Wednesday, 28 November 2012

I told you so

Back in 2009, we were told that the 50p income tax rate would not drive people away or make them change their financial arrangements to avoid it.  I said it would.

Well, the numbers are in, and...
Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.
What a surprise.
In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.  This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.
Just like Labour said it wouldn't. What's more:
increasing the highest rate of tax actually led to a loss in revenues for the Government.
Just like the Laffer curve said it would.

So, New Labour are idiots with no idea when it comes to finance and economics, and George Osborne (together with most other senior Tories) is a coward.


  1. Hmm. Brown et al. were/are politicians. The 50p rate was only ever a political tactic to embarrass the Tories. It's been incredibly successful.

    If George Osborne was half the strategist he claims to be, he would have waiting until the data were in before announcing the abolition of the 50p rate. Instead he played right into Ed Balls' hands.

  2. Also worth reminding ourselves that the Labour Party/left in general do not want us all to get more comfortable. They want us all to be similarly uncomfortable. Economic growth and prosperity are not their aim.

  3. The economic climate might also have something to do with the fall in the number of individuals earning more than £1m a year.

    ::[hides behind sofa]::

    I still can't find anything good to say about Gordon Brown. I doubt I ever will.

  4. I agree with Measured!

    Lots of discussion elsewhere about people reacting to the temporary nature of the 50p rate to give themselves taxable income before it came it and deferring giving themselves taxable income until after it gets reduced to 45p.

    I'm sure there are many factors at work, but overall high income taxes do not work.

  5. In a similar vein, the reduction of child allowances has a similar effect. My daughter has just negotiated a reduction in her working hours rather than take a small pay rise which would put her over the limit, as have several others in her position.
    The effect on employment is that the company has taken on a temp to cover the missing hours, and my daughter can now manage without a cleaner and has effectively had a rise by now having less expenditure.