Andrew Lloyd Webber – yes that Andrew Lloyd Webber – writes in the Daily Mail about the British government's foolish move, boosting the maximum income tax rate to 50%, and how it will hurt Britain.
[B]efore you lynch me as a rich b*****d flying a kite for my own cause, let me beg you to believe that I am not.
I believe that this new top rate of tax could be the final nail in the coffin of Britain plc.
I am 61 years old. I have lived and worked in Britain all my life. Not even in the dark days of penal Labour taxation in the Seventies did I have any intention of leaving the country of my birth.
Here's the truth. The proposed top rate of income tax is not 50 per cent. It is 50 per cent plus 1.5 per cent national insurance paid by employees plus 13.3 per cent paid by employers. That's not 50 per cent. Two years from now, Britain will have the highest tax rate on earned income of any developed country.
I write this article because I fear the inevitable exodus of the talent that can dig us out of the hole we find ourselves in. It is inevitable, given that other countries are bidding for entrepreneurs.
Aye, there's the rub. If taxes are raised to the point of punishing success, the successful will pull up stakes and take their business, as well as their money and the jobs they provide, some place where their efforts are appreciated. Elsewhere in his piece he mentions the draconian taxes placed upon the successful back in the 1970's. It destroyed the British economy as wealth fled the UK for tax havens. Businesses closed, jobs were lost, and the UK entered a period of economic decline not seen since just after the end of World War II.
And now the Obama Administration wants to the same thing to the US.
Just as Labour swept into power in Parliament and 10 Downing Street, the UK and has been drastically changing tax, trade, and industrial policies to reflect their socialist bent, so too have the Democrats swept into power in Congress and the White House been doing the same thing. About the only sure thing about this in both countries is that it spells big trouble for their respective economies. As Senator Judd Gregg (R-NH) has said, elections have consequences.
We are certainly seeing the consequences of Democratic power running unchecked in Washington. Just about every leftist dream on their long standing wish list is being brought up in bill after bill in Congress. Never mind they haven't thought about how the US will actually pay for all this unneeded and unwelcome social spending. Too many American voters bought the hype being sold by the Democrats last November and now the bills are coming due, in spades.
His "main concern," he says, "is that if you look at the Obama budget, it projects on average about a $1 trillion deficit [every year] over the next 10 years." And as a result of all that spending, "You see the size of government growing from 21% [of gross domestic product] to 22%, to 23%, 24%, 25% . . . toward 30%."
Set against this spending growth, Mr. Gregg points out, "the revenue base is only so big. Granted, right now it's way down because of the economic situation. But even if you took it back to an economy that's performing extremely well, say [revenues of] even 19% [of GDP], you can't close that gap under the present projected situation. And so we're in trouble. And the policies of this administration are driving that to an even more acute situation." Spending and deficits are both heading skyward, and government debt held by the public is heading toward 80% of GDP.
For Mr. Gregg, this is like living a nightmare. He has been a hard-nosed advocate for government spending restraint since his days as a Congressman (1981-87) and governor of New Hampshire (1987-93). At times, his commitment to fiscal responsibility led him to oppose tax cuts when they weren't matched by spending restraint. Those stances incurred the ire of his Republican colleagues, but he always stuck to his fiscal-responsibility guns. Now he's staring down a spending explosion that makes those battles look picayune.
The only way to pay of even a small portion of those huge deficits will be to raise taxes. As I mentioned in an earlier post, even raising the tax rate on 'the rich' to 100% would only raise an additional $400 billion in revenue, theoretically. (If the tax rate were actually raised to that point, the revenues collected would most likely be zero.)
It appears that both nations are on a collision course with financial ruin, with their respective governments being the ones setting that course. How is it the people in either government think that this is somehow good for their countries and the people they are supposed to be serving? That's the way it usually is with socialists. They really don't believe there's no way the money will eventually run out because they know the rich (meaning anyone with a job) have an endless supply of money that can be taken away “for the good of society.” As history has shown on more than one occasion, that usually leads to abject poverty. Since when does poverty benefit anyone...except the socialists?