Eamonn had a very good piece in the Mail on Sunday yesterday, explaining why the 50p tax is bad news:
And although the Treasury has yet to release its formal study on the impact of a 50 per cent tax rate on growth, the early indicators are worrying; latest tax receipts from self-assessment forms – those used by the country’s richest – are down by half a billion pounds.
The total revenue from income tax payments came to £10.35 billion – £509 million lower than the previous year. Senior Treasury figures quietly let it be known that there had been ‘manoeuvring’ by well-off taxpayers to avoid the 50p top rate of income tax.
It is an example of what economists call the Laffer Curve, after the American economist Arthur Laffer, who discovered this simple truth: high tax rates actually bring in less money for the Treasury than lower ones, because they result in greater tax avoidance.