Defying logic


Germany plans to do it, Japan has already done it, France plans to do it,  and even the states where the only true alternative to a de facto social democratic government is a pure socialistic one – Denmark and Sweden – are at it too. I am here referring to the fact that these countries are all cutting or intending to cut taxes as a way of boosting domestic production and employment rates. By lowering taxes the government lets taxpayers keep more of what is theirs, while also promoting private investments. In contrast, the British government has found its own way to 'boost' productivity: unlike everybody else, it is hoping to do so by increasing income taxes.

Either the British government has defied logic and found that the optimum of the Laffer curve is attained by increasing (already high) taxes, or it has begun digging its own fiscal grave. By and large, the tax increases are the result of the British government’s inability to prioritise among public expenditures, as well as to satisfy notions of economic “justice". This is not the time for such fancies.

It is highly unrealistic of the British government to believe that people who are set to be hit by this tax will sit back and do nothing. People earning the kind of money required to pay 'super-taxes' have one striking thing in common: they are extremely mobile, not only domestically, but globally. The lucky winners of one of the highest marginal taxes in the world would probably not mind paying it for a year or two, but after a while they will start to look around to find better offers. Britain is looking like an increasingly bad choice.