A devastating blow against Brown’s “tax the rich” plan from the Institue of Fiscal Studies today. How much will the new 45 percent tax rate for those over £170,000 raise? “Approximately nothing” says the IFS and adds that “HM Treasury would raise more with, eg, a 44 percent rate”. This reminds us why most developed countries have cut their top marginal rate: it discourages risk-taking.
After the briefing, I asked why a higher tax could fail to collect more revenue. Mike Brewer from the IFS replied: “People will contribute more to their private pensions. Convert more income into capital gains. Emigrate. Work less.” I asked him if, then, Brown’s 45 percent tax rate could be described as “futile” and he just smiled.
Britain’s best politics newsletters
You get two free articles each week when you sign up to The Spectator’s emails.
Already a subscriber? Log in
Comments
Join the debate for just £1 a month
Be part of the conversation with other Spectator readers by getting your first three months for £3.
UNLOCK ACCESS Just £1 a monthAlready a subscriber? Log in