Pledging to Raise Britain's Marginal Tax Rate Will Not Help Essay

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The United Kingdom's Labour Party recently pledged to lift Britain's top marginal tax rate from 45 per cent to 50 per cent.

The reaction was interesting because it illustrates the way people in politics sometimes talk past one another in political debate.

The policy has been partly framed as a deficit reduction measure and partly as an effort to create a "fairer" economy.

In critiquing the proposals, detractors have focused on the first of these, pointing out that the analysis of Her Majesty's Treasury is that the higher tax rate only accounted for an additional £100 million in tax revenue.

In isolation, that seems like a lot. Given that the UK Budget deficit exceeds £116 billion, however, the proposal would not meaningfully
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. . tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now".

Clearly thinking about the long-term, he was willing to suffer short-term deficits as a result. Once enacted, however, the Kennedy tax cuts spurred immediate and sustained growth in tax revenues.

The Centre-Right can point this out until blue in the face - but doing so completely misses the point.

Ad Feedback Polls show that large majorities of the British public would support the move. About 40 per cent would do so even if it raises no revenue.

For the current generation of progressive leaders, stiff marginal tax rates are not exclusively (or even primarily) a means of raising money for the government to spend. Decreasing the wealth of the rich is considered a legitimate end unto itself - even if nobody else benefits.

For instance, in the 2008 Democrat Party primaries, then candidate Barack Obama wanted a big increase in America's capital gains tax.

In a debate with Hillary Clinton, the moderator pointed out to him that when the rate had been decreased under Clinton's husband, more revenue was generated than was under the higher rates.

The same thing had happened when George W Bush cut the rate even further.

Mr Obama averred that he would still increase the rate "for purposes of fairness".

Or consider France's new top tax bracket of 75 per cent, which goes
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