Well of course

If you tax something you get less of it.

The Centre for Economics and Business Research (CEBR) has worked out that 0.5p increase planned for April 2011 will lead to smaller companies shedding so many staff that the increased tax take would only make a small additional contribution to the public finances.

The job losses alone would cost the Treasury around £900m in jobseekers allowance and other benefits, the centre said. It would come at a time when the Government is spending £1bn in an attempt to create 150,000 new posts.

If you tax jobs then you\’ll have fewer of them.

This really isn\’t rocket science you know.

3 comments on “Well of course

  1. I have never really understand why the Labour Party, supposedly the party of the working man (and woman) is so keen to increase tax on wages (as opposed to income). Removing ceilings for so-called Employers’ NI was a particularly callous act, since Gordon must have known full well that the costs of this tax inevitably is born by the employee, whatever its official name.

  2. Correct.

    Double-taxes on income, like Employer’s NIC or VAT have their own special kind of Laffer Curve. If you add in gains and losses that relate to receipts from other taxes (corporation tax or income tax) and expenditure on unemployment benefit, then the revenue maximising percentage rate for either tax is actually close to zero.

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