Wednesday, September 07, 2011
The 50% letter
Posted by David Smith at 08:45 AM
Category: Thoughts and responses

A group of prominent economists has written to the Financial Times urging an early reduction in the 50% top rate of tax. It is a welcome contribution to the debate. I wrote on June 26 (Cut tax to make Britain a magnet for the world) about the damage the 50% top rate of tax was doing,and the need to send a signal by reducing it at the earliest opportunity.

I wrote: "What about an aggressive tax strategy to try to attract activity to Britain? By that I mean cutting the 50% top rate of tax and delivering early on the chancellorís promise to give Britain the most competitive tax regime in the world.

"If such tax cuts could be shown to be at worst revenue-neutral, at best net revenue raisers - admittedly not an easy thing to demonstrate - there would be a powerful case for introducing them even at a time when the public finances are undergoing serious repair."

The piece, here, concluded: "High tax stunts growth, for business and individuals. Britain has become a high tax country. As long as that remains the case, growth will continue to be stunted. The golden goose will be well and truly stuffed."

Here is the FT letter. (May not be accessible to all).