Friday, February 24, 2012
The Telegraph, 50p Tax Rate 'Failing to Boost Revenues’:
The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.
Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.
The self-assessment returns from January, when most income tax is paid by the better-off, have been eagerly awaited by the Treasury and government ministers as they provide the first evidence of the success, or failure, of the 50p rate. It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1billion.
As taxes assume a leading role in U.S. policy debate ... the first receipts on a new wealth tax in the U.K. have brought disappointing results to British Treasury officials.... [S]ome observers, political conservatives among them, are taking the recent experience in the U.K., which last year raised its top rate on high income earners from 40% to 50%, as a demonstration of the ineffectiveness of a tax-the-rich policy.
Britain’s Telegraph newspaper reported that the U.K. Treasury–in the first test of the wealth tax policy introduced last year–received 509 million pounds less for January than the same month in 2011. The Treasury had projected that monthly revenues would actually increase by more than 1 billion pounds. ...
The disappointing results could move Chancellor of the Exchequer George Osborne to drop the tax after an official analysis is completed next month, but the Tory official’s Liberal Democrat coalition partners remain strongly committed to higher rates for Britain’s highest earners.
Wall Street Journal editorial, David Cameron's Tax Lesson: A 50% Tax Rate Yields Less Revenue Than Advertised:
Speaking of higher taxes (and President Obama always does), there's news from once fair Britannia.
Preliminary figures out this week show that Britain's 50% top marginal income-tax rate may have reduced tax revenue from top earners by as much as 5%, compared to the old 40% top rate. Tax revenue from those filing self-assessments due January 31 was down some £500 million versus last year. ...
What this week's numbers teach, however, is that Britain's richest taxpayers are simply shifting their incomes, or themselves, offshore, or deferring income, or otherwise arranging their affairs to avoid the confiscatory new top tax rate. Maybe that's unfair, too—the rich are usually better at protecting their assets—but it's the predictable consequence of a tax rate whose animating purposes are envy and spite.
There's a lesson here for the Obama Administration, not that it is likely to heed it any more than Mr. Cameron.
(Hat Tip: Chaz Perin.)