Sir Michael Caine – a veteran of the Korean War – has had his patriotism questioned by a drone of an MP because he objects to paying excessive taxes. According to opinion polls, increases in the higher rate of tax paid on higher earnings are “popular”.

This is like asking two wolves and a sheep ‘what shall we have for supper?’

The political tactic of distracting public resentment by persecuting some minority in a time of hardship has a long and dishonourable history. Traditionally, the minority selected was some unpopular racial group, but overt racism is, for the moment at least, unfashionable, so the politicians are picking on the “better off” – as if anyone is “better off” in this mess of the politicians’ making!

They are trying, with some success, to equate the “better off” with rich, unscrupulous bankers in the public mind.

Yet the fact is that the rich, unscrupulous bankers are the people being bailed out by the politicians with public money!

The real victims, as ever, are the entrepreneurs – the very people whose initiative and drive are our only hope of escaping a depression...

...except that what is bad for enterprise is bad for the economy, and what is bad for the economy is bad for everyone:

1   By slashing the potential rewards of enterprise, high taxes alter the terms of the risk-versus-reward calculation that determines whether it is worth starting or expanding a business, and so makes more risky businesses unviable;

2   Higher rate taxes de-motivate not only those who are actually paying them but also those who are currently on lower incomes who are working hard in the hope that they may one day enjoy a higher income;

3   Those who really are “rich” do not in fact end up paying more, because they can either afford to move abroad easily, or to employ expensive advisers even more cunning than the tax-man to shelter their wealth – so it is the aspiring entrepreneur who sticks with his business who ends up paying the bill;

4   Those who can afford to do so also postpone taking profits until taxes are reduced;

5   The pool of investment available for new and expanding businesses, which depend on surplus wealth, is reduced disproportionately by higher rate taxes – and this is the investment which, unlike government investment, would have been shrewdly managed and led to the most significant long term growth;

6   For all these reasons, past experience indicates that increases in higher rate taxes reduce the revenue pool and may therefore actually decrease, rather than increase, the taxes paid by those on the higher rates;

7   In that event, unless governments then cut expenditure, which seems unlikely, taxes on those on lower incomes will rise as a direct result of the increases in higher rate tax – trickle down in reverse; and, finally,

8   Even those, like the British and American governments, who are obsessed with the idea of a Keynesian “demand-led recovery”, i.e. spending our way out of recession, accept that higher taxes reduce consumer spending – and higher rate taxes reduce it more than most.

Even the high sounding call for the “better off” to pay more taxes to help the “worse off” is nonsense. Any entrepreneur who wants to help the worse off should apply the same management skills that made him his money to spending it: a carefully targeted and managed 10% of his income paid directly to charities that help the worse off will help them more than 50% paid in taxes to the government – most of which would be wasted, not least on paying politicians and bureaucrats.