Why high tax rates are silly

From the UK is a perfect example of why high tax tares are silly:

The amount of income tax paid fell sharply last month in the first formal indication that the new 50p higher rate is not raising the expected amount of revenue.

The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.

Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.

The self-assessment returns from January, when most income tax is paid by the better-off, have been eagerly awaited by the Treasury and government ministers as they provide the first evidence of the success, or failure, of the 50p rate. It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1billion.


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  • Alloytoo

    High(er) tax rates are not necessarily silly, if there is a perceived value in the taxes. England’s problem since the 1970’s is the dearth of value. The rich see themselves being milked to support the budgers on the dole, and they’re objecting.

  • nzd.gbp

    haha. It doesn’t matter how often you point this out to the lefties, it just doesn’t seem to get through. They don’t care whether it raises revenue. It’s about punishment. I’ve never seen such a bunch of self destructive whining in my life as I’ve seen here in the last few years. Wailing and gnashing of teeth and demands for revenge on the rich. Even jobs for life in a government department wouldn’t make them as happy as seeing the rich punished. Well I’m sorry you losers, the rich are smarter than you. That’s why they’re rich. That’s why they don’t have to pay these destructive taxes, and guess what, you’re better off that they don’t pay them. They know what to do with that money better than a bunch of public schooled born to rule inheritors do.

    • Sarrs

      It’s just so much more complicated than the left can comprehend – they see business in only back and white, raise taxes = increase revenue. There are so many other variables that need to be taken into consideration that are just ignored. They play right into the hand of the rich with policies like these, then they get angry because the desired outcome never eventuates, raise taxes again and businesses move offshore. The tax pool reduces because there are fewer business to tax but at the same time more people end up on welfare because jobs have gone.

    •  Not necessarily smarter – more easily able to avoid paying I would say. As a wage or salary earner your tax is taken without your control. I still believe a single rate of taxation for ALL earnings regardless of their colour, shape or disguise would be a fair way for the government to receive tax from their population. Someone earning (and I use that term advisedly) a million a year will of course pay more dollars in tax than someone receiving $35,000 each year – but if it is the same percentage they are charged I believe it to be fair. Probably way too simplistic for the tax agents – they’d lose their jobs.

      • nzd.gbp

        – As a wage or salary earner your tax is taken without your control

        By the comment in parenthesis, do you think some sin is being committed if you earn more than a million per year? 

        Couldn’t agree more re the flat tax.

  • phronesis

    Lower and Upper tax free thresholds with a flat tax in between.

  • Sarrs

    The problem with increasing tax rates is that other parts of taxation legislation needs to be looked into as well. Raising tax rates makes business structures that weren’t previously economically viable a logical alternative. No one pays more tax than they have to so every legal alternative business structure will be investigated. What needs to happen is, prior to an increase in tax rates, the broader taxation landscape needs to be investigated and alternative business structures that result in lower taxes need to either be blocked or have the tax rates in those areas increased too. 

  • phronesis

    There is some evidence that high tax rates have different effects in different countries. In countries where wealth and success are idolised tax avoidance increases with tax rates. In countries that value lifestyle over money people just work less overtime. This directly impacts on the productivity of the country as highly skilled people work less.

  • captain kidd


    Taxes.The root of all evil,should be complusory reading for all.

  • captain kidd

    If you own none of your service or can have no property you are a slave.If a 100% free person has total control over ownership of his service and property what is the state of a person whose govt controls some of his services,not free ie some part of a slave.

  • Guest

    Clearly they have strayed onto the wrong side of the Laffer Curve…