Further to the last blog...
Private enterprise is the motor that can – and, eventually,
when it is allowed to do so, will – drag the world out of recession.
So nothing could be better designed to delay recovery than
the British government’s proposal to penalise enterprise by increasing higher
rate income tax.
Although it plays well with the masses (when you rob Peter
to pay Paul, you can always rely on Paul’s vote), taxing the so-called rich has
two negative effects for the whole economy.
First, since higher incomes are more likely to leave a
surplus after personal expenditure, taxing them disproportionately reduces the pool
of money available for investment in viable businesses.
Second, it reduces the net rate of return on investment,
which can tip risk versus reward calculations against investing in more
marginal ventures.
Higher rate tax increases are therefore a double threat to
investment in the growth we all need to get out of this mess.
If that was not enough, the government is also increasing
“national insurance contributions” – the British euphemism for payroll tax.
In other words, the government’s response to the danger of
massive job losses is to tax jobs!