the needs of their masters.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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