One for all those who insist that the rich should pay more in taxes:
Imposing a new 45p rate of income tax on the rich will not work and will actually cost the Treasury money, an influential independent think-tank has warned.
The existence of the Laffer Curve is simply a mathematical certainty. The question is what is the maximum revenue raising rate?
Mr Browne and Mr Brewer calculate that the current 40 per cent is the optimum rate to maximise Treasury revenues from income tax on the rich. "Any attempt to go above that would cost the Revenue money," Mr Browne said.
I wouldn\’t say that I am wholly convinced that 40% is indeed that rate. But that there is one is certain and going above it will be counter productive needs to be understood.
If we\’re actually to have that vital debate on tax that some are calling for, we do need to find out what the rate is.
That would actually be a useful thing for some of those left wing economists to work on. What actually is the maximum revenue raising rate of income tax? Would be interesting, don\’t you think?
Gentlemen, start your spreadsheets……