Vir Cantium

I'm right, you know …

Admiral @RichardJMurphy: “I See No Laffer Curve”

Richard Murphy in an earlier life: "Ships? No such thing. What am I standing on? Oh."

It’s a long way yet from a flat rate tax, or even the flatter tax system that George Osborne mentioned some time ago, but the runes on the future of the ’50p’ tax band are promising.

The Treasury already know that it can be cut to 45% with little lost revenue. If that’s a carrot, the stick is the evidence that the high tax rates, both personal and corporate, are leading to emigration abroad, particularly from the City.

Now we would expect the news that bankers are leaving to be greeted with joy by the economically illiterate, but it seems even those who claim to be quite good with numbers and stuff are saying things like this:

It made him smile. That’s nice. Like seeing a Curry’s looted might please someone who has an ill-thought out gripe against the evils of corporate retail … until one day they realise that such businesses employ people and yes, even pay various taxes for schools’n’ospitals and things.

A Murphite then helpfully demonstrated their ignorance with this response:

That’s the trouble with Twitter; it’s short, quick and easy to post your thoughts without proof-reading or checking your logic. The 50p rate isn’t raising much … those liable to pay it are leaving to avoid it; perhaps the two are related?

As a dweller of the reality-based community then pointed out:

Now, where have we heard of that effect before? Raising taxes so far that they actually raise very little in additonal revenue, as people who can move do so, and others avoid it through other legal means (even including working less, since the marginal increase in take-home pay is worth less than the opportunity cost of the time spent earning it).

I’ll give Mr. Murphy a clue. This phenomenon starts with an ‘L’ and ends with ‘affer’. He won’t guess it though because, as he reminds us regularly, the Laffer Curve doesn’t exist. Strange, then, that even he and his union paymasters aren’t campaigning for a 100% flat tax to cure the deficit.

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