Sunday, 26 February 2012

Top Tax Rates

In the last 50 years, which politician actually wins the title of ‘The Greatest Redistributionist’, ie who achieved the greatest increase in the amount the rich pay? Tory B-liar? Gordy? Mrs T? Nope. Nigel Lawson. ‘Really?’ I hear you say. Yup. Why so?

Well it was he who in 1988 reduced the top rate of income tax. Back then, the top 1% only paid about 14% of all income taxes. And once he began to ratchet down income tax, the money flowed into the Treasury at speed. From my post last Sunday, you will recall that this has now steadily climbed so the top 1% now pay over 25% of all income taxes.

And this is always a fact studiously ignored by the left. Lower taxes, and tax collection soars. It’s obvious. If there is no need to avoid or even worse evade tax, you just pay it. If you want to squeeze more tax from the rich, cut their tax rates. As JFK once said: "It's the soundest way to raise the revenues in the long run".

So with that lesson, where do we stand right now in the top income tax league table:

Sweden - 56.6%
Belgium - 53.7%
Denmark - 52.2%
Netherlands - 52.0%
Japan - 50.0%
United Kingdom - 50.0%
Austria - 50.0%
Finland - 49.0%
Germany - 47.5%
Ireland - 47.0%
Australia - 46.5%
Canada - 46.4%
Iceland - 46.1%
Portugal - 45.9%
France - 45.8%
Israel - 45.0%
Greece - 45.0%
Italy - 44.9%
Spain - 43.0%
United States - 41.9%
Switzerland - 41.7%
Slovenia - 41.0%
Chile - 40.0%
Norway - 40.0%
Luxembourg - 38.9%
Korea - 38.5%
Turkey - 35.7%
New Zealand - 35.5%
Poland - 32.0%
Hungary - 32.0%
Mexico - 30.0%
Estonia - 21.0%
Slovak Republic - 19.0%
Czech Republic - 15.0%

Hmmmm. We're not doing too well are we? Particularly as the soon to be announced HMRC and IFS research into the 50p rate concludes that it doesn't really raise anything significant and may actually reduce HMRC's income!

Which brings us nicely to flat taxes. The first time I really thought about flat taxes was when Steve Forbes ran as a Republican candidate in the 1996 and 2000 US Presidential races. He was a flat tax fan. But the Left hate flat taxes as they don’t satiate their class war desires to soak the rich and, as Forbes was and is very very rich, his campaign was a ‘red rag to a bull’.

But of course, since then lots of countries have adopted flat taxes: Albania, BIH, Bulgaria, Czech Republic, Estonia, Faroe Islands, Georgia, Guernsey, Hong Kong, Hungary, Iceland, Iraq, Jamaica, Jersey, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Macedonia, Mauritius, Mongolia, Montenegro, Romania, Russia, Serbia, Slovakia, Trinidad and Tobago and Ukraine.

Now, notice something about this list? Yup, they are all countries which had struggled to collect taxes as the rich had avoided, evaded or just buggered off. They had to adopt flat taxes to entice them to stay and pay.

Now what happened to their tax income? It soared. Obviously. Lesson there for Lefties and Greeks, no?

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