Examples of higher taxes leading to less Tax Revenue
We wanted to follow up on the recent Fiscal Cliff writing with a few examples of how raising taxes actually lowers revenues. These two deal with the more obvious and immediate impact of people choosing to do whatever necessary to not pay the higher tax rather than the longer lasting effects of lower economic growth. The secon is the more detrimental in the long run, but the first should be reason enough. Recently, the UK and France have raised taxes on the wealthy. The idea is that the masses can steal money from the rich because they have more votes. The reality is that less taxes come in and the economy suffers for all. That’s just basic econcomics, but does a politician want the truth or a good campaign?
Here are the two examples with links…
6. Lesson From UK: Tax Hike on Wealthy Lowers Revenue
One side wants to rein in entitlements to deal with the budget deficit. The other side insists that any such moves be accompanied by higher taxes on the wealthy.
That may sound like the ongoing fiscal battle in Washington, but actually describes the situation in Britain.
The difference is that Britain has already raised taxes on the wealthy, with a telling result: The government actually lost revenue.
In the 2009-2010 tax year in Britain, more than 16,000 people reported annual income of more than 1 million pounds (equal to about $1.6 million today). Then in 2010, Prime Minister Gordon Brown, a member of the Labour Party, introduced a new 50 percent top income tax rate for high-income earners. After that, the number of people reporting income of at least 1 million pounds fell to 6,000.
“It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes,” The Telegraph reported.
Harriet Baldwin, a Conservative member of Parliament, said: “Labour’s ideological tax hike led to a tax cull of millionaires.”
Instead of raising revenue, the tax hike cost the U.K. 7 billion pounds ($11.2 billion) in lost revenue — and that in an economy one-quarter the size of America’s.
France warms to Gérard Depardieu, the heroic exile
François Hollande, the French prime minister, may come to regret insulting the actor who symbolises Gallic exuberance
Asterix and Obelix have deserted Gaul. Or at least the two actors who played them in three blockbuster movies have. With Gérard “Obelix” Depardieu’s much-trumpeted exile to Belgium last week, following Christian “Asterix” Clavier’s move to London in October, France has lost her best-known fictional heroes, undefeated by Julius Caesar’s legions, but vanquished by François Hollande’s punitive new 75 per cent top marginal income tax rate, recently hiked capital gains tax, and reinforced wealth tax. Continued here…