Higher Taxes Will Not Raise More Money, Arthur Laffer Warns Reeves
Britain’s taxes are so high that putting them up again would cost more than they raise, a top US economist has warned. The Telegraphhas more.
Dr Arthur Laffer, the brains behind the Laffer curveand a former economic adviser to Donald Trump,said a fresh Budget raid on workers and businesses in the autumn will prove self-defeating.
He said that high taxes had created “a welfare mentality” and that Rachel Reeves should “base policies more on incentives” to work.
His intervention will prove awkward for Downing Street, coming days before Mr Trump is set to touch down in the UK for an unprecedented second state visit.
There are widespread expectations that the Chancellor is planning significant tax rises at the autumn Budget to plug a £50 billion hole in the public finances.
Ms Reeves is facing a toxic combination of spiralling debt costs and a stalling economy, with new figures showing that GDP was completely flat in July.
Dr Laffer – who advised Mr Trump during his 2016 campaign and was formerly an adviser to Ronald Reagan and Margaret Thatcher – made his remarks after a meeting with Sir Mel Stride, the Shadow Chancellor. …
Dr Laffer said “the UK is at – or perhaps already beyond – the critical point” on the curve. …
In a statement to the Telegraph, he added: “The UK’s tax revenues, and thus the country’s ability to provide high-quality welfare to those who truly need it, plus other government services, have been seriously degraded.
“First, incomes are sufficiently low to create the need for welfare because of the UK’s high tax rates – especially on job creators.
“Second, high taxes over long periods divert production from good products to tax shelters and tax avoidance.
“And third, high taxes create a welfare mentality where everyone claims to be a victim.
“The UK should base policies more on incentives. Don’t tax what you like and don’t subsidise what you don’t like.” …
His intervention comes with Ms Reeves’s last Budget, which raised taxes by £40 billion, having been widely blamed for suffocating economic growth.
Socialists don’t like truth or facts, and will probably ignore this advice as misinformation.
I hadn’t realised Dr Laffer was still with us!
We are heading for an economic crash, which although painful for many, will be good in the long run. Honestly, there’s nothing we can do to stop the crash and burn, we’re not in charge, and those who are either don’t care or are planning it!
I think you are right. It’s just a pretext.
Just like with communism: the advertised aim was the liberation of the proletariat and the totalitarian dictatorship was only supposed to be the means to achieve that aim.
It was only a few people – Orwell being one of them – who realized the truth: the totalitarian dictatorship was the aim. The rest was a lie. A deception, a bait, a trick.
The aim of a leftist, socialist government is always, always total state dependence. Every single individual should be financially dependent on the state, so that effectively everyone is a slave. Private property allows the individual some freedom: this is against state power.
Crippling taxes is one way to achieve this.
These people don’t really want growth. Why would they? An impoverished population is much easier to control. This is why poverty invariably follows socialism.
While I think Reform has the right approach it’s policy development on taxes is necessarily limited. What would be useful would be a vigorous promotion of capitalism, free markets and small government but non-party organisations can do that.
Why not have speakers visit schools, community centres and even workplace canteens (if these still exist) to present the case for economic freedom.
I am not proposing laissez fairs and emphatically not globalisation, which is Blairism, but a means to counter leftism in schools, BBC and even allegedly centre right MSM.
The education minister Wendolene is letting the Far Left teaching unions help draft the curriculum – which the witch wants to force on the private schools that have yet to close – in return for their votes to make her Deputy Leader. Leftism in schools will get even worse, if that’s possible.
RT
7 months ago
This doesn’t fit the Marxist dogma so will be ignored.
LizT
7 months ago
These politicians seem never to have heard of the Law of Diminishing Returns.
Andrew Bent
7 months ago
Even those politicians who recognise the Laffer curve too often seem to think the top of the curve, the maximum tax revenue, is the place to be. If increasing tax rates does increase revenue it doesn’t mean there hasn’t been a disincentive effect, just that the tax loss through some people working less is smaller than the gain from those still working as much as ever. But unless those still working are actually doing more work than before, less work gets done and the country is poorer, even if the govt is getting a bigger slice of a smaller pie.
Subtle, but a very important point. It means the difference between families managing and being able to save for a rainy day which, while being better than borderline solvent, does mean for the aware, cutting back.
AnneCW
7 months ago
I have no background in economics, but ‘Don’t tax what you like and don’t subsidise what you don’t like’ seems like a solid starting point for policymakers.
Gezza England
7 months ago
Woolly of the Telegraph to say that Rachel from Accounts economically incontinent budget is ‘widely blamed’ for crushing our economy when it is the sole cause of it.
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Funny how the first solution to fiscal constraints for governments of whatever stripe is always raise taxes, when it should be cut spending
Thats because increasing the bribes gets votes, reducing them loses votes.
Taxing “the rich” to pay is always popular.
And when here’s no one left to tax, then what do they do? Ah! Of course. The Magic Money Tree. Sorry 🙄
Even that can wilt and die eventually.
Socialists don’t like truth or facts, and will probably ignore this advice as misinformation.
I hadn’t realised Dr Laffer was still with us!
We are heading for an economic crash, which although painful for many, will be good in the long run. Honestly, there’s nothing we can do to stop the crash and burn, we’re not in charge, and those who are either don’t care or are planning it!
Prepare appropriately.
The point is not to raise more money.
Exactly
“a fresh Budget raid on workers and businesses in the autumn will prove self-defeating”
The purported point is to raise more money, but I doubt that they care whether it does or not
The point is the exercise of power for its own sake or to suit an even darker agenda
I think you are right. It’s just a pretext.
Just like with communism: the advertised aim was the liberation of the proletariat and the totalitarian dictatorship was only supposed to be the means to achieve that aim.
It was only a few people – Orwell being one of them – who realized the truth: the totalitarian dictatorship was the aim. The rest was a lie. A deception, a bait, a trick.
The aim of a leftist, socialist government is always, always total state dependence. Every single individual should be financially dependent on the state, so that effectively everyone is a slave. Private property allows the individual some freedom: this is against state power.
Crippling taxes is one way to achieve this.
These people don’t really want growth. Why would they? An impoverished population is much easier to control. This is why poverty invariably follows socialism.
Whatever you tax, you’ll get less of it. Human Nature.
Socialists claim to believe they can change human nature
But fail to learn from past experience, which proves them wrong every time
I have begun to believe some of them simply don’t care
Socialist don’t accept the Laffer Curve, being ignorant of economics and trusting in the Magic Money Tree.
https://www.youtube.com/shorts/1Bx16NWhRkU
Thomas Sowell: Why We Should Cut Taxes
https://www.youtube.com/shorts/uCWmx1I6fVc
Thomas Sowell Tax Rates, Tax Revenues, & “The Rich”
While I think Reform has the right approach it’s policy development on taxes is necessarily limited. What would be useful would be a vigorous promotion of capitalism, free markets and small government but non-party organisations can do that.
Why not have speakers visit schools, community centres and even workplace canteens (if these still exist) to present the case for economic freedom.
I am not proposing laissez fairs and emphatically not globalisation, which is Blairism, but a means to counter leftism in schools, BBC and even allegedly centre right MSM.
The education minister Wendolene is letting the Far Left teaching unions help draft the curriculum – which the witch wants to force on the private schools that have yet to close – in return for their votes to make her Deputy Leader. Leftism in schools will get even worse, if that’s possible.
This doesn’t fit the Marxist dogma so will be ignored.
These politicians seem never to have heard of the Law of Diminishing Returns.
Even those politicians who recognise the Laffer curve too often seem to think the top of the curve, the maximum tax revenue, is the place to be. If increasing tax rates does increase revenue it doesn’t mean there hasn’t been a disincentive effect, just that the tax loss through some people working less is smaller than the gain from those still working as much as ever. But unless those still working are actually doing more work than before, less work gets done and the country is poorer, even if the govt is getting a bigger slice of a smaller pie.
Subtle, but a very important point. It means the difference between families managing and being able to save for a rainy day which, while being better than borderline solvent, does mean for the aware, cutting back.
I have no background in economics, but ‘Don’t tax what you like and don’t subsidise what you don’t like’ seems like a solid starting point for policymakers.
Woolly of the Telegraph to say that Rachel from Accounts economically incontinent budget is ‘widely blamed’ for crushing our economy when it is the sole cause of it.