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Wednesday, April 29, 2009

50% Tax Rate Own Goal

Unsurprisingly, the politically motivated 50% top tax rate introduced by Darling in last week's budget has proven to be an own goal.

The Treasury admitted that billions of pounds of revenue would be lost, as high earners take the high road and leave the UK.

Mike Williams, the director of personal tax at the Treasury, told the Treasury Select Committee that only 31% of the possible total income from the tax increase will be received by the Treasury.

Last week the Chancellor said that the rate change would raise £1.1BN. However, figures now show that £2.5BN will in fact be lost via perfectly legal tax avoidance schemes, or by moving abroad.

Another nail in the coffin of last week's dismal budget.

Labour Chancellors never seem to learn the lesson that the politics of envy, when applied to tax, simply backfires; as they lose more money than they gain.

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