British Tax on Millionaires Fails to Increase Revenue

I’m fascinated by unexpected outcomes of simple arguments. Here in the USA we are in the midst of an ideological fight between the Republicans who want to increase tax revenue without increasing tax rates and Democrats who want to add money to the treasury by increasing tax rates alone.

The British have already had this fight, and the Labor Party won. In 2011 the UK introduced a 50% tax on those making over a million pounds. In tax year 2009-10 there were 16,000 taxpayers. Today there are 6,000 taxpaying millionaires, a decline of over 60%. Worse from the government’s perspective the increase in the tax rate cost the government £7 billion in lost revenue.

So raising tax rate results in lost revenue? Simple argument; unexpected outcome for a liberal. All too predictable for a libertarian/Republican.

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