Britain’s failed tax-hike experiment should serve as a red flag for Congress

As the battle over tax rates for top-earners escalates on this side of the Atlantic, the American media has largely ignored Great Britain’s recent tax-increase debacle.  After sticking it to the rich by pushing top tax rates from 40 percent to 50 percent in 2010, Britain lost two-thirds of its millionaires and £7 billion in tax revenue.  In response, Britain is dropping the top rate down to 45 percent next April.

The embarrassing announcement complements a March report by Britain’s tax-collection agency detailing the apparent negative effects of the tax increase (the first increase of the top rate in the UK since 1988).  Concluding that there was “considerable behavioral response” to the tax increase, the report details how the tax hike stunted economic growth, caused substantial (legal) tax avoidance, and likely made the UK “a less attractive place to start, finance and grow a business.”

Wouldn’t the British government’s own admission that raising top-income tax rates actually reduced revenue and hurt economic growth be relevant to the current American tax debate?

One doesn’t even have to look across the Atlantic to see the negative economic effects of soaking the rich.  California, with one of the highest tax rates in the country, has been hemorrhaging its population to more tax and business-friendly states at an alarming rate.  The state’s comically high tax rates also didn’t prevent the unprecedented bankruptcy proceedings several large California cities earlier this year.

Nonetheless, President Obama and Congressional Democrats are willing to ignore economic reality in pursuit of “fairness” (which, unlike revenues and GDP, is an abstract concept and impossible to measure).

Obama summed up the left’s view perfectly during a 2008 debate performance.  When questioned by the moderator on the historical fact that recent reductions in the capital gains tax rate resulted in greater revenue, while the last increase in the rate resulted in reduced revenue, Obama insisted that the rates should be increased anyway “for the purposes of fairness.”  The “rich need to pay their fair share” meme continues to be a principal talking point on the left.

If your goal is to stoke class resentment among less-wealthy Americans for political gain, then the fairness argument is a winner.  But if your goal is to grow the economy and increase revenue, Great Britain’s failed tax-hike experiment should offer a grim warning to Democrats and a reason to maintain some political backbone among Republicans.

At the end of the day, fairness doesn’t reduce the deficit; revenues do.

Comments

Leave a Reply

Maher tells PC liberals 'shut the f up'

Bill Maher's politics are not always the greatest. But when it comes to knocking down the liberal PC brigade, he is on point like no other.

SNL parodies Starbucks' race campaign

What if another company--say, Pep Boys (or Girls! Or Whatever!)--took on their own campaign to talk about gender and sexual identity?

SNL's "The Rock" Obama goes beast-mode

Dwayne Johnson hosted SNL last night, so naturally he had to play a muscled-up Obama, who can finally do all the things he really wants—like throw John Boehner through a window and rip of Tom Cotton’s hand.

Devo does not want Scalise to 'Whip It'
A founding member of the 1980s band Devo really does not want to see House Majority Whip Steve Scalise “Whip It Good.” Scalise has been using the bands hit song “Whip It” at events and his staff recently created a joint fundraising committee with Rep. Patrick McHenry (R-N.C.) to raise money for a 1980s-themed birthday party […]
Jon Stewart rips Democrats for race-bait

“Oh, for f---s sake.”

White House

Carly Fiorina says there’s a ‘higher than 90 percent chance’ she’s running for president

Carly Fiorina’s 2016 campaign is all but certain now—and she’s making no secret as to whom she’ll be targeting.

White House promises not to use legal loophole to keep NSA spying alive if Patriot Act expires
If the Patriot Act expires, it will stop the National Security Agency’s bulk spying too. The Obama administration promised this week that it will not take advantage of a legal loophole to keep the NSA spying alive unless Congress re-authorizes the Patriot Act, Reuters reported. Section 215 of the Patriot Act, which authorizes the NSA to collect data on […]
In honor of National Puppy Day, here are the top 10 cutest presidential puppies

Today is National Puppy Day! To celebrate, we give you the top ten cutest puppies to grace the White House Lawn.

Obama: ‘By hook or by crook’ I’ll push my agenda through
This is probably not the smartest phrasing to use. President Obama had an interview with Huffington Post over the weekend and while much of the interview was his oft-repeated lines about how Republicans are the reason nothing is getting done in Washington, he added a new phrase about his legacy that is bound to raise […]
Obama tells Prince Charles that Americans like the royal family better than their own politicians

President Obama has admitted what we all already knew: Americans far prefer the Duchess of Cambridge to Michelle.

Congress

Sen. Harry Reid will not seek re-election
WASHINGTON (AP) — Senate Democratic Leader Harry Reid, the wily Nevadan who dominated the Senate for a decade from the minority to the majority and back again, announced Friday he will retire after five terms. Reid, 75, who shepherded key Obama administration initiatives including the president’s health care law, lost his role as majority leader — […]
Schock: Lincoln faced challenges too
Embattled Rep. Aaron Schock (R- Ill.) gave his farewell speech on the House floor Thursday, promising that it was “not the end of a story, but rather the beginning of a new chapter.” While his own trials are more of the “Downton Abbey” decor and Katy Perry concert variety, Schock likened this tough time to that […]
Boehner, Pelosi read mean tweets
Taking a cue from Jimmy Kimmel’s famous “Mean Tweets” series, House Speaker John Boehner (R-Ohio), House Minority Leader Nancy Pelosi (D-Calif.), Sen Bernie Sanders (I-Vt.) and House Majority Leader Kevin McCarthy (R-Calif.) got in on the fun and read some mean tweets about themselves in a video for the 2015 Radio & Television Correspondents Association […]
GOP blocks Warren's student loan plan
THE HILL — Senate Republicans on Wednesday blocked an effort by Sen. Elizabeth Warren (D-Mass.) to attach an amendment aimed at lowering student loan rates to the budget. Senators voted 46-53 against Warren’s amendment to the Republican budget resolution. Warren’s amendment would have allowed people with college loan debt to refinance at interest rates from […]
Rand really liked those 'Stand with Rand' trolls

During Ted Cruz's big announcement at Liberty University yesterday--which students were required to attend--some Rand Paul supporters decided to troll Cruz with some "Stand with Rand" shirts: