Eat the rich
A few days ago, I tweeted a criticism of a Spectator article. Specifically, the article stated:
I've since looked into the detail of this claim.
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In summary, it seems very unlikely from published research that the 50% tax rate will cost £4.5 billion, and it's disingenuous of the Spectator to base an article on such an extreme value. However, I've now a better appreciation of the considerations around raising money by increasing tax on the rich, there does appear to be a rather delicate balance to strike to optimise income, and relatively little hard data to make this decision on.
Of course, none of that takes into consideration any social effects of higher rate taxes for the rich. I can imagine that some people may act in an economically irrational way and support higher taxes for the rich even if it cost everybody else more. Obviously, there will be opposing views to that too, and the overall social effect of all that is rather unknowable.
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The Taxpayers’ Alliance did the figures for us, and put the cost of the 50p tax1 at £4.5bn.
I've since looked into the detail of this claim.
( Collapse )
In summary, it seems very unlikely from published research that the 50% tax rate will cost £4.5 billion, and it's disingenuous of the Spectator to base an article on such an extreme value. However, I've now a better appreciation of the considerations around raising money by increasing tax on the rich, there does appear to be a rather delicate balance to strike to optimise income, and relatively little hard data to make this decision on.
Of course, none of that takes into consideration any social effects of higher rate taxes for the rich. I can imagine that some people may act in an economically irrational way and support higher taxes for the rich even if it cost everybody else more. Obviously, there will be opposing views to that too, and the overall social effect of all that is rather unknowable.
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