” The problem is it’s not true. Raising taxes only makes things worse. The vintage conservative nostrums about higher taxes reducing revenue and enervating economies still hold.
Look at Great Britain where former Prime Minister Gordon Brown pushed through a tax hike shortly before voters booted him in 2010. Wealthy earners saw their rate increase from 40% to 50%. The top rate for capital gains also shot up 10%.
The results have been catastrophic for Britain’s economy. In 2010, there were more than 16,000 people in Britain declaring income of 1 million pounds or more. With Brown’s new taxes, that number dropped to just 6,000 as the wealthy either left Britain or trimmed their income to avoid taxation. Earlier this year, under Conservative Prime Minister David Cameron, the government announced it would drop that rate from 50% to 45%. Since then, the number of residents declaring 1 million pound incomes is up to 10,000.
Higher tax rates lead to fewer millionaires; lower tax rates lead to more millionaires. It’s as clear an illustration as you’ll ever see. And far from increasing revenue, Brown’s tax burden actually cost the treasury 7 billion pounds. Britain’s economy has stalled since Conservatives took power, leading various Krugmanians to reflexively scream “AUSTERITY!” every time they hear an English accent. Britain’s recession is complicated but one of its real causes is surely “TAXES!” “
Illustration By Gary Varvel
- 2/3 Of All Britain’s Millionaires Left Country After Last Tax Hike, Tax Hike Created Less Revenue, Not More (patdollard.com)
- Two-Thirds of Millionaires Left Britain to Avoid 50% Tax Rate (taxprof.typepad.com)
- Where Have All of Britain’s Millionaires Gone? (401kplanadvisors.com)
- Lesson for Warren Buffett: British Millionaires’ Response to Tax Increases (heritage.org)
- READ THIS LESSON FROM GREAT BRITAIN -Great Britain Loses Two-Thirds of All Millionaires after Raising Tax Rate (itmakessenseblog.com)
- When Tackling the Fiscal Cliff, US Should Learn from UK’s Mistakes (usdailyreview.com)