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

Polititainment

Secret Service once threatened Mr. Met's life

Mr. Met sure has a lot of fans in New York. But the larger-than-life mascot definitely doesn't have one in the Secret Service, who threatened to shoot and kill him if he approached President Bill Clinton, according to a firsthand account.

Jill Biden on Joe: "I fell in love with the boys first"

Second Lady of the United States Dr. Jill Biden didn't marry Vice President Joe Biden for his sense of humor -- instead, she "fell in love" with his two sons first.

Joe Biden's first Instagram photo

Ladies and gentlemen of this great nation, rejoice! Vice President Joe Biden has joined Instagram -- and his first post is everything you ever dreamed it would be.

Celebrate Tax Day with this ditty

What better way to celebrate curse Tax Day than with a little toe-tapping, finger-snapping ditty that perfectly describes how we all feel about the Internal Revenue Service?

Joy Behar roasts Chris Christie

New Jersey Gov. Chris Christie (R) may need some ice for a few burns he sustained from former "The View" host Joy Behar, as the comedian delivered an awkward roast of the 2016 presidential hopeful.

White House

Jay Carney: “Never been a more transparent administration”

Despite consistent objections by journalists that the White House overly restricts press access, Press Secretary Jay Carney believes that there has "never been a more transparent administration."

Jay Carney: Toughest interview for Obama in 2012 was with Jon Stewart

Give comedian Jon Stewart a gold star sticker. The host of The Daily Show was President Barack Obama's toughest interviewer during the 2012 election cycle, White House Press Secretary Jay Carney said on Thursday.

The most powerful selfie in the world

Joe Biden — he's just like you, and he takes selfies, too.

Obama: Republicans a threat to the right to vote

President Barack Obama slammed Republicans on Friday for supporting voter identification law and labeled the GOP as a threat to the right to vote.

Republicans renew fight against Obamacare as Sebelius resigns

FOX NEWS -- Republicans responded to news of Health and Human Services Secretary Kathleen Sebelius' resignation from the Obama administration on Thursday with fresh calls to repeal the president's health care law.

Read more at FOX News.

Congress

Rep Black: GOP budget makes a path to a bright future

Our nation is $17.4 trillion in debt and out of control Washington spending has no end in sight. In fact, the nonpartisan Congressional Budget Office estimates that on our current trajectory we will return to $1 trillion annual budget deficits by the year 2022.

Cruz: Impeach Holder

Sen. Ted Cruz (R-Texas) pulled no punches when criticizing Attorney General Eric Holder on Thursday, as he called on Congress to impeach the Department of Justice head.

Pelosi: GOP not acting on immigration because of race

House Minority Leader Nancy Pelosi (D-Calif.) pulled the race card when speaking about Republicans' inaction in passing comprehensive immigration reform and said "race has something to do" with the GOP not bringing such legislation to the House floor.

House passes Ryan's budget plan

The House on Thursday passed a 10-year Republican spending plan drafted by Budget Committee Chairman Paul Ryan.

Read more at The Washington Examiner.

Harry Reid's Koch-fueled meltdown

Senate Majority Leader Harry Reid (D-Nev.) has been in a Koch-fueled rage, seizing moments left and right (mostly from the left) to bash Charles and David Koch.